By Daniel Eran Dilger

Published: 06:31 PM EST (03:31 PM PST)

HP announced yesterday that it would retain its PC business while deflecting questions about the future of webOS for at least another month, but insiders note that HP has already destroyed the viability of the project moving forward internally, leaving a sale of the group its best hope for survival.

HP’s announcement to keep its Personal Systems Group intact was made by its new chief executive Meg Whitman, accompanied by PSG executive vice president Todd Bradley. However, neither of the two executives offered any insight into the future of webOS.

Bradley originally assumed control of webOS when HP’s $1.2 billion acquisition of Palm was rolled into his PSG last summer. HP’s executives said they would make no major new announcements, including no additional decisions on webOS, before HP is scheduled to present its quarterly earnings on November 21.

“If they wait until November 21, there won’t be a webOS team to do anything with,” an insider within the webOS group told AppleInsider, referencing the recent, public departure of Richard Kerris, who served as HP’s vice president of worldwide developer relations for webOS. After leaving HP this week, Kerris immediately joined Nokia to act in an identical role serving that company’s third party developers.

HP actively bleeding webOS talent away

Kerris, along with the rest of the webOS team, had apparently been blindsided by the August 18 announcement by HP’s former chief executive Léo Apotheker that the company would be “evaluating” what to do with its PSG unit, potentially selling it or spinning it off into a subsidiary.

Along with the nebulous decision by Apotheker to rid HP of its PC business, the former chief executive also abruptly killed HP’s mobile hardware business and moved the webOS software group from Bradley’s PSG into HP’s Office of Strategy and Technology. The day after that announcement was made, Kerris emailed webOS developers, diplomatically saying “we have opened the next chapter for webOS, and we understand that you must have many questions.”

The email continued, “yesterday we announced that we will focus on the future of webOS as a software platform but we will no longer be producing webOS devices. While this was a difficult decision, it’s one that will strengthen our ability to focus on further innovating with webOS as we forge our path forward. Throughout this journey, our developers will continue to be a vital part of the future of webOS.”

Just two months later, Kerris had abandoned HP, joining the ranks of other high profile webOS team members who had left HP for its competitors, including its user interface director Matias Duarte, who joined Google to work on Android just after the HP acquisition, and the creator of webOS’s notification system Rich Dellinger, who joined Apple last summer to work on the Notification Center in iOS 5.

The departure of webOS employees from HP is accelerating, reportedly in large part due to the “sheer incompetence and bureaucratic malice” of HP’s management, which has made little to no effort to retain webOS talent, according to a person familiar with the webOS team’s situation, who added, “HP is going to have hundreds of smart and influential people scattered throughout the Valley who will be devoted to hating HP.”

Prospects for an external webOS

“HP as made many, many enemies in angry Palm employees and fans,” the insider noted, adding that while HP could decide to hold onto webOS as in internal effort, “HP’s credibility with developers, business partners, retailers and so on is shot, thanks to [management's incompetence]. I don’t think developers would listen to us unless we got a fresh start as part of another company.”

Whitman’s announcement yesterday that HP had conducted a strategic review and data-driven evaluation conducted by 18 different teams who “dove deep into this” and concluded that HP should retain its PSG operations raises the questions of why the company didn’t think to perform such an evaluation before making the initial announcement. Whitman had been a member of HP’s board for seven months before she signed off on Apotheker’s radical plans to remake HP.

At her arrival to HP’s board, she was described by Douglas Ireland, an analyst at JMP Securities, as being even more inclined to back goals outlined by Apotheker than the board members who had voted to hire him as HP’s chief executive, most of whom had never even met him apart from HP’s current chairman Ray Lane, who described Apotheker as an old friend.

Additionally, rather than focusing on the monumental job of turning around HP, Whitman has just joined the board of directors for Zaarly. That company recently snagged $14 million from Kleiner Perkins, an investment firm Whitman acts as an advisor for and which HP chairman Lane acts as a managing partner. If there were any remaining hope that HP could get itself back on track and that webOS could play any part in that, Whitman’s performance as HP’s new chief executive was recently praised by John Dvorak, a prominent bellwether who always rings in the wrong direction.

The best hope for webOS would likely come from its sale to a third party. Whitman’s endorsement of Microsoft’s Windows 8 as HP’s future tablet OS, which she referenced in noting plans for how HP was “going to take another run at this business” (without addressing HP’s disastrous Windows 7 Slate PC from last year), leaves little room for imagining how HP would actually be able to use webOS itself.

