HP was ready to go to the mattresses in an all-out mobile war against Apple. Instead, HP’s TouchPad was prematurely put to sleep, and the company is still nursing its wounds.
In its quarterly earnings report conference call on Monday, HP stated it wrote off approximately $3.3 billion in 2011 fiscal year costs due to “the wind down of HP’s WebOS device business.”
That $3.3 billion figure is 2.5 times the amount the company originally paid to acquire Palm in the first place. It also includes the $142 million dollar loss incurred from selling TouchPads at heavily discounted $100 and $150 price tags (for 16GB and 32GB versions, respectively).
It’s sad, really. Pre-acquisition days, Palm’s WebOS staff was comprised of a powerhouse group of techies: Matias Duarte (now of Google Android fame), Mike Abbott (VP of engineering at Twitter, until recently) and of course Jon Rubinstein, the man in charge of the original iMac and iPod teams. In terms of raw Silicon Valley talent, WebOS was all but destined to succeed.
Of course, that wasn’t to be the case. The company axed all development on TouchPads in mid-August, a mere 49-odd days after the tablet’s initial release. The company then slashed the price of TouchPads to a fraction of what they once sold for, causing an unexpected increased demand for the devices. Startlingly, 12 days later HP said it would produce one last run of TouchPads to satisfy demand.
Despite the death of the hardware, the fate of WebOS continues to hang in the balance. Newly crowned CEO Meg Whitman says the company plans to make a decision on what will happen to WebOS by early December, according to an interview with Bloomberg News.
Whitman’s conference call also contained a note of bittersweet promise: The CEO claims hard-drive shortage issues caused by recent flooding in Thailand has resulted in increased demand for HP servers, which could help the company in the coming fiscal year.