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A Simple Explanation for Why HP Abandoned Palm
- llambda 15y agoI guess this is why the vision of the CEO matters so much to investors (think Jobs). But regardless, HP was in trouble. I wonder if they would have stayed in the hardware business even if Hurd had stayed on. Maybe WebOS was not long for the company regardless of who was at the helm; its unequivocal success notwithstanding, maybe it'd have been abandoned anyway.
- cletus 15y agoI tend to agree with the basic reasoning but there's one thing I don't understand. Why cancel the TouchPad? Why not just spin that out with the hardware business to Compaq (which is the idea, yes?)? It seems they've devalued that unit by killing WebOS. All PC makers are on razor thin margins... apart from Apple. A post from yesterday [1] painted an interesting picture where Dell, through a series of seemingly rational decisions, essentially taught Asus the PC business, allowing the Taiwanese manufacturers to eat US PC makers for breakfast in later years. [1]: http://news.ycombinator.com/item?id=2907187 http://news.ycombinator.com/item?id=2907187
- A-K 15y agoFrom the quotes that were gathered from HP's PR, it sounds like they weren't at all confident in the TouchPad's ability to turn profits in the coming years. Assuming they didn't withhold a bunch of evidence that led them to that opinion, they'd surely have had a tough time finding a buyer. It also doesn't inspire a lot of confidence if you're trying to spin off a product division after giving it only 49 days on the market.
- ars 15y agoAt a good enough price I'm sure they would have found a buyer. They got zero dollars for it now, so any sale prices seems better than what they did. And if patents were the problem they could have required a cross licensing agreement with any buyer as a condition of sale.
- Joeri 15y agoThey can still sell off the patents.
- raganwald 15y agoINAA, but in many cases you do better to shutter something and write it down than to sell it for a pittance. Let’s say it’s bleeding money. Keeping the lights on while you find a buyer costs money, and buyers are no fools: If you can’t find two buyers to bid against each other, the one buyer you find has you over a barrel: Every day they delay in negotiations with you costs you money, so you are under tremendous pressure to conclude a deal at their price with their terms. I have no idea what’s going on with HP, but its not unreasonable to close something quickly if you don’t have a buyer or buyers already lined up to do a deal. I suspect that if HP had received feelers from a possible buyer, they would already have tried to sell Palm. Closing it means that they either don’t have any serious buyers or have already tried to sell and discovered that it’s cheaper to close it and keep the patents.
- nivertech 15y agoIt's the same as some VCs will prefer to shutdown a startup, instead of selling it for a low price. If they will sell it and it turned to be success with new owners - others will think this VC is dumb. If he shut it down - no chances to look dumb ;)
- tptacek 15y agoWouldn't that require them to come up with a valuation for the WebOS business? And right now, wouldn't that valuation look very bad for HP? The spot price for the WebOS business is much lower than what HP paid for it. Why not delay and diffuse the reckoning?
- chollida1 15y ago> Why not just spin that out with the hardware business to Compaq (which is the idea, yes?)? It seems they've devalued that unit by killing WebOS. I'd imagine one of the biggest reasons is patents. If they spin out the business they have to sell the patents. If they're going into a new market where they don't traditionally have alot of expertise their only chance of not getting sued into oblivion is to be able to cross license patents. Spinning off the Palm patent portfolio significantly hurts them in this regard. With the price of patents being what it is these days, it might have been worth more to them to keep the patents and bury the project.
- protomyth 15y agoI am with you on the patent reason, but I think they are going to sell them. They probably figure they are worth more than a WebOS-based device would be to the PC division.
- nknight 15y agoWhat? Why would they have to sell the patents? Keep the patents, license them to the spin-off, no?
- raganwald 15y agoIn the current legal environment, my guess is that a technology with patent licenses is nearly worthless compared to a technology with patents. Note that if someone wants to license webOS, naturally they license the patents. But who would want to buy the business but not the IP? That’s like licensing the operating system, being responsible for maintaining it, and paying a massive fee for the license up front. Such a business would be hard to run and hard to sell since you aren’t buying the IP and therefore can’t resell it.
- teyc 15y agoCisco did the same with the Flip. Killed it but didn't want to mess around untying the IP.
- ansy 15y agoThe TouchPad is a real disaster. 10% sell rate even after promotions? This is like ET for the Atari 2600. Best Buy was ready to just send back 245,000 out of the 270,000 it ordered because it couldn't sell them. At least HP agreed to give them away at liability cost instead of dumping them in a landfill. Notice HP did not pull the Pre and Veer phones from the shelves or put them on fire sale. HP's reasons for keeping the webOS lights on are probably threefold. 1) Phones are still for sale. 2) HP has a liability to show some support for webOS devices it sold or risk a class action lawsuit. 3) HP could still sell the Palm assets to someone and the company is lot more valuable if it comes with employees.
