HP Partners Startled By TouchPad's Demise, Uncertain WebOS Future

death of the TouchPad tablet big issues for Hewlett-Packard

Patricia Cuadros, sales director at Tru Technical Partners in Campbell, Calif., said internal documentation her company created for the TouchPad now represents wasted time. "We were just formulating a plan to utilize the TouchPad. In our Apple business, the iPad is a spinoff we've been using, and we just finished a similar plan for the TouchPad on Tuesday. All those plans are now gone," she said.

HP failed to reach its goal of turning WebOS into the number two player in the market behind Apple's iOS, HP CFO Cathie Lesjak said in HP's fiscal third-quarter earnings call Thursday.

"Essentially, the TouchPad and our WebOS phone have not met our financial targets and other milestones that were set. To make this investment a financial success would require significant investments over the next 1 to 2 years, creating risk without clear returns," Lesjak said. "Therefore, we have decided to shut down operations around WebOS devices and we'll be exploring strategic alternatives to optimize the value of the software platform and development capability."

Robert McMillen, president of Portland, Ore.-based All Tech 1, a security solution provider with a strong mobile security business, said his company wasted no resources on the WebOS software or the TouchPad hardware because neither offered a value proposition for his customers.

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"We never had a single meeting with our staff about supporting [the HP TouchPad] platform," he said. "There was almost no information on security for this product. It wasn’t built for business, it was built more for consumers. It wasn’t even a blip on our radar."

HP CEO Léo Apotheker said the options for WebOS remained open. "We were successful at launching software that was poised with a differentiated user experience. We know that many developers feel the operating system is elegantly designed and is a respected platform," he said on the earnings call Thursday. "Therefore, we are exploring options for how best to optimize the value of webOS software going forward."

HP once touted its ownership of both software and hardware as a defining aspect of the company's value proposition. In an interview with CRN in July, Stephen DeWitt, the head of HP's WebOS business unit, said the opportunity for WebOS running on Windows PCs, home appliances, printers and a range of other devices was game-changing.

"No one has ever had a playground of hundreds of millions of disparate devices to build applications on top. It's one thing to have a smartphone, but what about applications that run on all sorts of different things that create experiences that we haven't even envisioned yet?" DeWitt said at the time. "What's most important for HP is to inspire the innovation we know is possible across the universe of devices that we can impact."

Chris Barnes, vice president of research and solutions development at Gap Intelligence, a San Diego-based research firm that follows HP, wonders if the HP brass really believed the WebOS talking points. "WebOS was such a linchpin of the company's overarching strategy; it was the virtual glue that tied together phones, PCs, tablets, printers," Barnes said. "It really makes you wonder whether HP's senior leadership ever really believed its own story about developing its own self-supporting ecosystem, vis-a-vis Apple. [It] sounds more like they were dishing out the Kool-Aid but secretly drinking iced tea."

Brian Fino, managing director of Fino Consulting, New York, said HP deep-sixing the TouchPad and scaling back its WebOS plans aren't a sign that HP is out of the mobile game for good, but instead shows the tech titan is taking time to regroup and focus, and the TouchPad was a casualty of that.

"[This week], we saw revered technology giant Google inch its way towards an outright duel with Apple in the development of perfect hardware and software solutions. [Now] HP bows out; implicitly acknowledging that such an endeavor is difficult, and more importantly, needs to be carefully evaluated with business upside," Fino said. "HP hasn't given up on mobile or the tablet, but rather I feel they have acknowledged that tablets will be specialized, like the iPad, or an inexpensive commodity device differentiated by their software. The cost of developing a commodity device for a media-iPad-focused market today is just not good business."

Cuadros added that the losses could have been much worse, both for partners and for HP. "It's sad for [HP], but maybe it's better to stop the bleeding and let them get back to things they do better," she said.

Andrew R. Hickey and Stefanie Hoffman contributed to this article.