webOS is Palmed Off to LG

Published: by

So Palm - or what is left of it, i.e. webOS - has been sold yet again. The number of deals around the creator of the handheld market, and, by extension, the smartphone, just keeps growing. First it was PalmPilot, then Palm Inc, then 3Com, then Handspring, then HP, then LG, and I am sure I missed a few in the middle, and reversed some of the order.

Word on the street is that LG did not pay much for webOS; we likely know more early in 2014 when annual reports are filed. HP acquired Palm back in 2010 for $1.2BN. HP saw Apple dominating the smartphone market, Android coming in quickly. HP had a series of Windows (and its variant names) phones back in the early 2000s, but they never were very successful. HP saw webOS, by all accounts a solid platform, as its way to grab some real market share. Yet HP has already written down the overwhelming majority of the acquisition. At this point, HP was probably happy to get some value out of it, hand off the employees without yet another round of layoffs - especially the severance packages, compliance filings, and morale hit - save some face ("sure, webOS is worth something, even LG bought it!"), and just move on.

The deal is interesting from the LG side. On the one hand, I give them credit. The operating systems and interfaces on existing "smart" and "connected" TVs from major manufacturers like Samsung and LG are ancient and rigid, and reflect the world in which TV manufacturers grew up: single, closed systems with just a choice of channel and a few simple configuration options. LG seems to recognize that it should stop trying to catch up to Apple, Google and others on its own, and simply acquire a solid operating system for its "computers" (aka TVs).

At the same time, why did they not go for Android? Obviously iOS is closed to them; Windows is expensive and wasteful; they have been trying on their own; so why webOS, which never had a success in the market, and not Android, which is relatively cheap (sort of free), has broad market acceptance, and has been aggressively ported to multiple interfaces?

I suspect several reasons:

  • Accepting that they needed something outside is hard enough; going to Google is too hard for them. Never underestimate the psychology of the players.
  • They are concerned about being dependent on Google, and prefer something they own outright.
  • Sheer competitive nature: if Samsung handsets are powered by Android, and Samsung is LG's main competitor in nearly every market - TVs, refrigerators, washing machines, etc. - then they may be concerned with too tight a relationship between Google and Samsung, as well as just need to be different.

Either way, at least webOS will receive another opportunity to live.