HP said it will stop making WebOS tablets and smartphones as the company begins a push into the business market.
The company “will discontinue operations for WebOS devices,” referring to the recently released TouchPad tablet and WebOS phones, which have not sold well. In addition, HP plans to spin off its personal PC business and acquire U.K. software company Autonomy, which makes software enabling businesses to organise and retrieve email, documents and other media. The purchase is set to cost HP $10.3 billion.
HP also plans to take a $1 billion restructuring charge to shut down its tablet and smartphone businesses.
The decisions come after the company cut its outlook for the next two quarters. As a result of its increasingly anemic PC business and its difficulty in competing in the mobile devices market, HP CEO Leo Apotheker said yesterday HP needs to “sharpen our focus.”
In order to do that, Apotheker said, “you need to take significant action.”
The moves are a dramatic reversal from HP’s earlier push to stake a place for itself in the mobile consumer market. Last spring HP talked about competing with its Palm acquisition and has made moves since to push its WebOS platform into the market.
It recently talked of licensing WebOS and putting it into larger systems like cars and appliances, and last month reshuffled its management to spur WebOS development.
However, adoption of WebOS devices has been slow, as carriers are reluctant to carry devices with the OS, like its TouchPad tablet, since they have sold sluggishly despite good reviews. WebOS generally received solid reviews overall but consumers were not fans of the TouchPad’s hardware, saying it was outdate and slow.
As the company struggled to compete in the mobile sector against rivals like Apple, Samsung and Google, Apotheker began looking at market data and talking with directors about shifting HP to a more profitable direction. He eventually realised that “to be successful in the consumer device business we would have had to invest a lot of capital and I believe we can invest it in better places.”
That better place Apotheker speaks of is the enterprise market. HP is striking out strong in this direction, especially in acquiring Autonomy and making moves to detach its personal PC business only a decade after it acquired Compaq. HP’s PC unit turned a $567 million profit in the quarter ended July 31, as it remains the world’s biggest computer maker.
However, this business doesn’t offer high enough margins for HP, and many expect revenue from the sale of the division will fund HP’s future enterprise software services.
As HP turns decisively towards the business market, questions linger on about will happen to WebOS. Some believe the company still sees the platform as an intellectual property asset and may look into licensing it to phone makers.
However, HP may be limited in this plan because WebOS is designed to work on only Qualcomm chips while potential licensing partners work with a larger range of chips, according HP vice president Todd Bradley to website, This Is My Next.
The company instead is looking into options and said it will announce a plan in two weeks, marking an end to the tech giant’s foray into the consumer mobile market.