Weekend Tech Blog: Hewlett-Packard implodes before our eyes

The company abruptly kills off its highly promoted TouchPad tablet after only two months.

The company abruptly kills off its highly promoted TouchPad tablet after only two months.

So much for the summer doldrums in the tech news business.  The news from HP, Google, and Motorola Mobility amount to major game changes in the consumer tech business.

HP made major news in the tablet market that was not the kind it — or anyone else — expected it to make.

For the last several weeks, if you watch any commercial TV, you’ve probably been bombarded with ads by hip entertainers including Lea Michele, Manny Pacquiao and Russell Brand holding full size computer tablets in front of their faces — with their "live" faces creepily coming out of the tablets — extolling the virtues of the new HP TouchPad.

The joy was obviously limited to the commercials. 

On Thursday(Aug. 18), HP announced it was killing off the TouchPad: one of three major announcements effectively amounting to a major restructuring of the company. Reports surfaced during the week that the tablets, with webOS as its operating system, have done an über-belly flop in the marketplace. Giant consumer electronics retailer Best Buy reportedly has over 270,000 Touchpads in inventory — and has sold only 25,000. According to a Wall Street Journal report, the cancellation also includes ending webOS smartphones.

HP introduced the TouchPad with great fanfare in February and started selling it in late June. Less than 18 months ago, HP acquired the assets of Palm, the legendary PDA maker, in what was essentially a $1.2 billion fire sale. The crown jewel of the deal was the webOS system. As recently as two months ago, HP executives saw webOS as the center not only of its tablet strategy, but a system that would work its way onto PCs and ultimately into the company’s “cloud” plans: a cornerstone of its rivalry with Apple and Google.

Where this week’s news leaves the well-regarded webOS operating system technology is anyone’s guess, although CNET News reported that HP planned to "explore options to optimize the value of WebOS software going forward."

HP CEO Leo Apotheker noted the key factor in the changeover may be the consumer’s increasing reliance on tablets and less on traditional PCs, as quoted by ZD Net: “Consumers are changing the use of their PC . . . The velocity of change in the personal device marketplace continues to increase as the competitive landscape is growing increasingly more complex especially around the personal computing arena.” Added CFO Cathy Lesjak: “Our intention was to solidify WebOS as the clear No. 2 platform for tablets, but with such a young ecosystem and poorly received hardware we were unable to achieve our target.”

My take is that people generally accept the tablet battle is a two-horse race between the iPad and Android OS tablets. Yet another operating system, one virtually untested in the marketplace, plus few apps available for it, did not bode well for HP’s webOS success.

The rest of HP’s news was also a major surprise, including a sobering report that HP may be spinning off its computer business — but not its printers, storage devices, or networking gear.  The Journal report noted the company’s board had approved exploring “strategic options” for its PC business including a “full or partial separation” of the PC division over the next 12 to 18 months. HP also announced a $10.3 billion offer to buy British software maker Autonomy, a maker of search software for emails and documents.  Ordinarily that would be the major news on any other day, and in fact may be extremely important to HP's future direction, but in light of the other announcements it was almost a footnote in the day's news.

The three announcements were emblematic of a shift at HP to make it more competitive in the services and business world, and less dependent on high-volume but low-margin consumer businesses.

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By now the news that Google plans to purchase Motorola Mobility for $12.5 billion in cash is old news.  If you’ve not read much about it, here’s a thoughtful summary from Time Magazine blogger Harry McCracken.

The move brings Google and Apple into more mano-a-mano contact, competing in hardware, software and operating systems.  Each has its own unique strengths — Google’s search and ads dominance, Apple’s design and marketplace masteries — but now Google has a proven mobile device manufacturing arm that can serve as both a grand laboratory as well as its mobile sales arm.  That brings it closer to Apple’s capabilities as a hardware provider.

And what to say about Microsoft? With iOS and Android mobile technology dominating the mobile market, will Microsoft decide it needs to beef up its less-than-stellar presence and acquire a phone maker such as Nokia or RIM just to keep place with the competition? And where, if anyplace, does the Skype Internet-based phone service, which Microsoft recently bought for $8 billion, fit into the picture?