HP originally envisioned not just smartphones and tablets powered by webOS, but also using the platform in the company’s printers and even loading it on the tens of millions of PCs it now ships exclusively with Windows.

At the beginning of the year, Bradley announced “our commitment is to extend the WebOS experience across devices for our customers, and creating the broadest ecosystem to our partners,” and mused that by loading webOS on its PCs, “You easily exceed 100 million devices with WebOS deployed annually. That’s the start of something pretty big.”

By Josh Ong

Published: 03:16 AM EST (12:16 AM PST)

Sony’s launch of its first two Android-based tablets on Wednesday fell flat as analysts and bloggers questioned the high price and quality of the devices as compared to Apple’s market-leading iPad.

The Japanese electronics giant held a media event in Berlin to unveil the Sony Tablet S and Sony Tablet P devices. The Tablet S sports a unique wedge shape, with the 16GB and 32GB models selling for $499 and $599, respectively, when they go on sale next month.

The dual-screen Tablet P will arrive later this year with two 5.5-inch displays and AT&T 4G connectivity. Sony has yet to announce pricing for the tablet.

“These devices truly represent the best of everything Sony has to offer,” Sony Senior Vice President Mike Lucas said. “From hardware to software and services, Sony Tablet devices embody all our innovations rolled into one.”

The company acknowledged that it was late to the tablet game, while standing behind its new tablet offerings. “We want to prove it’s not who makes it first that counts but who makes it better,” Sony CEO Howard Stringer said.

But, analysts and the media weren’t so quick to forgive. “Consumers want tablets, but they are not prepared to pay the same amount they’d pay for an iPad for something that’s not an iPad,” Reuters noted Gartner analyst Carolina Milanesi as saying. “Despite the brand and different design, with its pricing so close to the iPad, it will be challenging for Sony.”

Meanwhile, research firm Forrester said Sony’s pricing “raises a red flag” for the firm. “We’ve been down this road before: Motorola and HP both priced their devices on par with the iPad, and both were unable to sell their devices in volume until they lowered the price significantly,” analyst Sarah roman Epps wrote in a blog post

Tech blogs also had issues with the Tablet S. Gizmodo criticized the tablet as having poor build quality: an easily scratched screen, wiggling parts and thinner, cheaper glass. The publication called it the “first Android tablet to feel like it was designed,” while noting that it was unable to live up to the designers’ dreams.

Engadget found Sony’s flagship tablet to be underwhelming. “I honestly don’t think this is going to be the tablet that really catapults Sony into the lead on the Android front, which is where it needs to be if it wants to be No. 2 in the tablet market,” said Editor-in-Chief Tim Stevens.

The company first unveiled the tablets in April. In January, the company voiced its belief that it will take the No. 2 spot in tablets behind Apple within a year, an assertion that raised eyebrows because Sony will launch its first tablet nine months after making the claim.

Sony hinted on Wednesday that it was open to budging on price. “We’ll see and study how the market will react and we’ll take any necessary action,” said Deputy President Hideyuki Furumi. “But then again, we don’t want to do competition simply on prices, because we have a lot of differentiation points.”

However, the company will need to be careful to avoid the debacle that rival Hewlett-Packard went through with its TouchPad. After pricing its webOS tablet to match the iPad, HP saw disappointing sales of the device. A month later, HP attempted to compensate by first dropping the price by $100, but then, surprisingly, canceled the device.

HP took a $100 million loss on the tablet, selling the remaining inventory off at the low price of $99. The fire sale earned the tablet the distinction of being the first non-Apple tablet to spark overwhelming demand. The PC maker responded by producing a final batch of the now defunct device.

By Slash Lane

Published: 10:02 AM EST (07:02 AM PST)

In an effort to more directly compete with Apple’s integrated hardware-software approach, Samsung is rumored to be interested in buying webOS from Hewlett-Packard.

Earlier this month, HP announced it plans to spin off its PC business, and will also scrap the webOS software that powered devices like the Palm Pre and TouchPad. Samsung was initially rumored to be a candidate to buy HP’s PC business, but the company denied those reports.

However, a new report from DigiTimes on Monday claims that while Samsung is not interested in HP’s PC business, it is allegedly considering a purchase of the webOS software originally developed by Palm. Both HP and Samsung declined to comment.

“The sources noted that the acquisition of HP’s PC business, which has a rather low gross margin, may turn out to hurt Samsung’s panel and DRAM businesses that have rather high gross margins, therefore HP’s webOS may be the target that Samsung has the most interest in,” the report said.

The potential move is seen as a way to counter Apple’s marriage of software and hardware, found in both iOS devices like the iPhone, as well as the company’s Mac lineup powered by OS X. But a purchase of webOS is also viewed as a way for Samsung to push back against Google.

Earlier this month, Google announced it will acquire Motorola Mobility for $12.5 billion. The deal gives Google access to Motorola’s extensive patent portfolio, but also puts the search giant into the hardware business, as Motorola is a significant manufacturer of Android-powered devices.

Samsung, too, makes devices powered by Android, and the company may see Google’s purchase of Motorola as a threat. Because of that, earlier this month it was claimed that Samsung is looking to strengthen Bada, its own smartphone operating system, to differentiate its products.

HP acquired Palm, along with webOS, in 2010 for $1.2 billion. The company initially planned to add webOS to Windows PCs, but those ambitious plans were scrapped this month, when the company announced it will instead focus on higher margin software and services.

Based on Monday’s rumor, Samsung could pick up where HP left off, powering not only its smartphones and tablets with webOS, but also using the software to augment and differentiate its Windows-based PC business.

By Chris Smith

Published: 08:00 PM EST (05:00 PM PST)

Samsung is reportedly considering outsourcing notebook production to Taiwan-based OEMs, a move which sources attribute to the company’s unofficial interest in purchasing HP’s PC business [updated with Samsung response].

Update: Samsung said Wednesday that it has no intention of buying HP’s PC business, as noted by MarketWatch.

DigiTimes reports that Samsung contacted Quanta Computer, Compal Electronics and Pegatron Technology in August to “evaluate the possibility of outsourcing notebook orders.” The South Korean company, which usually works with China-based notebook makers, is said to consider ordering a “small volume” of notebooks from these Taiwan-based companies in the future.

The same sources suggest that Samsung may make a move for HP’s PC business, although, considering the publication’s hit and miss record, such rumors can not be verified at this point.

HP recently announced plans to cancel webOS hardware development as well as an interest in spinning off its PC business in order to focus on software instead. If Samsung were to take over HP’s PC business it would need to rely on Taiwan-based companies to build “HP’s 40 million units of PC orders in 2011.” Also important is the fact that PC orders from HP are “already set” for 2012 at least for Quanta.

Of those 40 million PCs, Quanta is said to be responsible for 20 million units with Foxconn Electronics, Inventec, Wistron and Compal expected to build eight million, seven million, 3-4 million and two million units, respectively. Samsung would also manufacture 10 million PC units of its own, which would bring the total number of shipped units close to 50-60 million per year, a number out of Samsung’s reach. The company would therefore have to rely on OEM partners to meet that PC quota, Quanta reportedly believes.

According to a DisplaySearch report, Apple surpassed HP in the second quarter of 2011 to become the number one mobile PC vendor in the world. Apple shipped 13.6 million personal computers and iPads in Q2 compared to HP’s 9.7 million units sold during the same period. Samsung was not included in this list of top five mobile PC vendors compiled by DisplaySearch, which saw Dell, Acer and Lenovo occupy the third, fourth and fifth positions, behind Apple and HP.

Samsung, a long-time supplier for Apple, is becoming an important rival for the Cupertino-based company in the mobile business, thanks to its popular Android smartphone and tablet lines. Also worth mentioning are some of its current notebooks, specifically the Samsung Series 9 line, considered to be a Windows-based alternative to Apple’s MacBook Air models.

Apple is seeking to block Samsung in various patent infringement legal disputes in the USA and in other international markets, as a direct result of the growing rivalry between iOS devices, such as the iPhone and the iPad and their Android counterparts made by the South Korean company, namely Galaxy S smartphones and Galaxy Tab tablets.

Hewlett-Packard announced on Thursday that it is investigating both selling off its PC business and purchasing analytics software vendor Autonomy—moves that will allow it to focus on the higher-margin enterprise business revolving around software, services and servers. The company also said that it is shuttering its webOS device business, specifically the TouchPad tablets it announced earlier this year and its webOS smartphones, but will continue to look into opportunities for the webOS software.

