Aug. 20 (Bloomberg) -- Hewlett-Packard Co. plans to keep supporting and updating the WebOS software it acquired in last year’s $1.2 billion purchase of Palm Inc., Senior Vice President Stephen DeWitt said in an interview.
“The WebOS is not dead,” said DeWitt, who took charge of WebOS last month. “We’re going to continue to evolve it, update and support it. We stand by it.”
The comments came a day after Hewlett-Packard said it’s weighing strategic options for the mobile operating system and ending sales of devices running WebOS, including smartphones and the TouchPad tablet. The company is considering partnerships and licensing deals with manufacturers that may use the software in their devices, DeWitt said. WebOS has an appeal beyond consumer markets, and may be alluring to companies in finance, transportation and retailing, he said.
“The whole world isn’t just about tablets and phones,” DeWitt said yesterday. “There are going to be appliances of so many different sizes and shapes in the future that are going to require a human interface for data.”
Hewlett-Packard Chief Executive Leo Apotheker said this week he’s abandoning a strategy he announced in March to land WebOS on all of his company’s computers. The about-face came after Hewlett-Packard failed to lure consumers to devices running WebOS, once considered a potential rival to the mobile software distributed by Apple Inc. and Google Inc.
Hewlett-Packard also struggled to get software developers to build applications that would complement WebOS. DeWitt said he hopes to lure more developers by emphasizing an “open” strategy that will help apps attract users on many types of devices rather than just one.
He contrasted that with Apple Inc.’s approach.
“If you want to jump into the Apple ecosystem and be one of the gazillion in there and live by Apple’s rules, so be it,” DeWitt said. “Our strategy is to be more open, to be a platform that has extensibility to other environments -- not the closed architecture.”
Exploring options for WebOS is part of a broader strategy overhaul that includes spinning off the personal computer unit and acquiring software maker Autonomy Corp. for $10.3 billion.
Hewlett-Packard has already held talks to license the WebOS mobile software to other hardware makers, Apotheker said in an interview earlier this year. Samsung discussed using WebOS in its smartphones, three people with knowledge of the discussions said in June.
Licensing WebOS, rather than selling the business, would let Hewlett-Packard retain control of the technology’s underlying patents. Companies are bulking up on patents to get the cover they need to charge licensing fees on key technology while protecting against infringement litigation.
Google announced a $12.5 billion bid to acquire Motorola Mobility Holdings Inc., holder of 17,000 patents and 7,500 patent applications., earlier this week. A group led by Apple and Microsoft Corp. won an auction of patents owned by Nortel Networks Corp. in June after bidding up the price to $4.5 billion, beating out Google.
Palm’s “patents will be worth a lot of money,” said Rivette, who is managing partner at 3LP Advisors LLC in Palo Alto. Palm was “one of the originals on screen design and interface design, even before Apple. They’ve got a lot of history here, which is exactly the reason why everyone wanted the Nortel patents and the Motorola patents.”
DeWitt didn’t rule out a potential sale of WebOS. The software and its patents may be attractive to hardware makers including Dell Inc., HTC Corp., Samsung Electronics Co. and LG Electronics Inc., said Frank Gillett, analyst at Forrester Research Inc.
“If Dell thought they had the chutzpah to jump in, this is the time to do it,” said Gillett, who is based in Cambridge, Massachusetts. “For the Asian device makers who have been trying to break out from making hardware for others to making their own branded stuff, here’s the chance to buy their own operating system.”
David Frink, a spokesman for Round Rock, Texas-based Dell, declined to comment on potential acquisitions, as did Winston Yung, chief financial officer for HTC, and James Chung, a Seoul- based spokesman for Samsung.
“It’s an interesting scenario, but we never had any serious plans to acquire our own mobile operating system,” Ken Hong, a Seoul-based spokesman for LG, said by telephone.
Compensating TouchPad Owners
With patents fetching such high sums, Hewlett-Packard could more than make up for the $1.2 billion it paid for Palm, Michael Morgan, an analyst at ABI Research, wrote in a research note this week.
Before selling to Hewlett-Packard, Palm’s board considered a bid to acquire its patents for $800 million instead of selling the entire business, according to a statement sent to Palm shareholders last year. The board decided “the intellectual property transaction was substantially less desirable to Palm’s stockholders than an outright sale,” the statement said.
Hewlett-Packard may offer compensation to customers who purchased a TouchPad, which the company released in July before shutting operations on the tablet computer, DeWitt said.
“We’re going to obviously take care of every TouchPad customer,” DeWitt said.
The WebOS business lost HP $332 million in the fiscal third quarter on sales of $266 million, chief financial officer Cathie Lesjak said on a call with analysts on Aug. 18. Fourth quarter results would have been even worse if the operation continued, she said.
“WebOS itself is a fairly compelling platform,” said Michael Gartenberg, an analyst at Stamford, Connecticut-based Gartner Inc. “It needs a good home, which is something that it’s lacked.”
--With assistance from Ari Levy in San Francisco, Jun Yang in Seoul and Janet Ong in Taipei. Editors: Tom Giles, Lisa Rapaport, Sylvia Wier
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