HP Calls It a Day: TouchPad and PC Death Knell Sounded

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Figures. The day after I blog about tablet wars, HP decides to dump the TouchPad and put webOS on ice. Yup, after only 6 weeks, millions in development and advertising, HP pulled the plug. But the TouchPad didn’t jump off the bridge alone, no sir – it took the PC division with it. That’s right, the world’s biggest PC manufacturer announced that it is getting out of the PC business. Unbelievable. Or is it?

It’s no secret that HP has been foundering since the buried-in-tabloids departure of Mark Hurd some ten months ago. Stock prices have languished (down 10% YOY) and the margin in PCs is thinner than a politician’s promise at election time. And the TouchPad? A complete non-starter. Despite all the ballyhoo about the beauty of webOS (and the $1.2B that Palm cost them 18 months ago), the millions in advertising, the $100 price drop; HP crumpled it up and threw it away after less than 2 months on the shelves. Speaking of on the shelves, Best Buy may get hurt more than HP out of all this given they are sitting on hundreds of thousands of dust collecting TouchPads. It’s a shame really. HP led us to believe that webOS was set to give even Microsoft a run for its money in the PC OS world. It truly is / was a great little operating system. HP says it is looking for ways to leverage that purchase but we’ll see about that over the next year. Maybe they will license it out to whoever is left in the tablet space once Apple completes its play for world domination.

So what’s next for HP? Well, Leo Apotheker has a vision and it doesn’t include any consumer products and likely no business PCs either. He is set to torch ~30% of their revenue and their number one share in the PC market for a roll of the dice on software and services as clearly evidenced by the $10B Autonomy purchase – one of the world’s largest database search software makers with customers like Coke and the US Securities Exchange – for a 64% stock price premium. Incidentally, that represents only a paltry 2% of their overall revenue so this is no small gambit. Still, it comes as no surprise to industry insiders. After all, Apotheker did recently head up that little tiny software outfit from Germany called SAP. Perhaps you’ve heard of them? Looks very similar to IBM when they dumped their PC lineup in favour of software and services. I wonder if anyone reminded Apotheker that transition was 10 years in the making giving new meaning to the phrase “long view”.

Well, it didn’t take Michael Dell long to start the festivities as he tweeted to the world in his usual smug and arrogant manner shortly after the HP press release: “If HP spins off their PC business … maybe they will call it Compaq?”. Good one, Michael. Hope you didn’t stay up too late coming up with that jab. If HP does indeed dump PCs from their line card – and they will – it looks like it is up to Dell and Lenovo. Them and whoever has a few billion kicking around in chump change to spend on a flagging PC manufacturing line card.

And tablets? For now, it is all Apple. Yes, I know – there is Android and PlayBook but the Android OS is so fractured as to be unrecognizable as Android across the myriad of manufacturers who have basterdized it to fit their hardware and PlayBook? Not a bad tablet really but only barely half-baked at release time and it too is on very shaky ground with a future that is anything but certain given the butt-kicking RIM has taken of late. The only other CEO more arrogant than Michael Dell is Steve Jobs and his smug-o-meter must be off the charts today. Oh – and I haven’t even mentioned the Motoroogle deal and the ramifications of that mistake. Google will pay for that gaff, mark my words. What a crazy week in tech-world!

Agree? Disagree? Let me know your thought on this or any other subject.