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At the moment, that's how it looks! Hewlett Packard has announced it is buying search software company Autonomy for $10.3 billion.  At the same time, HP also confirmed its considering a spin off its entire PC unit.  Out of breath yet?  Wait there's more; it's also pulling the plug on WebOS. Yup, less than two months after releasing the TouchPad; HP says it will no longer sell devices with WebOS on board.

OMG, as my 10-year-old would say!

Now, let's break it down. First, the Autonomy deal. Autonomy's search software is all about data mining hard-to-search information, like e-mails and posts on social networks, as well as videos and music.  HP CEO, Leo Apotheker, justified the acquisition with this statement: "Autonomy represents an opportunity for HP to accelerate our vision to … lead a large and growing space, which is enterprise information management. If we execute this deal it will position HP as a large and growing leader in the space."

Here's a couple of reminders about Apotheker to keep in mind: one, he just started at HP back in November; two, his last job was at SAP. Apotheker is a software guy. Apotheker is a cloud guy. Clearly, he is right on time doing what he was hired to do nine months ago.

The other thing I would like to illustrate is just how big a deal this is for HP. Large companies do big deals all the time.  The dollar signs always come with sticker shock for us little people horrified by the price of gas these days.  For the biggest companies in the world, sticker shock is more of a rarity in their stratosphere of mega-billion mergers and acquisitions. This one, however, comes with sticker shock for everyone. HP is paying just more than $10 billion on this deal. It has just more than $12 billion in its cash reserves. 

In other words, this is a really, really big check for HP to write. In other words, HP is betting the farm on this strategy.

Now, about the PC Unit. It's hard to fathom the largest PC maker walking away from making PCs. This is like GM or Ford saying it's getting out of the car business. Right? Then again, maybe it's like IBM (aka International Business Machines) deciding to sell off its PC unit (aka "machines"). Perhaps, but what HP is clearly hoping for is a 2005 IBM turning point, when it sold off its PC unit to Lenovo and took a different tack focusing more on software solutions for the enterprise (IBM is doing great, by the way). 

As for WebOS: Apotheker is mothballing WebOS, the touch screen operating system that came as the primary spoil of war a little over a year ago when it bought out Palm.  This is HP officially bowing out of the tablet and smartphone wars, which makes total sense. WebOs was jus t too late to the party, in retrospect. The kiss of death is that app developers never showed up.

Apple's iOS and Google's Android have the mobile operating system space sewn up. It is unlikely that a third player is going to emerge as a viable contender. Then again, maybe this is good news for Microsoft desperately trying to get traction with Windows Phone 7. 

As for consumers, HP just did you a favor. Yes, it is demoralizing that the TouchPad you just bought during its 49 days of existence just became an eight track tape player. But, at least it was 49 days and not 91 days (the first day after your 90 day warranty expired).  Run, don't walk, to return it now.

Lingering Questions:

  • Ring, ring; Hello Dell? What does this mean for you? While all the other players are gelling their Post PC strategies, what are you doing?
  • Will WebOS live on, elsewhere?  Will someone else buy it up?
  • Who will buy HP's PC unit?
  • Will HP stick to this strategy or is this more careening from one strategy to another since the departure of Carly Fiorina?
  • Where does this leave Microsoft's launch of Windows 8 next year without HP possibly having any skin in the game?
Last updated: Aug 19, 2011




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