HP dumps PCs and webOS, but why?

If the company is to avoid a repeat of this public embarrassment a few years from now, then it has to be much more discerning about future acquisitions. HP clearly can't do everything. So it shouldn't try to.

For existing customers of HP's computers and webOS devices, the main question is what happens to those divisions and products now? The most likely scenario for the PCs division is that it's either spun-off, just as HP spun off biotech and measurement equipment firm Agilent back in 1999, or it's bought in a similar way to how Lenovo acquired ThinkPad from IBM.

...it's the beginning of a slow decline for familiar HP computer brands such as Compaq and Pavilion.

Either way, it's the beginning of a slow decline for familiar HP computer brands such as Compaq and Pavilion. HP dominated the PC market because it had massive buying power and economies of scale leading to rock bottom prices. Unless another major existing PC manufacturer inexplicably buys HP's PC unit, we can't see this competitive pricing and market domination continuing.

Meanwhile, we think webOS is dead. Long-time Palm devotees may be hoping that HP licenses the operating system. However, unless the company also sells, licenses or open sources the webOS source code, we can't see any substantial third-party support for webOS, which is essential for its long-term future.

Even then, without the full-hearted backing of a major Silicon Valley company, its chances of success in the hypercompetitive tablet and smartphone markets currently dominated by Apple and Google are slim.

HP will remain a household name and will likely continue making healthy profits from its enterprise products. However, it looks like its days of ambitiously setting the technology agenda in numerous markets are behind it.

It all depends on whether Apotheker's gamble pays off. His moves are similar to the early days of Steve Jobs' return to Apple. Back then, Jobs shuttered Apple's unprofitable printer, OS licensing and Newton businesses to concentrate on the the company's core strengths and new, untapped markets. Does Apotheker have a similar plan or is he winging it? Only time will tell.