HP kills WebOS, to exit PC business

SPECIAL REPORT: Huge changes for world's largest PC maker
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In a shocking about face, tech giant HP has killed off the WebOS platform including the newly launched TouchPad tablet and the Pre range of smartphones which have only just gone on sale in the UK this week.

In an explosive announcement, HP gave the strongest signal yet that the firm intends to distance itself from hardware and gamble on greater success in the enterprise software and services markets.

That world's largest PC maker said that the firm would not only exit the fledgling WebOS mobile hardware business but was also exploring a disposal of the IT giant's Personal Systems Group (PSG), the business unit that manufactures PCs and notebooks.

HP announced that its board of directors had: "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."

At the very least the PSG group, which currently accounts for about a third of HP revenue, will be spun-off from the main HP business if a buyer cannot be found.

Just four months ago incoming HP chief Leo Apotheker unveiled his vision of a move towards cloud computing where WebOS would be used as a platform to interact with HP's cloud services.

"HP's scalable, converged infrastructure forms the backbone of today's cloud computing, and we expect our leadership in software, services, PCs and web-connected printers," Apotheker said in may.

Signaling that the firm doesn't believe it has a chance of competing with Android and Apple rivals in mobile hardware, HP issued a terse statement saying that put the emphasis on WebOS software instead.

"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," the firm said in a release.

Yet HPs focus on software was already on the cards. Apotheker, himself an ex-software man having formerly headed SAP, has often placed the emphasis on enterprise software solutions.

The firm's launch of the WebOS-powered TouchPad received a tepid response from the critics with Engadget saying: "We all wanted the TouchPad to really compete, to give us a compelling third party to join the iOS and Android boxes on the ballot. But, alas, this isn't quite it."

HP's Palm unit boss Jon Rubenstein emailed staff telling them not to be disheartened by reviews and that "The HP team has achieved something extraordinary - especially when you consider that it's been just one year since our work on the TouchPad began in earnest."

The WebOS boss equated the launch of the new devices with the launch of Mac, which also wasn't received warmly at launch. Rubenstein added that the company planed to issue over-the-air updates in "short order" to address the flaws.

Yet unlike the Mac, HP's platform launched against a polished market leader. AllThingsD cited a source that had seen internal HP sales reports that illustrated the scale of the failure of the TouchPad to win consumers over from the iPad, despite a $100 price cut.

"Best Buy has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000, or less than 10 percent of the units in its inventory," they said.

Faced with the prospect of hundreds of thousands of unsold TouchPads, HP was confronted by the harsh realities of the hardware market. The firm used the same announcement to signal a potential acquisition of British enterprise software outfit Autonomy in a deal that could be worth as much as $10 billion.

The firm will host a conference call with analysts later today as the company also unveils third quarter earnings.

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