- ugh 15y agoI have real trouble understanding that. I don’t know how tablets are presented in the US but in my local German electronics retailer they are all right next to each other. The TouchPad even had more promotional material around it, it should have sticked out. (Ignoring the iPad which is right next to the other tablets but on an extra table with all the other Apple stuff.) Ignoring the iPad, I don’t understand how the TouchPad could be less successful than all the other tablets. Android can’t be the reason, that’s not how the tablets are presented. They are the Samsung tablet, the Motorola tablet, the Asus tablet, the HP tablet. It’s not even obvious that the Motorola and the Samsung tablet run the same OS, at least if you are a casual shopper, trying out tablets. To me, Android and webOS didn’t feel different enough to make one the clear winner, at least if you have limited time and are just playing around with it. The price certainly can’t be the reason, they all cost about the same. Android tablets seem to at least be a little successful, why is the TouchPad not at all successful?
- lukifer 15y agoWhat killed the TouchPad more than anything was lack of differentiation. If they had been $400 from the start, they could have been "the iPad, but cheaper". They could have started with a 7-8" model. They could have targeted specific niche markets or verticals en masse, preloading them with use-case specific apps and selling thousands of units at a time to big orgs. As it is, the webOS is a brilliant OS which HP completely squandered. I hope it somehow lives on via skunkworks or homebrew; I plan on keeping my $99 unit, as the browser and e-book functions will keep it useful for years to come. (Side note: it's also occurred to me that webOS is perfect for large-scale touch computing, of the "big-screen drafting table" variety. Why they haven't pursued this instead of touchable iMac knockoffs is beyond me.)
- Gustomaximus 15y ago> All PC makers are on razor thin margins... I keep hearing this but then think I saved 30% by building my own PC so it doesn't ring true. Also I would expect HP to get parts at least 10-20% cheaper than a consumer increasing this margin. And the time assembling is not that much to warrant additional costs. Maybe because I have a high end rig there are some margins here... but in this context it feels like there are decent margins there to me.
- hboon 15y agoThere's also branding, marketing, advertising, floor space, sales staff, call center and after-sales support, as well as management time that your supplier didn't have to pay for (or not as much for).
- Retric 15y agoFalcon-nw sells high end PC's with vary healthy margins, however they don't sell a lot of PC's. Alieanware (now part of dell) sells mid range to high end PC's with ok margins. Dell a lot of sells low to mid range PC's with crap margins, but they make good margins on their support contracts.
- anigbrowl 15y agoAutonomy is nothing like SAP. What a ridiculous, empty post.
- webfuel 15y agoOn the wikipedia page for Autonomy Corporation, under competitors, you'll find SAP NetWeaver Enterprise Search plus SAP Business Objects Text Analysis http://en.wikipedia.org/wiki/List_of_enterprise_search_vendors http://en.wikipedia.org/wiki/List_of_enterprise_search_vendo...
- allertonm 15y agoI tend to agree with anigbrowl. While there are some overlapping products, those things are a tiny fraction of what SAP sells and far from their core business (I used to work for SAP Business Objects.)
- bradleyland 15y agoIf looked at closely enough, no two businesses are alike. The question is, what's relevant to the discussion? In the scope of comparing consumer products vs business consulting, we can paint with broad enough strokes to call SAP and Autonomy "similar" businesses.
- allertonm 15y agoPerhaps so, but in this case you don't have to look too closely. Autonomy & SAP have similar customers, true. But the suggestion in Gruber's post is that the purchase of Autonomy is a substitute for a purchase of SAP. Which is a bit like saying the purchase of a front drivers side door mirror is a substitute for the purchase of a car. (Downvotes too, jeez.)
- bradleyland 15y agoI'm stating this earnestly to try and explain why I think you're receiving a negative reaction. You'll chose how to take it. I sincerely mean no offense by it. You're being downvoted because you are arguing a point that no one is making. No one is saying that SAP and Autonomy are in the same business. It's almost like you're choosing not to get it, just so you can talk about the differences between SAP and Autonomy. This is, more or less, the thesis of Gruber's post: > The thing is, Apotheker’s relevant experience was serving as CEO of SAP. What’s SAP? SAP is an enterprise software and consulting company. Honestly, we all should have seen this coming. You don’t bring in an enterprise consulting guy to turn around a PC and device maker. You bring in an enterprise consulting guy to turn a PC and device maker into an enterprise consulting company. The only portion of the post where Gruber makes even a remotely questionable comparison is this statement: > Autonomy — a company I’d never heard of before but which more or less sounds like a rival to SAP He off-handedly likens Autonomy to SAP. Maybe that's wrong, but it doesn't matter. Follow us all here: Fact: HP was a hardware products company. Fact: Apotheker was head of SAP, an "enterprise consulting" company. Inference: Apotheker is going to take HP in an "enterprise consulting" direction, not a "hardware products" direction. Arguing whether Autonomy and SAP are the same business is tangential to the point.
