Some thoughts on webOS and HP

Managing or being on the board of a company of the size of HP (325 000 employees as reported here) is something that few people have experience in, myself included of course. And I prefer not to have to ! However the recent announces made by HP do not leave the IT world without comments, which includes of course what HP employees think themselves about it.

So I’d like to share here some quotes of others and my thoughts about these recent news, as well as some olders, knowing that it’s always more easy to bring criticisms, especially afterwards, than building stuff.

Before that some caveats are needed for once:

1/ I think for myself (as usual) and this doens’t represent any idea from my employer.
2/ All the info shared here are publicly available. You won’t get any private info of course, even if some links between public info may have passed unnoticed.
3/ I’m however reacting as an HP employee, attached to the names of Mr Hewlett and Mr. Packard (even if I never met them) and the HP Way.
4/ All of this is probably unaccessible from my pay-grade level, and reflects solely a poor Technology Architect’s view.

Let’s start with some quotes:

“Many assume, wrongly, that a company exists simply to make money…the real reason HP exists is to make a contribution…to improve the welfare of humanity…to advance the frontiers of science…Profit is not the proper end and aim of management –it is what makes all of the proper ends and aims possible…”

David Packard, 1947

“Irresponsible reporting by Taiwan’s Commercial Times, suggesting that HP might sell its PC business, should be dismissed as market rumor and speculation. HP runs the world’s largest PC business and it is core to HP’s strategy for the connected world.”

Bill Wohl, HP senior vice president and chief communications officer 2011-03-10

“HP today announced that its board of directors has authorized the evaluation of strategic alternatives for its Personal Systems Group (PSG), including the exploration of the separation of its PC business into a separate company through a spin-off or other transaction.”

HP 2011-08-18

Of course margins at PSG are the lowest of the 3 major business units of HP as you can see here (5% vs 17% for IPG and 15% for EB). But this remains a profitable business, so pays salaries of employees, pays for investments and brings some money back to investors, which is normaly the goal as defined upper by Dave Packard.

The idea of an HP without PSG questions the future of IPG, especially on the consumer market where their respective products are so complementary (you often buy a printer with of just after your PC). And what about the future of our Workstation entity which produces enterprise grade machines ? Especially for our Linux customers. The only relative good news that this evokes to me is that Microsoft may well loose more in that deal. Windows and its Office suite have no future without a PC.


Hewlett-Packard Co , the world’s No.1 PC maker, has no plans for layoffs so far, its Chief Executive Leo Apotheker said on Wednesday.
“The answer is no. You can quote me on it,” Apotheker told Reuters on the sidelines of a company event in Beijing.
Leo Apotheker, 2011-06-29
Hopefully this will proove to be true.

“We believe exploring alternatives for PSG could enhance its performance, allow it to more effectively compete and provide greater value for HP shareholders,”
Leo Apotheker, 2011-08-18

HP stock price $23.60 2011-08-21 vs 52-wk High $49.39 – Delta is $25.79 – the share lost thus 52% of its highest value, or HP lost some 53 B$ wrt to its highest value during last year of quotation. Far from intentional I think, but you could do a lot with that missing money: reward your employees, invest in R&D, reward your investors.

“Hewlett-Packard Company (NYSE: HWP) today announced the completion of its acquisition of Bluestone Software, Inc., Philadelphia, Pa., in a stock-for-stock merger.”
HP 2001-01-18
Wikipedia indicates a deal valued $470 million
Everybody knows how much unsuccessful this was.

“HP today announced the completion of its acquisition of Snapfish, a leading online photo service.”
HP 2005-04-15
What will that become without PSG ?

“HP today announced the completion of its acquisition of Peregrine Systems, Inc., a leading IT asset and service management software company.”
HP 2005-12-19
Wikipedia indicates a deal valued $425 million

“HP today announced that it has completed its acquisition of Mercury Interactive Corp., the largest software acquisition in HP’s history.”
HP 2006-11-07
Wikipedia indicates a deal valued $4.5 billion
Even if due to time evolution, prices are incomparable, how does that price to buy a clear leader in multiple domains relates to the Autonomy one ?

“HP today announced that it has signed a definitive agreement to acquire PolyServe, Inc., a leading provider of storage software for application and file serving utilities.”
HP 2007-02-26
Again a technology that HP didn’t really exploited and which was abandonned in 2011.

“HP today announced that it has completed its acquisition of Electronic Data Systems Corporation (EDS), creating a leading force in technology services.”
HP 2008-08-26
Wikipedia indicates a deal valued $13.9 billion.
Is it really possible that Autonomy is valued nearly as much as a 170 000 employees company doing high value margin services ?

If you sum the 4 last big acquisitions made by HP (3Com, Palm, 3PAR, ArcSight) we have less than $8 billion, always compared to the single value of Autonomy for $10 billion. Is it really worth it ? Even some consider the conspiracy idea !

Also from a FLOSS perspective, putting $10 billion in a software company when the rise of Open Source is everywhere (from Top500 to Android, from Cloud to GENIVI) seems like a failed opportunity to have developed our own software to do even better. We invest only $2.77 billion in R&D as reported here. Imagine what a company like ours could do with even half of the acquisition sum in research on software. Even if we do not open source it. At least now, as I strongly think that the selling licenses model is doomed to fail in some years. And how the cloud builds itself is another proof of that. But that shouldn’t be a major problem for HP which has a strong hardware and services history and capabilities. However we have to maintain these ! I still hope that our new CEO will help with that.

Finally, I’m really puzzled by what happens to our WebOS strategy. Some quotes again:

“HP and Palm, Inc. (NASDAQ: PALM) today announced that they have entered into a definitive agreement under which HP will purchase Palm, a provider of smartphones powered by the Palm webOS mobile operating system, at a price of $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion. The transaction has been approved by the HP and Palm boards of directors.”
HP 2010-04-28
Wikipedia indicates a deal valued $1.2 billion.

“HP today enlarged the HP webOS world with the first webOS slate ­– the HP TouchPad – the breakthrough webOS user interface fully realized in the tablet experience.”
HP 2011-02-09

“Attendees of Mobile World Congress will get a “first look” demonstration of the HP webOS application for HP ePrint Enterprise and HP ePrint Mobile Print Location solutions. ”
HP 2011-02-14
First report indicating a more global usage of webOS inside HP for other products than just Palm-derived ones.

“HP intends to build webOS into a leading connectivity platform. As the world’s No. 1 maker of PCs and printers, HP has the potential to deliver 100 million webOS-enabled devices a year into the marketplace, and HP plans to use that scale along with leading development tools to build a robust developer community that is eager to access every segment of the market and every corner of the globe.
HP also intends to be a leader in the area of connectivity. HP already has a globally distributed installed base in both the consumer and enterprise, and ships two printers and PCs a second, which will be webOS enabled – this huge, growing installed base of devices provides enormous opportunity upon which to build HP-, customer- and ecosystem-driven innovation. HP and its ecosystem of partners will continue to provide context-aware experiences for consumers, SMBs and large enterprises with secure information creation, digitization, transformation and consumption — anytime, anywhere.”
HP 2011-03-14
This was part of the global strategy announcement made in March. It really placed webOS at the center.

“HP today announced HP webOS Pivot, providing users an entertaining and informative editorial resource for discovering webOS 3.0 applications for the HP TouchPad, which launches July 1.”
HP 2011-06-23

“Building on the successful launch of HP webOS 3.0, HP today announced it is accelerating the global expansion of webOS.”
HP 2011-07-11

“HP reported that it plans to announce that it will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. HP will continue to explore options to optimize the value of webOS software going forward.”
HP 2011-08-18

It’s not the first time I’m surprised by such decisions. Some others are valso. But I think it’s the frst time that it’s so quick ! Even with a quaterly orientation vs a long term one, these Touchpad and Pre products have had no chance to ramp up. And believe me: I’m not the sort of geek that likes this type of product. But our Solution Center ordered some of them so we could demonstrate them in front of customer and write small apps to proove their usefulness. And I was completely fan after a couple of minutes !! These are great products. Maybe not the best, but with a couple more useful apps, and some issues solveed, it could well have become a very successful product.

So I really think that even if it was not the results expected (25 000 units sold vs 270 000 planned for BestBuy), a new market study could have help. Especially, once the price dropped, it seems that we sold 300 000 very quickly. It could even have been a good strategy indeed, to drop the price wrt iPAD and thus attract a large user base, some of them becoming developers, and they would see a market opportunity themselves.

In brief, it would have been a good idea to let a bit of time to these products to live. What if Google had droped their Android devices after les than 2 months ? they would never have become number 1 (It took them 4 quarters in 2010).

However, for the moment we seem to keep webOS per se in our portfolio. And that stack is clearly a great asset. Not only because it’s based on Linux 😉 It is de facto portable. Lots of devs have been commited upstream in their respective projects. So we can imagine that IPG usage may continue. If PSG products remains, they could also benefit from this stack and allow us to diminish our dependencies toward a Microsoft OS. And to target additional new markets such as GENIVI as done with Meego.

Of course, in order to compete with Android, it would need to be Open Source IMO. That would insure it the largest community interest. And won’t prevent us to sell not licenses, but support contracts to our customer base (be it consumer or IT manufacturer).

I know that HP has lots of capabilities, including in R&D. The future of memristor for example looks brilliant. I’m this week in Houston, working near from our ProLiant division, and can tell you that they understand customer needs and react to our feedback (I had a new feature for our Smart Array controler taken into account during the week, with even a timeline for delivery !). We do have great people. We need to trust them more and let them work on delivering the great products they are working on. And leave them at least 3/4 quarters to see what impact their ideas have for our customers.

HP needs to respect its willingness to really invest in R&D more as promised. We need now more than ever to re-instituate a long term strategy, even if we still monitor closely at quaterly reports. Hopefully, this is still possible. That’s IMO the best way to improve our stock market (for investors happyness), improve our state of mind (for employees happyness) and keep customer loyalty by providing to them the best product we can.

Even if I think that founders are leading their company with a unique perspective, there is no reason that another board and leaders can align and do the same. Maybe after re-reading the HP Way.

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9 Responses to “Some thoughts on webOS and HP”

  1. Dave Says:

    Great post Bruno. I would like to see companies go private again as many of these hasty and poor decisions come from folks who get rich off of stock price. Wall street drives poor decisions and enables leaders that do not have the same Bill and Dave values.

  2. brunocornec Says:

    A new study on webOS vs iOS:

  3. brunocornec Says:

    Too bad for Phil Robb, who is a great director for our Open Source Program office, and who was probably overloaded with questions at LinuxCon (

  4. CC Says:

    Hi Bruno, we APJ center members is certainly jealous, because we can never get those products and try them out, since they have never been released in China. Another story is: Bestbuy failed in China, and closed all its branches. So if all the selling numbers are based on bestbuy, we Chinese will certainly mock on the decision. Plus, I don’t think we can take Leo’s words, as you quoted about lay off, because in the same day, he said he would make us change our iphones into palms – Lynn

  5. motitos Says:

    In Spain, we have a bad joke about WebOS, because we read it «we-bos», which sounds very similar to a rude and colloquial way of saying testicles in Spanish.

    Cheers from the South of Spain…

  6. vhanniet Says:

    Great post! Also worth reading with replacing “webOS” by “added value innovation for users/customers” and “HP” by “worldwide public company”…

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