5 ms·

I tend to agree with the basic reasoning but there's one thing I don't understand. Why cancel the TouchPad? Why not just spin that out with the hardware busine

by cletus 15y ago

I tend to agree with the basic reasoning but there's one thing I don't understand. Why cancel the TouchPad? Why not just spin that out with the hardware business to Compaq (which is the idea, yes?)? It seems they've devalued that unit by killing WebOS. All PC makers are on razor thin margins... apart from Apple. A post from yesterday [1] painted an interesting picture where Dell, through a series of seemingly rational decisions, essentially taught Asus the PC business, allowing the Taiwanese manufacturers to eat US PC makers for breakfast in later years. [1]: http://news.ycombinator.com/item?id=2907187 http://news.ycombinator.com/item?id=2907187

A-K 15y ago
From the quotes that were gathered from HP's PR, it sounds like they weren't at all confident in the TouchPad's ability to turn profits in the coming years. Assuming they didn't withhold a bunch of evidence that led them to that opinion, they'd surely have had a tough time finding a buyer. It also doesn't inspire a lot of confidence if you're trying to spin off a product division after giving it only 49 days on the market.
- ars 15y ago
  At a good enough price I'm sure they would have found a buyer. They got zero dollars for it now, so any sale prices seems better than what they did. And if patents were the problem they could have required a cross licensing agreement with any buyer as a condition of sale.
  - Joeri 15y ago
    They can still sell off the patents.
  - raganwald 15y ago
    INAA, but in many cases you do better to shutter something and write it down than to sell it for a pittance. Let’s say it’s bleeding money. Keeping the lights on while you find a buyer costs money, and buyers are no fools: If you can’t find two buyers to bid against each other, the one buyer you find has you over a barrel: Every day they delay in negotiations with you costs you money, so you are under tremendous pressure to conclude a deal at their price with their terms. I have no idea what’s going on with HP, but its not unreasonable to close something quickly if you don’t have a buyer or buyers already lined up to do a deal. I suspect that if HP had received feelers from a possible buyer, they would already have tried to sell Palm. Closing it means that they either don’t have any serious buyers or have already tried to sell and discovered that it’s cheaper to close it and keep the patents.
    - nivertech 15y ago
      It's the same as some VCs will prefer to shutdown a startup, instead of selling it for a low price. If they will sell it and it turned to be success with new owners - others will think this VC is dumb. If he shut it down - no chances to look dumb ;)
tptacek 15y ago
Wouldn't that require them to come up with a valuation for the WebOS business? And right now, wouldn't that valuation look very bad for HP? The spot price for the WebOS business is much lower than what HP paid for it. Why not delay and diffuse the reckoning?
chollida1 15y ago
> Why not just spin that out with the hardware business to Compaq (which is the idea, yes?)? It seems they've devalued that unit by killing WebOS. I'd imagine one of the biggest reasons is patents. If they spin out the business they have to sell the patents. If they're going into a new market where they don't traditionally have alot of expertise their only chance of not getting sued into oblivion is to be able to cross license patents. Spinning off the Palm patent portfolio significantly hurts them in this regard. With the price of patents being what it is these days, it might have been worth more to them to keep the patents and bury the project.
- protomyth 15y ago
  I am with you on the patent reason, but I think they are going to sell them. They probably figure they are worth more than a WebOS-based device would be to the PC division.
- nknight 15y ago
  What? Why would they have to sell the patents? Keep the patents, license them to the spin-off, no?
  - raganwald 15y ago
    In the current legal environment, my guess is that a technology with patent licenses is nearly worthless compared to a technology with patents. Note that if someone wants to license webOS, naturally they license the patents. But who would want to buy the business but not the IP? That’s like licensing the operating system, being responsible for maintaining it, and paying a massive fee for the license up front. Such a business would be hard to run and hard to sell since you aren’t buying the IP and therefore can’t resell it.
  - teyc 15y ago
    Cisco did the same with the Flip. Killed it but didn't want to mess around untying the IP.
ansy 15y ago
The TouchPad is a real disaster. 10% sell rate even after promotions? This is like ET for the Atari 2600. Best Buy was ready to just send back 245,000 out of the 270,000 it ordered because it couldn't sell them. At least HP agreed to give them away at liability cost instead of dumping them in a landfill. Notice HP did not pull the Pre and Veer phones from the shelves or put them on fire sale. HP's reasons for keeping the webOS lights on are probably threefold. 1) Phones are still for sale. 2) HP has a liability to show some support for webOS devices it sold or risk a class action lawsuit. 3) HP could still sell the Palm assets to someone and the company is lot more valuable if it comes with employees.
- ugh 15y ago
  I have real trouble understanding that. I don’t know how tablets are presented in the US but in my local German electronics retailer they are all right next to each other. The TouchPad even had more promotional material around it, it should have sticked out. (Ignoring the iPad which is right next to the other tablets but on an extra table with all the other Apple stuff.) Ignoring the iPad, I don’t understand how the TouchPad could be less successful than all the other tablets. Android can’t be the reason, that’s not how the tablets are presented. They are the Samsung tablet, the Motorola tablet, the Asus tablet, the HP tablet. It’s not even obvious that the Motorola and the Samsung tablet run the same OS, at least if you are a casual shopper, trying out tablets. To me, Android and webOS didn’t feel different enough to make one the clear winner, at least if you have limited time and are just playing around with it. The price certainly can’t be the reason, they all cost about the same. Android tablets seem to at least be a little successful, why is the TouchPad not at all successful?
  - lukifer 15y ago
    What killed the TouchPad more than anything was lack of differentiation. If they had been $400 from the start, they could have been "the iPad, but cheaper". They could have started with a 7-8" model. They could have targeted specific niche markets or verticals en masse, preloading them with use-case specific apps and selling thousands of units at a time to big orgs. As it is, the webOS is a brilliant OS which HP completely squandered. I hope it somehow lives on via skunkworks or homebrew; I plan on keeping my $99 unit, as the browser and e-book functions will keep it useful for years to come. (Side note: it's also occurred to me that webOS is perfect for large-scale touch computing, of the "big-screen drafting table" variety. Why they haven't pursued this instead of touchable iMac knockoffs is beyond me.)
Gustomaximus 15y ago
> All PC makers are on razor thin margins... I keep hearing this but then think I saved 30% by building my own PC so it doesn't ring true. Also I would expect HP to get parts at least 10-20% cheaper than a consumer increasing this margin. And the time assembling is not that much to warrant additional costs. Maybe because I have a high end rig there are some margins here... but in this context it feels like there are decent margins there to me.
- hboon 15y ago
  There's also branding, marketing, advertising, floor space, sales staff, call center and after-sales support, as well as management time that your supplier didn't have to pay for (or not as much for).
- Retric 15y ago
  Falcon-nw sells high end PC's with vary healthy margins, however they don't sell a lot of PC's. Alieanware (now part of dell) sells mid range to high end PC's with ok margins. Dell a lot of sells low to mid range PC's with crap margins, but they make good margins on their support contracts.