- iand 15y agoHe's never heard of Autonomy so therefore assumes it's similar to SAP? Hmmm.
- rimantas 15y agoWhy do you assume he assumes instead of doing some little research?
- iand 15y agoI'm quoting him: "Autonomy — a company I’d never heard of before but which more or less sounds like a rival to SAP." That indicates he didn't do much research. Another thing that indicates lack of research is that his comparison of Autonomy to SAP is wrong.
- sek 15y agoWebOS was for Hurd just a fig leaf to make a future orientated impression, in reality were all the profits he made short term. What HP needs now is focus and that is what Apotheker is doing. Some people are disappointed that it is not consumer orientated, but when you look at the "smart phone wars" this seems reasonable to me. HP can't compete with Google, Apple and Microsoft there. Look at Nokia and Blackberry.
- iamdave 15y agoThat's an excellent point. I'm actually curious to see now if we had this same discussion when Dell started to pull back on their consumer division. It's still there, but their business offerings seem to either have been given more attention, or for whatever market reasons have dwarfed Dell consumer.
- masklinn 15y ago> What HP needs now is focus and that is what Apotheker is doing. Yes and no. Focusing would be to reduce the surface of the corporation to its core business, basically what Jobs did when he got back to Apple. What Apotheker is doing is to change HP's business altogether.
- skrebbel 15y ago> What Apotheker is doing is to change HP's business altogether. No he isn't, he's reducing its scope to the most profitable and future-proof business units. HP is one of the world's biggest enterprise software business. Yes, also before they bought Autonomy. They just also make PCs and printers and the likes, which makes consumers not know any better than "HP is a PC and printer maker".
- Tichy 15y agoThat's stating the obvious. Another question would be, why was Apotheker hired? Whoever did that must have expected something like that?
- nikcub 15y agoThe HP board made the decision, and I am surprised that nobody has yet made the link between Andreessen's editorial in the WSJ (he sits on the HP board) and this recent shakeup.
- chalst 15y agoLinks, since I looked for them myself: 1. Why software is eating the world, 20th August. http://online.wsj.com/article/SB10001424053111903480904576512250915629460.html http://online.wsj.com/article/SB1000142405311190348090457651... 2. HN thread: http://news.ycombinator.com/item?id=2905410 http://news.ycombinator.com/item?id=2905410
- acangiano 15y agoI think his interpretation of the facts is very plausible. Sadly, Larry Ellison was absolutely right when he said, at the time of Hurd's scandal, "the HP Board just made the worst personnel decision since the idiots on the Apple Board fired Steve Jobs many years ago." Good CEOs who can revamp stagnant companies are hard to come by, particularly in the consumer space. Hurd was that CEO, Apotheker is not. And getting out of the consumer space, at a time when there are several paradigm shifts going on, means missing huge opportunities.
- runjake 15y agoFiring Steve Jobs was the best thing Apple could have done, long term. Apple is where it's at today because of what Steve Jobs learned and grew from his "failures".
- DeusExMachina 15y agoThis is true also because Steve Jobs speaks about it in his Stanford speech, but it's a rare event that you cannot know in advance. No company fires the CEO to let him learn more and then come back to rescue the company. Moreover Apple went on the verge of bankruptcy before Steve Jobs came back. So it was still a bad decision for the board to fire him.
- bad_user 15y agoThe board of directors fired Steve Jobs because of the company's poor performance. It wasn't as if it went downhill only after Steve left.
- j_baker 15y agoNo they didn't. They fired Steve Jobs because they didn't get along with him. http://www.thedailybeast.com/articles/2010/06/06/why-i-fired-steve-jobs.html http://www.thedailybeast.com/articles/2010/06/06/why-i-fired...
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- ayanb 15y agoHP has a highly distinguished board of directors. I find it strange that no one is highlighting the fact that Léo Apotheker is definitely enjoying the vote of confidence of the top level executives, otherwise this would have never been possible.
- bvi 15y agoRemember, HP's board underwent a major shakeup once Léo came in: http://management.fortune.cnn.com/2011/01/28/hp%E2%80%99s-board-shakeup-apothekers-master-plan/ http://management.fortune.cnn.com/2011/01/28/hp%E2%80%99s-bo...
- codedivine 15y agoIndeed, I just looked at http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-govboard http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-g... There are 14 board members in total including Leo the CEO. Out of 13, 6 were appointed in 2011 while the board leader (Lane) was appointed at the same time as Leo Apotheker. That means out of 14, only 6 precede Leo.
- rwmj 15y agoThis quote: "Autonomy — a company I’d never heard of before but which more or less sounds like a rival to SAP" tells you everything you need to know about the blogger. He knows very little about the software business, and is just making up opinions based on his gut feeling, without backing it up with knowledge or evidence.
- fredoliveira 15y agoGranted he may know little about Autonomy (although I'll argue he knows a bit about the software business), but he's pretty much right on the money when it comes to what Autonomy sounds like (in the sense that it is also an enterprise-oriented business), is he not?
- dr_rezzy 15y agoyup... Autonomy is a huge name in the enterprise biz. This blogger got it completely wrong when he said they are an SAP rival. Autonomy is Oracle's biggest threat now and will likely start making inroads on its biz.
- VengefulCynic 15y agoHave you been to Autonomy's website? Seriously... go have a look... have a look at the 'Introduction to Autonomy' page: http://www.autonomy.com/content/Autonomy/introduction/index.en.html http://www.autonomy.com/content/Autonomy/introduction/index.... "Organizations already benefiting from Autonomy technology include Avis, BAE Systems, BBC, BMW, Coca-Cola, CNN, Ericsson, Fiat, Financial Times, GlaxoSmithKline, Isabel Healthcare, KPMG, Linklaters, Lloyds TSB, NASA, Nestle, Oracle, Philips, Safeway, Schneider Electric, Shell, T-Mobile, The European Commission, The U.K. Houses of Parliament, The U.S. Department of Homeland Security and The U.S. Securities and Exchange Commission." If Autonomy isn't enterprise software on the order of SAP (if not exactly the same business), they sure write confusing marketing copy.
- dgreensp 15y agoI have no faith in HP's leadership. I was talking to an insider last year about how HP wanted to be a computer maker. I said, "I know them for their printers, they make awesome printers." He said, "Yeah, they're not so interested in printers these days. They think the money's in computers." I guess it's whatever the "money's in" this week.
- buster 15y agoAtleast now HP now has a pretty valuable portfolio of patents of Palm
- nivertech 15y ago"Autonomy — a company I’d never heard of before" Autonomy is a leader in their field
- masklinn 15y agoWhich is very small and hard to see, especially for one Gruber which does not work as a corporate drone
- nivertech 15y agoNLP, Text Categorization, Unstructured Data is a huge field. I worked in a startup, whose competition was Autonomy's consumer internet spin-off in 2001
- iand 15y agoText classification and analysis isn't a small field. Plus this is a public company that's been in the FTSE for years (i.e. one of the top 100 companies in the UK)
- ugh 15y agoWhat’s your point?
- forgotAgain 15y agoHP also wants to be in the cloud. After the past week I think they've killed that as well. Who would lock themselves in to HP at this point?
- bugsy 15y agoI don't see what the big advantage is of CEOs few have heard of being dragged in to nuke existing companies and rebuild them in the image of the old company he used to work at. Why not just nuke the company out of spite (or alternatively sell off all assets and give to charity if not spiteful) and have the CEO stay at the old place and keep doing the same thing. Same outcome but not as painfully dragged out. Obviously if you keep doing multi billion dollar acquisitions, and then trash it all and fire everyone a couple years later when you switch CEOS, and then when things get even worse, fire that CEO with a golden parachute and bring it his cousin to do it all again, pretty soon your company headquarters are going to be an abandoned grassy field. Talk about burn rate!
- deleted 15y ago[deleted]
- dramaticus3 15y agofireball is a visionary genius
- j_col 15y agoUp-voting because I'm assuming you're being ironic ;-)
- nvictor 15y agowalmart - sold out target - sold out best buy - sold out online hp shop - sold out office depot - sold out amazon - ripping off customers with original price newegg - rip off also where am i gonna get my touchpad future android mega device? ;(
- dr_ 15y agoJust because Hurd decided to bet big on WebOS - it doesn't mean that bet was ever going to pay off. Gruber is correct and HP and Apotheker are going along with their plan as intended. The tablet/phone business was a long shot and their PC business over time was going to get weaker, they don't own the OS and hardware is tough to compete in with Chinese manufacturers. Their best shot at long term survival was enterprise software, and that's what they are doing. Perhaps they could come up with some kind of enterprise solution for WebOS in the future, but it's probably not their focus right now.
- daimyoyo 15y agoIt's really too bad. I really wanted webOS to gain some traction but now that HP has all but killed it, it seems incredibly unlikely that webOS will be anything more than a footnote in history.
- agilemanic 15y agosame here. I really liked webOS and thought about buying a Pre, but it was just too small. That's why I was looking forward to the Touchpad. Big screen and a very nice OS :-/
- thewileyone 15y agoWow ... first time I'm agreeing with Gruber whole-heartedly.