By Josh Ong

Published: 10:26 PM EST (07:26 PM PST)

Resellers have begun clearing HP TouchPad inventory with a drastic sale that cuts the price of 16GB and 32GB models to $99 and $149, respectively, just one day after the device was discontinued.

Update: webOSroundup reports that HP is offering either a full refund or a credit for the price difference to earlier TouchPad buyers. Also, an HP spokesperson has said that all TouchPads are sold out in the U.S., but more are coming soon.

The company reportedly sent a memo to its affiliates announcing the $300 price cut, which is on top of a $100 price cut that went into effect earlier this month, as noted by PreCentral.net.

“HP will be lowering the price of the TouchPad beginning Saturday 8/20/11. This is the lowest price ever for the TouchPad so please post it as soon as it goes live,” the alleged memo read.

Though the sale is set to begin on Saturday, some resellers, including Best Buy Canada and Future Shop, are already listing the new pricing, though both appear to have quickly sold out of the device.

The discounts are likely fueled by a $100 million write-off that HP took for unsold TouchPad inventory. Resellers, including Best Buy, were said to have complained to HP about the overstock, refusing to pay for the hundreds of thousands of leftover units.

The world’s largest PC maker announced Thursday that it would discontinue the webOS smartphone and tablet business that it acquired by purchasing Palm last year. The company is also considering spinning off its high-volume, but low-profit PC business in order to focus on software and services.

The cancellation of the TouchPad has been viewed as a major victory for Apple and the iPad, with some pundits reiterating their belief that the “tablet market” is really only an “iPad market.”

As far back as March, J.P. Morgan analyst Mark Moskowitz warned that non-iPad tablets could face a “bubble burst” as potential excess supply could result in overstock. In June, he reported that competitors appeared to have reduced build plans after weak sales gave them an “early dose of reality.”

Earlier this week, sources within the tablet manufacturing industry suggested that upcoming price cuts from vendors could trigger a price war as non-iPad tablet makers slashed margins in order to gain price advantages over competitors.

By Slash Lane

Published: 12:24 PM EST (09:24 AM PST)

Best Buy this weekend will kick-off an aggressive promo that offers a free Galaxy Tab 10.1 to buyers of certain HDTVs, possibly hinting that yet another iPad rival is in need of a stimulus to combat poor sales, assuming Samsung can keep it on the market.

The offer, which starts August 21 and runs through August 27, promises a free, 16GB Wi-Fi version of the Android tablet to any customer who purchases a 46-inch or 55-inch, LED-lit 3D TV worth $1,500 or $2,000.

Electronista notes that the deal isn’t as drastic as the $100 TouchPad price drop that lasted a week before HP on Thursday ultimately waved the white flag in defeat, but is nonetheless unusual for a $500 device that’s been on the market for just a few weeks.

As the nation’s largest specialty electronics retailer, Best Buy has been placing big bets on sales of tablet devices following the success of the iPad but hasn’t seen the reception it was expecting for some of the non-Apple devices.

For instance, a report from earlier this week noted that big-box retailer took delivery of 270,000 HP TouchPads and but only managed to sell 25,000 units, or less than 10 percent of its inventory. A $100 price cut on the 9.7-inch devices did little to spur demand, with one analyst vouching his belief that the discount actually backfired by prompting customers to wait for further savings.

Disgruntled over the matter, Best Buy reportedly refused to pay for the remaining tablets and asked that HP take them back. But after pleading with the retailer to be patient, HP shocked the tech world on Thursday when it announced plans to scrap the TouchPad and all of its existing and future webOS devices entirely, essentially conceding the tablet market to Apple.

As part of the restructuring, HP said it would take a $.05 charge per share to account for the stockpile of unsold TouchPad, which, given the company’s 2.07 billion outstanding shares, amounts to just over $100 million.

The discontinuation of its mobile device initiative is part of a broader move that may see HP exit the hardware business entirely, likely spinning off its low-margin PC business as part of a shift in strategy that will see it challenge IBM on the software and services front rather than battle Apple on its highly-profitable hardware sales.

For its part, Samsung is not only challenged with making its Galaxy Tabs appear as viable alternatives to the iPad, it’s also fighting Apple to keep the devices on the market. Following a series of patent infringement lawsuits filed by Apple, a German court last week barred the sale of the Galaxy Tab across all of Europe, except for the Netherlands, where a separate complaint was pending.

