The demise of Palm | HP portable devices post

I decided to jot down some thoughts on the demise of the Palm | HP portable devices business. I am not going to say whether it was the right or wrong thing to do mainly because other people have been doing that already.

HP and the mobile device

HP was arguably the original modern mobile computing device manufacturer, coming out with the HP-35 scientific calculator back in 1972. The company had a long history of being a pioneer in mobile computing; so the move away from mobile devices is actually putting an ending to a long line of devices.

Compaq had a set of handheld computers in the mid-1990s called Aero. These ran DOS and Windows 3.1, being the predecessors of devices like the ASUS eeePC netbook.

HP developed a number of PDA devices in the early and mid-1990s including the 95LX, 200LX, 100LX and the OmniGo 700LX which allowed a Nokia 2110 to piggyback on the PDA with a specially molded section on the back of the case.

The Jornada series of devices was a range of Microsoft Windows-powered PDAs were launched in 1998 and had a number of achievements including the first Windows Pocket PC colour touchscreen device and a UK-only GSM smartphone. The Jornada brand was phased out following the merger with Compaq.

The iPAQ succeeded Compaq’s Aero line in 2000 and the HP Jornada line after Compaq had been acquired. The last iteration of the iPAQ range was in 2010.

The Palm range of devices were first launched in 1996, the operating system was tweaked and prodded over the next decade to power various different devices including the iconic Palm III, V and Treo range of smartphones. Ultimately it eventually came up with the webOS after repeatedly fumbling its future.

This is a long and rich history of engineering innovation for which the Touchpad and Pre don’t stake up as worthy successors.

Things I never got when the Palm acquisition was first announced

I wrote up some bullet points of things that I didn’t fully understand when HP originally announced the Palm acquisition:

  • Is HP overpaying for the company? There isn’t that many people interested in Palm and analysts had set a target share price of zero. Is this price as much about emotion as assets?
  • Why is the Palm WebOS going to live up to HP’s faith in it?
  • Much was made of Palm’s cloud services technology in the webcast, but how many extra servers or services will it actually sell for HP?
  • SKUs. I was alarmed at the amount of proposed device variants HP was envisaging in the future on the call with possible support in differing form-factors for Microsoft Windows, Windows Phone, Android and WebOS in personal devices

With the benefit of hindsight:

  • Unless HP manages to parlay Palm’s intellectual property assets into a patent war chest either through an auction or successful legal action, it is unlikely to make its money back on the Palm acquisition. There isn’t likely to be licensing revenues from other manufacturers that would make up Palm acquisition. Whilst, the current uncertainty around Android may make manufacturers open to looking at an alternative operating system; but why take on webOS when both Palm and HP couldn’t make it work properly? It’s not like both these brands didn’t have a good reputation and heritage in building mobile computing devices, also in order to license the operating system HP would have to maintain and continue to develop it. What would that road-map look like and why would HP continue to develop consumer-facing software given its renewed focus on the enterprise
  • I never did find out how webOS was going to live up to HP’s leap of faith in the operating system because it evidently didn’t pan out, hence HP withdrawing it’s Touchpad and Pre devices

The value of the Touchpad and its implications for the webOS

Many of the eulogies for the Touchpad and the Pre point out that webOS was good software held back by poor hardware. This was the same criticism leveled at the original Palm Pre; so it begs the question why didn’t new owner HP try and deal with the performance issues second time around? I suspect that the leadership of Palm knew that the original Pre sucked, which why it was kept out of journalist hands for so much of the launch period.

Given the resources of a large company like HP, I would have thought that the former Palm engineering team and their new HP would not have wanted to continue making poor performing products; and instead would have looked to draw a line under everything with a superior device.

Yet when you look at the price that the remaining Touchpad devices are flying off the shelves in the US: 99 USD, this tells you a lot about the perceived value of the product.

The 99 USD price point is some 220 USD below the tear-down price of the HP Touchpad. The tear-down price is a conservative estimate of the total cost of a Touchpad to HP. Now you can allow for the fact that the product has some discount priced in because HP was withdrawing from the market, but even Nokia isn’t taking that kind of bath with its Symbian handsets.

So a fair amount of this discount must be due to the device experience provided by the webOS software. The risk versus rewards offered to users by this operating system far outweigh the intrinsic value of the hardware on which it runs. I would have to question why anyone would want to license webOS?

More Links

HP | Palm deal thoughts

HP: What Léo Apotheker’s Decisions Mean | Monday Note

HP gave up on cool webOS devices but promises webOS PCs and printers | VentureBeat

HP TouchPad Carries $318 Bill of Materials – Teardowns at iSuppli