Yesterday, we reported on Hewlett-Packard’s miserable TouchPad sales, and how retailers are particularly unhappy with the tablets and wished HP to take them back. Well, it looks like they got their wish, and then some. HP has decided not only to take back and discontinue production of its TouchPads, but in a stunning move, the company has also decided to discontinue all WebOS operations in general. This means that the company will cease production on tablets, phones, and all devices that run WebOS.
Many are already claiming that HP conceded to Apple, but with so many iPad imitators out on the market, this resignation could easily be the first of many.
“Consumers are changing the use of their PC,” said HP CEO Leo Apotheker. “The tablet effect is real and sales of the TouchPad are not meeting our expectations. The velocity of change in the personal device marketplace ocntinues to increase as the competitive landscape is growing increasingly more complex especially around the personal computing arena.” He then repeated, “The tablet effect is real.”
He should’ve called it “the iPad effect.”
Most surprisingly, HP also decided to spin off its PC unit—another costly move—nearly 10 years after the company bought Compaq for $25 billion. Amidst all the cutting, however, the company also managed to acquire another company called Autonomy, an enterprise information retrieval outfit.
“Transformation can involve difficult decisions, but we take these steps to better position for the future,” said Apotheker. “These challenges and the transformation we are undertaking will take several quarters to fully resolves.”
“I don’t take this action lightly. I know our investors don’t like being in this position and neither do I. I feel that as CEO I believe in transparency about what we are facing and be clear under the size of things we are doing now about it.”
The move to not only drop the TouchPad, but also its line of PCs, may seem like a panic-driven reaction to poor sales, but Apotheker might actually be onto something. Steve Jobs hinted at it too last March when he unveiled the iPad 2:
“A lot of folks in this tablet market are rushing in and they’re looking at this as the next PC. The hardware and the software are done by different companies, and they’re talking about speeds and feeds just like they did with PCs,” Jobs said. “Our experience and every bone in our body says that that is not the right approach to this. That these are post-PC devices that need to be even easier to use than a PC, that need to be more intuitive than a PC, and where the software and hardware and the applications need to intertwine in an even more seamless way than they do on a PC.”
Initially, it seemed like HP had bought into this notion of the “post-PC world” when the company acquired Palm for $1.2 billion in April 2010—absorbing Palm, webOS, and Palm’s 1,500+ patents from last year—with intentions to “double down on webOS.” But then, long-tenured HP CEO Mark Hurd was forced to resign just three months later, and while Apotheker took his place and continued the mission, he was clearly watching for any signs of trouble. When the TouchPad floundered upon arrival and Apotheker acquired Autonomy, it was settled: HP would in fact not be the next Apple.
“Autonomy represents an opportunity for HP to accelerate our vision to decisively and profitably lead a larger win space, which is the enterprise information management space.”
HP will turn its focus to rebuilding its brand, which will undoubtedly take a massive hit to its reputation due after inventing, then subsequently killing, an “iPad killer.” As the company puts more emphasis on its enterprise division—the company also named a new head for its enterprise services unit, John Vesentin—TechCrunch writer Greg Kumparak has some interesting ideas on how HP can make lemonade out of its lemons.
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