Even if you’re not a tech fan, this is one intriguing business Super Bowl to watch.

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TV giveth, TV taketh away . . .  So you want your TV programs everywhere: on an iPad your laptop, or a smartphone, and do it at your own time and pace? It’s getting easier to do it, but the price tag is going up.

For the last few years, TV and cable networks have made many shows and individual episodes available for free Internet viewing once they have aired. “Free” doesn’t generate revenue, however.  As a result, the TV industry is busy expanding the platforms on which people can watch programs — it’s called the “TV everywhere” concept — but it limits access to those programs to people who either have cable TV accounts or pay monthly fees to an Internet based program aggregator.

Having access to deep, rich libraries of TV programs is a great benefit to viewers and provides yet another reason for consumers not to cut the cord to their cable service. It can hardly be good news, however, to people who have stopped their cable subscriptions because of the weak economy, and are seeing their one (legal) source of free off-network program viewing fading away.

This week, Fox made good on a promise made last month: to limit next-day airings of some of its network and cable TV shows — Fox TV, FX — to people who have paid subscriptions to Hulu Plus, a program aggregator site partially owned by Fox, or the Dish TV satellite service.  Once you are authenticated as a paid subscriber, you can see a missed episode on either company’s website within 24 hours, or wait eight days to catch it on a free website.

Last week, Disney said it was “in discussions” to make the off-network content of its various networks — which includes ABC, ABC Family cable, the Disney Channel, ESPN, etc .— available on a same basis.

HBO Go and CNN Live are currently the most prominent examples of the “TV everywhere” trend. With HBO Go, your cable subscription AND your premium HBO subscription let you see virtually every movie, series, special, etc. in the HBO library on your PC or Mac computer, iPads and iPhones and some (but not all) Android devices. CNN offers both its news channel and sister channel HLN live for non-TV set viewing for consumers with at least a basic cable subscription. (Here in Seattle, Comcast cable subscribers need to set up a Comcast Xfinity Internet account.

There is little doubt the trend will continue.  Late this week, HBO sister channel Cinemax announced the debut of MAX Go: the newest TV everywhere-enabled site. Even though Cinemax is corporately related to HBO, it has not yet been activated for mobile viewing by Comcast subscribers as of this writing.  (Comcast is the major cable service provider in greater Seattle.)

According to a recent GigaOm article, these TV everywhere plans may lessen the number of viewers watching shows online, but could help increase revenues for broadcasters who receive money from the cable companies for retransmitting these shows. ABC CEO Bob Iger was quoted as saying that he expects revenues from similar deals to grow to $400-$500 million by 2015.

*  *  *

There’s another premium video service that’s following a somewhat more circuitous path into your entertainment zone.  EPIX, in its own words, is “a cable TV channel. It's a VOD service on your set-top box. It's a web site with movies. If you subscribe to EPIX, you get it all.”

It’s being heavily promoted with on-line ads and email.  A joint venture between Viacom, Paramount, Metro-Goldwyn-Mayer Studios and Lionsgate, it calls itself a “next-generation multiplatform premium entertainment channel, video-on-demand, and online service” with more than 15,000 films in its library.  You can see the site on the Internet. There are channels devoted to it both on Google TV and Roku desktop boxes.  Get your credit card ready.

But wait! You can’t watch it anywhere even if you’re willing to outright pay for it unless your cable or satellite company is running the channel.  Dish Networks is the only cable company in the Seattle area that has an agreement with EPIX. Comcast isn’t even listed as a potential partner on the EPIX website.

It seems strange to me that EPIX seems to be hiding its umbilical tie to the cable/satellite providers. Reading the website’s front page, its promotional emails or even signing up for the outlet’s free trial offer provides no clue that this is a “TV everywhere” plan. Until or unless you dig into the EPIX FAQ, you’ll not see what it actually is.

I’m guessing the channel wants to hook people to their service, then when they find out it’s unavailable, have them complain to their cable/satellite provider and push them to carry it. I spoke with an EPIX PR spokeperson about this; the solution offered me was that maybe I should consider changing cable providers in order to receive EPIX.


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