webOS has effectively been dead since mid August, but reports of its impending death continue to swirl. Hewlett-Packard Co. made a colossal error this past summer when it abandoned its webOS device business and shunned any ongoing commitment to the webOS platform. Such a move would instantly slash the value of any business and indeed it has. The HP-Palm deal is one of most botched marriages and subsequent business decisions to hit the wireless industry in years.
HP threw in the towel on its mobile plans way too early, and just as it was getting off the ground with new webOS devices and a tablet built primarily by the Palm team it acquired 18 months ago for $1.2 billion. Leo Apotheker was forced out of the top job at the company over that decision and newly installed CEO Meg Whitman has shifted gears on the mobile front, but only slightly.
Under Whitman’s leadership HP has reversed its decision to abandon the tablet market, and the PC business for that matter — another FUBAR decision by Apotheker. But as of yet, Whitman has not committed to any life ahead for webOS. The future of the platform may have been hanging in the balance months ago, but any remaining value to outsiders has already vanished. Developers weren’t flocking to the platform before and they sure have no interest in starting now.
By killing off the platform before a suitor was found, HP effectively wrote off the $1.2 billion it spent for Palm in a flash. Palm was in dire straights before HP came knocking, but its hard to imagine a worse outcome for the company that pioneered the early phase of smartphones.
Ever since it shuttered the webOS device business, HP has laid out two options for the webOS platform: licensing deals or an outright sale. Both appear less and less likely, but somehow this new report from Reuters counts as an exclusive. Sources tell Reuters that Bank of America Merrill Lynch is advising the company on — you guessed it — a sale that could fetch “hundreds of millions of dollars.”
I can’t imagine why a company would spend that much money on a nearly defunct mobile operating system, but crazier things have happened (and recently too). If HP finds a buyer for webOS, it’s going to be all about patents to the extent they are in play. HP gained anywhere from 1,600 to 4,000 patents via the Palm acquisition, but it’s unclear how much value those hold and whether or not they would be included in a webOS sale.
If HP genuinely plans to reengage in the tablet space, it should hold on to webOS and take another stab at building a formidable ecosystem in mobile. There is still room for a third ecosystem to emerge from the ashes of failing incumbents. And even though HP has done more harm to the webOS platform than good, the company might still be better positioned by offering a unique ecosystem that none of the other tablet makers can provide. But the longer HP waits to make a move, the less likely it is to see any significant return from a sale or revival.