The Garage is Closed: Thoughts on HP's Divestiture of webOS and PC Business

Four quickie thoughts on today's news that HP is getting out of the PC business AND dumping webOS, which was a $1B+ acquisition just a year ago:

1. "I Support You 100%, UNTIL I Support You 0%": I will never forget these words, uttered by a VC friend of mine, whose point was that I could count on his full, unconditional support until the very moment when he decided to replace me, the decision of which would be both swift and absolute. Needless to say, this axiom comes to mind with today's announcement. How else to make sense of HP's stated strategy just a few months ago that they were committed to putting webOS Everywhere? Now, of course, it's webOS Nowhere. 
2. Platform Plays are Hard, Folks: Any way that you slice it, I feel really bad for the WebOS team. They built a credible platform, decent hardware, and if anything, are to be faulted for failing to execute on a cogent SDK and supporting Ecosystem. I've said it at least 100 times; namely, that third-party developers make or break a platform play, and clearly the webOS team couldn't thread the needle there (in the amount of time that they had). That stated, having watched RIM, Nokia and Microsoft repeatedly 'crap the bed' in mobile platform execution, we should tip our hats to what the Palm/webOS team built. The bottom line is that successfully executing a platform play is HARD (as I noted over two years ago), and lies in orchestrating lots of seemingly disaparate moving parts. That Apple has made it look so easy is an optical illusion, borne of true excellence. It is NOT easy.
3. Post-PC is NOW: While I am sure that there is some measure of schadenfreude for Walter Hewlett to see the last vestiges of the disastrous Compaq merger put out to pasture (the real moment was when Carly Fiorina got booted from HP), the bottom line truth is that the PC hardware business is now officially a legacy business that no company with R&D dollars has any right to be in. The last heartbeat on that front will be when Dell pulls out of the PC business (a schadenfreude moment for Steve Jobs when that happens). Tick-tock.
4. The Garage is Closed: The garage that HP founders, Bill Hewlett and Dave Packard, so famously launched the company in that it cast a metaphor for startups, which has lasted 75 years, must be considered closed. What other conclusion can one make when a company basically abandons a credible platform position in the single largest growth area of the next decade, especially knowing how hard such a position to establish is, and how few compelling alternatives there are? Perhaps there is a large, unnanounced check written by Microsoft driving this one. Maybe, it's as basic as people (read: HP CEO Leo Apotheker) will convince themselves of anything, no matter how stupid, when their job survival is on the line, and they need to feed some chum to the shark-infested waters known as the quarterly-focused stock market, to get safely to dry land. Or, perhaps it's as basic as HP sees a niche in emulating IBM, Apotheker is ex-SAP (an enterprise and services focused company), and to a hammer, everything looks like a nail. 

The bottom line truth is that at HP, the garage is closed, and sadly, has been for some time.

UPDATE 1: HP has apparently told the webOS team, "We are not walking away from webOS," while providing no details on what that means. Yeah, RUNNING seems more like a better metaphor than walking, anyway. 

UPDATE 2: Quirky logic by HP's CEO ("the tablet effect is real...consumers changing how they use PCs.") So tell me, why again, are they ABANDONING the Post-PC biz? 

Related Posts:

1. iPhones, App Stores and Ecosystems: Why Platform Plays are Hard
2. Is the Enterprise Dead as a Tablet Strategy (O'Reilly Radar)
3. Apple's Segmentation Strategy (and the Folly of Conventional Wisdom)

Comments

[Bob Davis]

Mark good background on HP throwing up their hands because they see no future with webOS. After HP's $1.2 Billion strategic buy in April 2010 and now just walking away now seems crazy to me. There is another market for those that don't by into the IOS Platform. It seems like a knee jerk reaction and expensive move because of Best Buy's inability to sell enough of them before HP's earnings call.

[Mark Sigal]

@Bob, thanks for the comment. webOS had a solidly credible position, and it was hardly game-over in the space. Sure, their 1.0 was not gangbusters, but if it's the biggest market of the next day, and you know that PC is giving rise to Post-PC NOW, why abandon the space with so feeble of an effort? My gut is that Apotheker is an enterprise software guy, this wasn't his acquisition, and people write the narrative that scripts the outcome they most desire. Apple has solidly proven that a well-executed hardware, software, tools and services play is a game-changer on so many levels.

[Anonymous]

Well, it is true they abandoned a platforn for the most primising opportunity. But on the other hand, they recognized that as a company they had no chance of succeeding with it...so unfortunate but non an unreasonable move..

But paying 10x reevenue for an old-style enterprise software company? Now, what is the definition of insanity?

[Mark Sigal]

I am not sure that I agree that HP had no chance in Mobile/Post-PC devices. Maybe culturally they didn't, and/or they lacked the intestinal fortitude, but they had a differentiated position, a large sales organization to sell it, multiple product categories and market verticals from which to seed it, and arguably, a better position than Apple had when it entered the mobile phone market (but probably worse than when Apple launched the iPod).

As to Autonomy, that's one of those ends justifies the means cases that invariably leads to an overpay and under factor integration challenges.

In other words, may be a logical fork for Apotheker's HP, but odds are stacked against succeeding.