What Could Possibly Go Wrong?

I can understand — and certainly agree with — HP’s exit from the PC business. Selling PCs is not the business to be in, the margins are thin and the competition is abundant. Unless you are Apple there is no real way to differentiate one computer from the next and thus you must compete on price and blue LEDs.

What I don’t quite grasp is HP deciding to run WebOS as a software only business, exiting the mobile devices business — one laden with competition, but proving lucrative for more than a few. At this point it would seem that the best move HP could make, for both them as a company and WebOS, is to sell WebOS to a willing buyer.

(Hopefully any willing buyer would be smarter than HP and realize that it may take more than 12-18 months to start making money with the platform.)

The scenario that sounds far more likely at this point though is that HP has decided to license WebOS. At first brush this may sound like a great idea, WebOS is seemingly better than Android and with Google buying Motorola you have some eager customers in Samsung/HTC.

The problem?

Well licensing is a good move for WebOS as a platform and for HTC/Samsung (giving them leverage for negotiating with Google). BUT, this is anything but a good idea for HP the company — that is if they want to make money off of WebOS.

Here’s the thought process HP must have had:

“We need to do something with this Palm crap. I can’t have it dragging down financials anymore and honestly the PC business looks like shit too. … Ok, I know, let’s do what IBM did and focus on software and big enterprise markets. Here’s what we do: we spin off the PC division, we kill the mobile devices and just license WebOS. We make WebOS the Windows of the mobile world!”

Brilliant

Except that this strategy isn’t making much money for Microsoft or Google right now.

You know who is making a shit-ton of money right now? Apple. You know how? By making software and devices that work seamlessly together, also known as what HP acquired in Palm.

So in a moment of critical importance for the future of HP, CEO Leo Apotheker decided that — in a world where Apple is crushing Microsoft and Google realized they need more control over hardware (like Apple has) — well Leo decided he wanted to be more like Microsoft.

What could possibly go wrong?

At least HP still has those printer cartridges.

Originally posted for members on: August 18, 2011
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