Successful open source projects begin with a sponsor willing to put serious money into them. Not just time, but executive attention and focus. Unsuccessful projects are born of companies throwing code over the side and expecting others to pick up the dropped ball.
This is the latter.
This result was predictable a long time ago, even before HP acquired webOS with the old Palm Computing. There's really only room for two main stems in a business like this, a proprietary one and an open source one. Apple (NASDAQ:AAPL) seized the proprietary initiative, Google (NASDAQ:GOOG) the open source initiative. Under Palm webOS was a poor replacement for iOS, and under HP it's a poor replacement for Android.
Why should anyone work to develop webOS when they can make serious money simply shipping an Android app? Why plant a tree when you can pick acorns?
Simit Patel, best known here at Seeking Alpha for his work in gold and precious metals, has it precisely right, albeit a bit hedgy. This is a way for HP to get out of a bad market after it's dumped old product on it. Make some vague promises, then throw up your hands when no one else does the work you have decided not to do yourself.
There are other things HP can do with its capital, and the bottom line is this announcement will not be material to the company's results. It's just a fancy way of putting a line under a chapter that should not have been written.
HP is deploying its technology into clouds, into big data servers, into its existing printer line, and into trying to become what IBM became years ago, a services company. What it should be doing is fitting its hardware strategy to what those former EDS customers say their needs are.
If customers in healthcare, logistics and operations need tablets, make them Android tablets, and make sure they're secure, locked-down, and fit into corporate IT infrastructures seamlessly. If they really want PCs, keep making PCs. But listen to the customers, the people with money to invest in new hardware, rather than trying to support a money-losing orphaned tablet operating system.
At its present price HPQ is selling at a PE multiple a little better than that of Ford (F), and in line with that of competitor DELL. That's fair value. Buy only if you think the market as a whole is heading up. Otherwise leave it strictly alone, because not only isn't it moving up from here, it's not going anywhere quickly and is very likely to stay within the range of $25-$30 per share for some time.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.