Being a public company, Hewlett-Packard Co. is bound to report material events to investors. Executives of the world's number one vendor of personal computers haven't been evasive to questions.

Still H-P CEO Leo Apotheker's decisions, which some say border on the impulsive and the decisive, are raising more questions than answers.

A month after launching the TouchPad, and just a year after paying $1.2 billion for Palm Inc. and its webOS platform, H-P announced that it is ending production of mobile devices.

"HP will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. The devices have not met internal milestones and financial targets. HP will continue to explore options to optimize the value of webOS software going forward," Hewlett-Packard specifically announced in a statement on Aug. 18.

In the announcement, H-P also said that it was considering alternatives of its PC computing business, including a spin-off.
Following the announcement, the world's number PC vendor dropped the price of the entry-level TouchPad from $399.99 to $99.99. The device was priced at $499.99 during launching but cut to $399 just more than a week later.

The huge price drop was unsurprising, as allowing retailers to sell the device at extremely low prices is better of than letting the tablets rot on or clutter their shelves. Prior to the huge price drop, Best Buy had only sold 25,000 of 270,000 devices in its inventory.

But after the $99 GOB sales spurred demand for the webOS-based device, HP announced that it was resuming production of the tablet.
The new round of production for the TouchPad has baffled many industry observers, as HP would be taking a $200 loss per unit for the $99 sale. The 16GB HP TouchPad's bill of materials are estimated at under $300 with an assembly rate of $10.

Disgruntled Suppliers, Satisfied Consumers?

Is HP doing this to honor commitments or to appease disgruntled supply chain partners? How many cameras, Qualcomm Snapdragon S3 processors, 6000 mAh Lithium-ion polymer battery and other hardware has HP ordered and paid for?

Or is HP selling the devices at a loss to enhance the presence of webOS and make its mobile-devices business or webOS attractive to potential buyers?

Or Is HP changing its course now that the device has now penetrated the tablet market (and could end up as second only to Apple's iPad in tablet sales)? With more people using the TouchPad, webOS could be more attractive to developers, which in turn could generate interest in webOS devices. The webOS's problem was that, unlike Apple's iOS and Google's Android, it had very few apps for customizing the TouchPad.

The revival is "a limited run" that will end this quarter and "the decision has been made," said an HP spokeswoman, responding to questions about HP's decision to restart production of the TouchPad, according to The Wall Street Journal.

But another new announcement from HP is even more staggering: it will end production of webOS devices but it will continue to pour in money for the development of the webOS software.

Todd Bradley, executive vice president of HP's Personal Systems Group, in an interview with the WSJ, said HP would continue to invest in webOS mobile-device software despite its decision to discontinue production of the TouchPad tablet computer and other hardware running it.

We said when we bought Palm we were buying it for software assets," he said. "We will continue to build them."

HP's Strategy Challenged

What's inside HP's mind? How will it make use of the webOS if it doesn't produce the mobile devices that would run webOS?

Would it do a Microsoft Corp. and start licensing webOS operating systems to device makers or consumers?

Is HP now packaging the mobile-devices business with its PC assets given that the two industries are now more connected?

If HP is trying to woo device-makers, its list of interested parties is down by one.

Choi Gee Sung, CEO of Samsung Electronics, the world's second largest maker of mobile phones, has announced that the Korean company would never pursue HP's WebOS. Samsung already has the Bada OS, which is popular in Asian countries, and Google's Android OS, which is also being used by other device makers like LG, Sony Corp., and HTC.

HP Senior Vice President Stephen DeWitt said last month the U.S. company is still considering partnerships and licensing deals with manufacturers that may use the WebOS software in their devices.

But aside from the market leading Android, the OS for the mobile industry is already crowded with Apple's iOS (for iPad and iPhone), Microsoft Windows (for future Nokia phones), the Symbian (current Nokia devices), and Research in Motion's BlackBerry OS (BlackBerry phones and PlayBook tablet). And WebOS is not even in the top five of most widely used operating systems for mobile devices.

Is HP waiting for Android issues to pan out now that Apple and Oracle have raised IP claims against Android or its partners, and now that Google, the developer of the Android, is about to own smartphone maker Motorola Mobility?

As I say, there are more questions than answers.

What are you thinking? Tell us...

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