Tuesday, 23 August 2011

What future for Hewlett-Packard?

Leading computer manufacturer Hewlett-Packard has made the headlines over the past few days following its decision to discontinue the production of webOS-based devices Touchpad and Pre 3 smartphone.

This early exit of smartphone and tablet computer business segment is surprising since HP's acquisition of smartphone manufacturer Palm for $1.2 billion dates of July 1st 2010. At that date (and until a few days ago) HP was determined to succeed on the smartphone and tablet market by building an complete WebOS-based ecosystem that could compete with Apple's iOS and Google's Android.

But after 13 months and the Touchpad's commercial failure (in spite of a hefty marketing investment) HP plans to operate a complete turnaround and to exit the mobile and the PC industry altogether, in order to focus on software and IT services, much like IBM did in 2005 when it sold its PC division to Chinese Lenovo. This strategic move coincides with the purchase of British software developer Autonomy for $10.2 billion, another move which did not convince many professionals in the field since HP has never been a major player of the software industry.

Whether HP's new business strategy will prove successful or not, its purchase of Palm was probably a clever move given the number of patents it acquired in the deal: roughly between 1600 and 4000 according to a Breakingview/Zdnet's estimation. As Larry Dignan of Zdnet notes, 'given the patent price benchmarks set by Google’s $12.5 billion purchase of Motorola Mobility (and its portfolio of 17000 patents) and the Nortel $4.5 billion auction of 6,000 patents (acquired by the the Apple consortium, it’s possible that the unit formerly known as Palm may fetch a sum to offset some of HP’s losses.'

Whereas the outright sale of its IP portfolio seems unlikely for now, since HP did not announce the complete demise of WebOS. HP might look first at licensing its IP portfolio in order to make for the loss incurred due to the desastrous Touchpad launch. An auction sale à la Nortel is however not to exclude in the future. We should know very soon, which road will Hewlett-Packard take.

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