HP decides to spin off consumer PC unit & kill webOS

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HP is not having a great couple of months. They have decided to cap it off with a couple of major, and in my opinion, not positive, decisions. The company has decided to spin off its PC division and to halt webOS, effectively killing the TouchPad, all in one fell swoop.

HP decides to spin off consumer PC unit & kill webOS

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HP released a statement today discussing both the PC spinoff and the webOS decision. The statement was vague and short, mostly focused on earnings for the third quarter and projections for the fourth quarter but right up at the top was the following language:

“HP also reported that it plans to announce that its board of directors has authorized the exploration of strategic alternatives for its Personal Systems Group (PSG). HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction.

In addition, 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.”

It isn’t really news that the TouchPad, HP’s first webOS device, is not selling well. HP has tried everything to bolster sales but has come up short, so short in fact that major retailers like Best Buy have been asking the company to take back their stock. While that situation is indeed dire, this decision to halt webOS operations effectively kills the device. With webOS operations stopped, developers won’t be clamoring to build apps for the tablet. No new software renders the device thoroughly useless.

Consumers who decided to buy into webOS early in the hopes of seeing new HP phones using the system now have a $500 paperweight in their possession and that can’t make them happy. HP didn’t announce any plans to compensate people who bought the device and it’s likely nothing will ever be done for those early adopters. That has got to sting.

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The release does leave a sliver of hope for webOS by stating that they will continue to explore uses for it going forward. The problem is HP will have such a hard time getting anyone to buy into it a second time after stomping all over early adopters from this year. With that in mind, it’s very likely that webOS will never be seen or heard from again.

HP’s decision to spin off the PC devision of their company is startling. Combining that announcement with the death of webOS and a potential acquisition of Autonomy, it seems clear that HP wants out of the consumer market. Perhaps they don’t want to compete with Apple, Google, and Microsoft in a cut throat market, not to mention other PC hardware manufacturers.

Exiting the consumer market leaves just the enterprise, and that market has some very steep competition including IBM. The spun off consumer division is left to fight it out with all the big hitters in the consumer division. At this point it doesn’t look particularly positive on either side of the coin for HP.

How all of this shakes out and exactly how the company restructures will be interesting to watch. I expect to see aggressive moves by competitors to take advantage of the awkward position HP has put itself in.

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