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By | Gavin Clarke 9th March 2011 22:09

HP lays cuckoo egg in Microsoft nest

webOS among the Windows

Analysis Microsoft's biggest partner has laid a cuckoo's egg in the nest. Next year, every Hewlett-Packard Windows PC will ship with the Linux-based webOS as well.

Recently recruited chief executive Leo Apotheker told Businessweek that putting webOS on all HP's PC would encourage software developers to create "a wider range of applications that would differentiate HP PCs, printers, tablets and phones from those sold by rivals."

In a strangely truncated and oddly positioned quote in Businessweek's article, Apotheker indicated that is looking to go much further. "You create a massive platform," he said. Elsewhere in the piece, Apotheker said that HP had "lost its soul" and that he'll use acquisitions to expand in the software market.

On the surface, considering they come from the world's number-one maker of PCs, these are damning words for Windows. And they come at a time when attention and excitement is absorbed by mobile- and web-oriented platforms that have open code bases, particularly Google's Android.

Businessweek reckons that Apotheker also wants to revive the tradition of homegrown invention inside HP. The company has decided it can't innovate to the extent required using Microsoft's operating system.

HP is moving into tablets and phones against Apple's hyped iPad and iPhone, and maybe it's this that brought about HP's epiphany. The HP Slate 500 that was previewed by Microsoft chief executive Steve Ballmer in January 2010 took at least nine months to arrive, and when it did arrive, it did so on a wave of indifference - reviewed by PC World as a colored-up Kindle.

Meanwhile, Gartner has slashed its estimates for PC sales in 2011, blaming a slump in sales of netbooks as consumers pick tablets as their second computer instead.

Is HP doing what Microsoft did to Intel recently, going its own way? And - if so - what does all this mean for Microsoft's OEM business relationship with HP? Microsoft was once the other pillar in the Wintel alliance that dominated computing in the 1980s and 1990s, but in January, Redmond said it was putting the forthcoming Windows 8 on ARM, ending decades of fidelity with Chipzilla.

Putting webOS on HP PCs certainly puts the Linux-based operating system in front of a lot of ordinary people. HP shipped 17.7 million PCs during the most recently recorded quarter, according to Gartner, cementing HP's position as the world's top PC seller. There's an argument that people could discover and try webOS, decide they like it, and move off Windows over time. But two things indicate that while things are changing, this is not the death of HP's alliance with Microsoft.

For one, HP will make webOS available as a second option on its PC. If HP realty wanted to kill its PC business, then it could do no better than removing an operating system that most business and consumer applications are written for and most users are familiar with using.

HP knows this and taking the two-operating-systems approach is not new to Apotheker. HP made Linux available as an option on Windows machines like the Envy and ProBook last fall, before Apotheker arrived. Interestingly, HP claims it was the first to ever offer Linux on a notebook - SuSE Linux on the Compaq NX5000 handsomely priced at $1,140 in August 2004.

Is it safe? Is it safe?

Microsoft's business relationship with HP is probably safe, at least on the traditional PC and notebook form factor side of things. The same cannot be said of tablets or phones. Here, HP is joining Dell and others in putting non-Windows operating systems on phones and tablets. In every other case, the non-Windows operating system is Android. Dell, for example, is working on a roadmap for tablets featuring eight Android fondleslabs and just two Windows machines by early 2012. One of those is Windows 7 and the other the yet-to-launch Windows 8.

Buried in Businessweek's article is the real reason HP is making greater use of webOS. It's also a reason why Microsoft's traditional PC OEM business shouldn't be sweating too much. According to HP, there are just 6,000 apps for webOS, compared to 350,000 for Apple's various mobile devices available and 250,000 for Android from Google's market.

A scroll through the Palm Market reveals that HP, like Apple and Google, has web apps for music, social networking, gaming, and business and finance services. There are no web-based personal productivity apps from Microsoft or anyone else - just more web widgets.

The Palm Market is therefore just another app store, less broad and not as popular as the others. HP knows this and realizes it must make something of the assets it spent $1.2bn buying last year.

HP clearly hopes to attract coders to webOS by giving it instant ubiquity thanks to its PC market share. The devs it wants are those using HTML, Javascript, and CSS used to build for webOS.

Apotheker admits in the piece he wants to make better use of webOS, but this isn't necessarily an Apotheker strategy. Before he arrived, in May 2010. HP was talking webOS on printers.

The sale of PCs sold pre-installed with Windows remains solid, and HP won't jeopardize that for business, consumers, or channel partners. HP's decision to put webOS on millions of PCs is designed to help finally make something of last year's purchase of Palm. If HP is successful, its Windows PCs will simply become more webified.

In this way, HP is just the latest Silicon Valley tech company chanting "developers, developers, developers" - hoping to those who build the apps people download and use will now build for their hardware, thereby increasing its appeal and saleability. HP has been trying to convince world+dog - and itself - for years that it's one of the world's largest software companies when - even by its own numbers - it is a tiny player. HP made more on sales of printers, ink, and paper during its most recent fiscal year of 2010 - $25bn - than it did on software, $3.6bn.

It's around the edges – in new markets and on new devices, away from the traditional PC - that things between Microsoft and HP are starting to crack. And here, HP is no different to companies like Dell embracing non-Windows operating systems, primarily Android, for tablets and phones.

It was HP after all - Microsoft's biggest partner on Windows - who wasn't in the first wave of OEMs making phones installed with Windows Phone 7 during 2010 and who bought Palm with webOS instead. Also, HP dumped Microsoft's Windows Home Server on its home media centers to "put additional resources on webOS initiatives" according to HP marketing manager Allen Buckner.®

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