webOS Needs a New Home

"Need new home.
Foster parent threw me out.
Will work for royalties.
Take me home for $1.2 billion OBO."

If you saw webOS standing on the side of the road, this is what its sign might say. Since being effectively abandoned by Hewlett-Packard (NYSE: HPQ  ) earlier this month, webOS' fate has been up in the air. The only two alternatives to "optimize the value" are to either sell the entire platform or license it to third parties.

It's abundantly obvious that buyers aren't interested in webOS in its current incarnation, so licensing the software to other manufacturers doesn't seem likely. Many third party manufacturers have already gotten behind royalty-free Google (Nasdaq: GOOG  ) Android. Selling the entire platform seems to be the most likely outcome.

After shutting down the initial round of rumors that Samsung may be interested in buying HP's PC business, a Digitimes report today now suggests that the Korean electronics conglomerate is considering a purchase of webOS. This rumor actually has more credibility.

Here's why:

  • HP's PC business has low margins, which is precisely why HP is dumping it. Samsung already enjoys higher margins on its DRAM and panel segments.
  • Samsung Chairman Lee Kun-Hee has expressed that the company needs to enhance its software position for differentiation, and for management to consider mergers and acquisitions to do so.
  • The focus on its software platform, Bada, comes as a direct response to Google's acquisition of Motorola Mobility (NYSE: MMI  ) , which has created some tension with original equipment manufacturers and created opportunities for other platforms, like Microsoft's (Nasdaq: MSFT  ) Windows Phone 7.
  • Samsung has reportedly just hired HP's ex-VP of personal systems group marketing, Raymond Wah.

If Samsung buys webOS, it will likely incorporate parts of it into Bada rather than keep it as is. Seeing as how HP cut TouchPad prices by 80% to get its inventory moving, and that it paid $1.2 billion for Palm, Samsung might get a pretty good discount on the package -- particularly if it's the only buyer out there.

Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Google and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft and Google, as well as creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1545920, ~/Articles/ArticleHandler.aspx, 9/30/2014 6:43:55 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement