webOS Needs a New Home

Before you go, we thought you'd like these...
Before you go close icon

"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 (NYS: 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 (NAS: 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 (NYS: MMI) , which has created some tension with original equipment manufacturers and created opportunities for other platforms, like Microsoft's (NAS: 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.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Google and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Microsoft and Google, as well as creating a bull call spread position in Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners