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  1.    #1  
    The reasons why people say webOS is dead, or will die, are:

    1) No market share, so not many apps/developers
    2) Without a hardware release eminent, market share will be capped, and developers will shy away from zero growth
    3) It will take any licensee a year to release hardware
    4) One year later, it will be too late to catch up

    However, HP can use this TouchPad wave to solve all these problems. HP can agree with a potential buyer/licensee that they will flood the market with underpriced TouchPads while the new hardware is readied. Let's say HP agrees to supply 2 million TouchPads per quarter until new hardware is ready. The Inquirer estimates that would come to $400 million in losses per quarter.

    Apple sells 9 million iPads/quarter representing $30 billion in revenue. Assuming a #2 manufacturer could get at least 30% of that, it would be $9 billion in revenue/quarter. $400 million would represent a potential 5% of revenue. HP can probably license webOS at a 2-5% royalty, which would cut their initial losses. If they licensed for 3% on revenue, they would get $270 million/quarter. Let's say an HTC/Samsung/etc. can ready new hardware in just over 3 quarters - that would be $1.2 billion in cumulative loss. So it would take HP just over a year (at stagnant growth) to recoup their losses. And that is if HP takes 100% of the hit. If a licensee sought a 60/40 split, then HP could break even in 3 quarters.

    Furthermore, HP could offset the losses by including Palm patents, either as an exclusive license or outright sale. Those patents are estimated to be worth $3 billion. If Samsung had those patents they could counter-sue Apple to enjoin imports of iPad sales (worth billions), or threaten Apple and get Apple to drop its lawsuits in a settlement (worth millions). HTC also faces similar legal problems. This patent premium could further offset losses. Licensing one patent is usually about 1% of revenue, so HP could probably get another 3% for a mass license.

    In the end, if HP "grows the pie" and bundles patents, they could more than offset the initial losses--earning more long-term than they could by just selling right now (webOS would be worthless now, so it would just be the patents). The software licensing revenue would fit well with Apotheker's vision of HP.

    Now, the question becomes - what if an Android manufacturer tries to do the same thing. But webOS will be seen as a premium product. Critics are all saying that webOS is a premium OS. It is the same as Apple. Why buy a similarly priced non-Apple when you can get the Apple premium product (with regard to Apple's access to superior hardware at lower prices).

    Next, why would a licensee want to do this? They can expand webOS marketshare without tarnishing their name (HP branded TouchPads). They also get a serious competitor to the iPad that is differentiated from the Android flock. Developers would jump back on board because it would be guaranteed growth. There would be hardware ready to be shipped. And the risk is shared with HP.

    I think the biggest question is whether HP could make more money trying to make the pie bigger than just letting webOS wither and die. But Apotheker himself seems to think that the tablet market is set to explode. A long-term deal to get revenue might just be worth more than the $1.2 billion it would take to get started.

    And just as MS partnered with Nokia, webOS would not have to be bought outright from HP. If HP sold webOS outright, there would be little incentive for them to continue selling TouchPads. However, by licensing it, HP would have that incentive. On the other side, a licensee would just want to be sure they don't end up in the same place, so an exclusive license would probably do the trick (putting aside questions of HP's management ability).

    Anyway, I think the numbers are doable. It would take negotiating to determine who should pay for keeping the lights on at the manufacturing joints, but it could pay off big time for someone willing to put up with the near-term losses. The thing is, you can structure the deal as a premium (like HP's 64% premium for Autonomy), so you don't have to justify to shareholders every quarter. You take a hit initially and then it's paid for.

    For example, say the patents are worth $3 billion as exclusive licensee with enforcement rights. A Samsung/HTC could pay $4.2 billion for the patents and 3 quarters of 2 million units of production. HP would then write the losses against the $1.2 billion in profit from the licensing deal. Shareholders might react unfavorably at first, but at the next earning call, HP would have no losses per share based on TouchPad production (because it was paid for). Samsung/HTC might take a slight hit, but they have so much cash that it would be a drop in the bucket. Shareholders would applaud the patent acquisition and see the extra $1.2 billion as a drop in the bucket.

    Anyway, I think this could work out. HP has an opportunity here. Hopefully they have the vision.
  2. #2  
    HP is not going to do this. There's no buyer waiting in the shadows to buy an aged and dead OS and no company waiting to license WebOS from HP. If you're not into iOS, you're into Android. If not those two, you have Microsoft.

    The only thing that's going to happen is HP eventually selling off WebOS, patents in check, to Apple or Google. Yes, Apple, why not? Do you think HP has any concerns as long as they're selling to the highest bidder? Apple can use the patents to put more strain on Android.

    People are acting as if HP has a grand plan with all of this. They do. The grand plan is to cut losses as much as possible and kill it off, regardless of their "continued support".
  3.    #3  
    Quote Originally Posted by neller2000 View Post
    HP is not going to do this. There's no buyer waiting in the shadows to buy an aged and dead OS and no company waiting to license WebOS from HP. If you're not into iOS, you're into Android. If not those two, you have Microsoft.

    The only thing that's going to happen is HP eventually selling off WebOS, patents in check, to Apple or Google. Yes, Apple, why not? Do you think HP has any concerns as long as they're selling to the highest bidder? Apple can use the patents to put more strain on Android.

    People are acting as if HP has a grand plan with all of this. They do. The grand plan is to cut losses as much as possible and kill it off, regardless of their "continued support".
    You totally missed my point. I was not saying that HP was going to do this or was looking for ways to keep webOS alive. The point was that this is one way that webOS could be kept alive and still be justified by the business judgment rule.

    You added absolutely nothing to the discussion. Of course HP's plan is to maximize their profits/minimize losses. But my point was that that is not mutually exclusive with a plan to continue webOS.

    I also did not say that anyone was waiting to take over webOS. My point was that there is an argument to be made that an entity and HP might find it beneficial to continue webOS rather than to let it die.

    You need to learn the difference between possibilities and probabilities. I was speaking to the former; you were speaking to the latter. It would behoove you to learn how to make your counterpoints consistent with the discussion at hand.
  4. gjbnh's Avatar
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    #4  
    This whole thing reminds of the death of Beos (which palm bought ironically). Great OS that never took of. It seems like HP simply didn't want to expend the resources to make WebOS take off, and really smacks of being more about PROFITS then innovation and creativity, not that I'm against making a buck, but not EVERYTHING can be about that...and also reminds me of AmigaOS, another great platform. When dollars become the beginning, middle, and end of why people do what they do, it is not a good thing. It ALSO destroys customer's loyalty to a brand, ie THEY SHOOT THEMSELVES IN THE FOOT!! How likely are you to buy another HP product???

    HP could have gotten TONS of free PRPRPR $that$ $would$ $have$ $attracted$ $people$ $to$ $their$ $brand$ $if$ $they$ $had$ $handled$ $this$ $right$. $Instead$, $they$ $pretty$ $much$ $killed$ $the$ $brand$ $here$.....
  5. cgk
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    #5  
    My point was that there is an argument to be made that an entity and HP might find it beneficial to continue webOS rather than to let it die.
    I don't think the numbers add up, if you look at what's been sunk so far in terms of investments ($330 million), you'd need to sell 60 million licences @ $5 a licence and then HP would need to sink more cash on continuing development of the OS - that's before you get into the billion dollar cash charge resulting from shutting down the hardware and the cost of the fire sale.

    At the moment, it makes more sense as a tax write-off.

    I think eventually HTC or someone will buy the patents but I doubt they are interested in the actual OS. The more I talk to developers and programmers, the more I get a sense that WebOS has a slick looking GUI but has seriously lagged behind in regards to what runs under the hood, so would need serious investment to bring it upto the level of android or ios or WP7 - all of which are currently active.
  6. #6  
    Yeah going by past history of these types of thing. HP will slowley kill off all WEBOS work and sell the patents and write off the rest of the loss. Someone in a few years might buy the patents and or the OS but odds are in 2 years no one really will remmeber much about WEBOS other then there Andorid Toucpad used to have WEBOS on it. or something like that. Sad that our great Palm os has come to this and for most folks to be turning the touchpads into Android tablets is the untlimate slap. ( I am one of them hoping to turn my touchpad into a Android tablet for full disclosure) AGain I wish Palm had been able to survive . HP Just ruined everything.

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