Although the ban was partially suspended by a judge earlier this week, the separate suit filed in the Netherlands was revealed Friday to have Apple seeking an injunction banning Samsung’s entire Galaxy series throughout the European Union. This reportedly includes both smartphones — the Galaxy Ace, Galaxy S and Galaxy SII — as well as tablets: the Galaxy Tab 7 and Galaxy Tab 10.1.

As part of the complaint, Apple is demanding that Samsung and its subsidiaries send a “letter of request” to all their European clients, ordering them to recall all of the infringing stock “within 14 days” and offer compensation of the purchase price as well as transportation costs.

By Daniel Eran Dilger

Published: 06:30 PM EST (03:30 PM PST)

After just nine months on the job, HP’s chief executive Léo Apotheker announced plans to radically shift the company away from the shrinking PC market, drop its mobile competition to the iPad and iPhone entirely, and instead focus on its online services, printing and software businesses.

In the company’s quarterly earnings conference call, Apotheker stated that after careful consideration about “what needs to be fixed, what needs to be shut down, and what needs to be separated,” the company would begin an effort to shift priorities in multiple respects.

The first, affecting HP’s PC and mobile hardware business, acknowledges a competitive landscape and changes in how consumers are using PCs, a clear nod to Apple’s blockbuster iPad sales. Apotheker said HP’s Personal System Group, which builds PCs, needed ‘the flexibility and agility” to explore its options independently.

HP is now looking at a “range of options that include a spin-off” of the company’s PC manufacturing business, which is expected to take 12-18 months to complete. Apotheker still described PSG as being a profitable business, however, noting $9.6 billion in revenues and profits of $569 million in the most recent quarter.

Asked about why HP wasn’t announcing an immediate spinoff of its PSG unit, Apotheker stated that the company’s board had so far only committed to “looking at all strategic options,” and would continue to look at what it needed to do.

Asked about whether HP was still investigating the concept of putting webOS on its PCs as an alternative to Windows, Apotheker similarly described various options of using of webOS internally or licensing it to third parties as all being options on the table, but had no specific decisions to announce.

Just six months ago in February, PSG head Todd Bradley indicated during the company’s webOS tablet event that HP’s PCs would be a target for the new OS, saying, “Do the math on two PCs per second. You easily exceed 100 million devices with WebOS deployed annually. That’s the start of something pretty big.”

Out of TouchPad

However, the company presented a very dim view of its webOS-based mobile devices, including the TouchPad tablet and Pre smartphones. Due to market dynamics and intense competition, Apotheker said the company would be taking the “difficult but necessary decision to shut down WebOS hardware in Q4 2011.”

Apotheker said HP is “tracking market opportunities,” and exploring how best to use the webOS platform it acquired last year as part of its $1.2 billion purchase of Palm. Sales of TouchPad and webOS phones “did not meet milestones,” and “would require significant investment over one to two years” to continue to develop, taking on increasing risk in a very competitive market.

HP said it would take a billion dollar restructuring charge to cover the costs of shutting down its fledgling webOS mobile devices business after determining that sales of the TouchPad were simply “not meeting our expectations” after the new hardware was “poorly received” by the market.

Focusing on software, services

The company is now “focused on transforming services,” part of a “multiple quarter journey” to focus on delivering cloud solutions and “software accessible to any type of device,” as well as existing printing hardware and software businesses. Apotheker also said HP would also be lowering its Q4 guidance “to be realistic about where we are.”

In addition to issues related to its PC PSG business and WebOS hardware, Apotheker also described the company’s squabble with Oracle, which has pulled support for Intel’s Itanium processor from its database and ERP software. That decision hit HP hard, because it forces its customers with HP-UX Itanium-based servers to either buy new equipment to run Oracle’s latest software, or to continue to use their existing software knowing that existing bugs won’t be fixed.

Oracle, which recently acquired Sun, is now recommending its own Sun hardware, and claims that while HP tried to negotiate a contract with Oracle that would guarantee continued support for Itanium, Oracle never agreed to those terms. Further, Oracle says HP knew that Intel eventually planned to terminate its Itanium hardware platform, and that HP’s lawsuit demanding that Oracle reverse its decision to support Itanium servers was “utterly malicious and meritless.”