by cletus 15y ago

A-K 15y ago

From the quotes that were gathered from HP's PR, it sounds like they weren't at all confident in the TouchPad's ability to turn profits in the coming years. Assuming they didn't withhold a bunch of evidence that led them to that opinion, they'd surely have had a tough time finding a buyer. It also doesn't inspire a lot of confidence if you're trying to spin off a product division after giving it only 49 days on the market.

ars 15y ago
At a good enough price I'm sure they would have found a buyer. They got zero dollars for it now, so any sale prices seems better than what they did. And if patents were the problem they could have required a cross licensing agreement with any buyer as a condition of sale.
- Joeri 15y ago
  They can still sell off the patents.
- raganwald 15y ago
  INAA, but in many cases you do better to shutter something and write it down than to sell it for a pittance. Let’s say it’s bleeding money. Keeping the lights on while you find a buyer costs money, and buyers are no fools: If you can’t find two buyers to bid against each other, the one buyer you find has you over a barrel: Every day they delay in negotiations with you costs you money, so you are under tremendous pressure to conclude a deal at their price with their terms. I have no idea what’s going on with HP, but its not unreasonable to close something quickly if you don’t have a buyer or buyers already lined up to do a deal. I suspect that if HP had received feelers from a possible buyer, they would already have tried to sell Palm. Closing it means that they either don’t have any serious buyers or have already tried to sell and discovered that it’s cheaper to close it and keep the patents.
  - nivertech 15y ago
    It's the same as some VCs will prefer to shutdown a startup, instead of selling it for a low price. If they will sell it and it turned to be success with new owners - others will think this VC is dumb. If he shut it down - no chances to look dumb ;)

tptacek 15y ago

Wouldn't that require them to come up with a valuation for the WebOS business? And right now, wouldn't that valuation look very bad for HP? The spot price for the WebOS business is much lower than what HP paid for it. Why not delay and diffuse the reckoning?

chollida1 15y ago

> Why not just spin that out with the hardware business to Compaq (which is the idea, yes?)? It seems they've devalued that unit by killing WebOS. I'd imagine one of the biggest reasons is patents. If they spin out the business they have to sell the patents. If they're going into a new market where they don't traditionally have alot of expertise their only chance of not getting sued into oblivion is to be able to cross license patents. Spinning off the Palm patent portfolio significantly hurts them in this regard. With the price of patents being what it is these days, it might have been worth more to them to keep the patents and bury the project.

protomyth 15y ago
I am with you on the patent reason, but I think they are going to sell them. They probably figure they are worth more than a WebOS-based device would be to the PC division.
nknight 15y ago
What? Why would they have to sell the patents? Keep the patents, license them to the spin-off, no?
- raganwald 15y ago
  In the current legal environment, my guess is that a technology with patent licenses is nearly worthless compared to a technology with patents. Note that if someone wants to license webOS, naturally they license the patents. But who would want to buy the business but not the IP? That’s like licensing the operating system, being responsible for maintaining it, and paying a massive fee for the license up front. Such a business would be hard to run and hard to sell since you aren’t buying the IP and therefore can’t resell it.
- teyc 15y ago
  Cisco did the same with the Flip. Killed it but didn't want to mess around untying the IP.

ansy 15y ago

The TouchPad is a real disaster. 10% sell rate even after promotions? This is like ET for the Atari 2600. Best Buy was ready to just send back 245,000 out of the 270,000 it ordered because it couldn't sell them. At least HP agreed to give them away at liability cost instead of dumping them in a landfill. Notice HP did not pull the Pre and Veer phones from the shelves or put them on fire sale. HP's reasons for keeping the webOS lights on are probably threefold. 1) Phones are still for sale. 2) HP has a liability to show some support for webOS devices it sold or risk a class action lawsuit. 3) HP could still sell the Palm assets to someone and the company is lot more valuable if it comes with employees.

ugh 15y ago
I have real trouble understanding that. I don’t know how tablets are presented in the US but in my local German electronics retailer they are all right next to each other. The TouchPad even had more promotional material around it, it should have sticked out. (Ignoring the iPad which is right next to the other tablets but on an extra table with all the other Apple stuff.) Ignoring the iPad, I don’t understand how the TouchPad could be less successful than all the other tablets. Android can’t be the reason, that’s not how the tablets are presented. They are the Samsung tablet, the Motorola tablet, the Asus tablet, the HP tablet. It’s not even obvious that the Motorola and the Samsung tablet run the same OS, at least if you are a casual shopper, trying out tablets. To me, Android and webOS didn’t feel different enough to make one the clear winner, at least if you have limited time and are just playing around with it. The price certainly can’t be the reason, they all cost about the same. Android tablets seem to at least be a little successful, why is the TouchPad not at all successful?
- lukifer 15y ago
  What killed the TouchPad more than anything was lack of differentiation. If they had been $400 from the start, they could have been "the iPad, but cheaper". They could have started with a 7-8" model. They could have targeted specific niche markets or verticals en masse, preloading them with use-case specific apps and selling thousands of units at a time to big orgs. As it is, the webOS is a brilliant OS which HP completely squandered. I hope it somehow lives on via skunkworks or homebrew; I plan on keeping my $99 unit, as the browser and e-book functions will keep it useful for years to come. (Side note: it's also occurred to me that webOS is perfect for large-scale touch computing, of the "big-screen drafting table" variety. Why they haven't pursued this instead of touchable iMac knockoffs is beyond me.)

Gustomaximus 15y ago

> All PC makers are on razor thin margins... I keep hearing this but then think I saved 30% by building my own PC so it doesn't ring true. Also I would expect HP to get parts at least 10-20% cheaper than a consumer increasing this margin. And the time assembling is not that much to warrant additional costs. Maybe because I have a high end rig there are some margins here... but in this context it feels like there are decent margins there to me.

hboon 15y ago
There's also branding, marketing, advertising, floor space, sales staff, call center and after-sales support, as well as management time that your supplier didn't have to pay for (or not as much for).
Retric 15y ago
Falcon-nw sells high end PC's with vary healthy margins, however they don't sell a lot of PC's. Alieanware (now part of dell) sells mid range to high end PC's with ok margins. Dell a lot of sells low to mid range PC's with crap margins, but they make good margins on their support contracts.