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Why LG's purchase of webOS from HP could shake up the mobile market

by Gerry Purdy

March 26 2013

Gerry Purdy is the Principal Analyst with MobileTrax, a mobile analysis firm


Buying webOS will give LG control over the entire platform and make it more like Apple, says MobileTrax Principal Analyst, Gerry Purdy.

When Palm developed webOS, it was generally accepted that it was one of the best mobile operating systems ever created even if it was developed too late to help save Palm from the onslaught of Apple’s iOS and Google’s Android.

HP scooped up webOS in April 2010 for $1.2 billion in what seemed like a smart acquisition at the time: HP could use it as its core device OS and build a wide range of products based on it from printers to handhelds to tablets. But, a little thing like the CEO of HP wanting to divest the company of the PC Division got in the way. webOS was facing a slow death by lack of focus at HP.

But, a funny thing has happened in the three years since HP acquired webOS: major device vendors are looking for ways to differentiate themselves in the mobile market. Building smartphone products based on Android was at least an initial blessing for major vendors trying to counter the iPhone love fest. The vendor could focus on building new device hardware, incorporating Android (which Google was continually enhancing) and building applications and services on top of Android to provide a differentiated product.

Lately, however, smartphone device makers want to control the entire user experience from hardware to operating system to software and services to better control their destiny. Google purchased Motorola Mobility in part for that reason which sent a message to other Android partners: Google realized that it’s important to control the hardware as well as the software environment in smartphones and tablets.

Coming out from beneath the shadow of Samsung and HTC

LG has been slowly improving their position in the mobile space over the past few years by focusing in advanced technology in their smartphone line. They have been using Android but, with the possible exception of the Optimus G "superphone", LG still has not been able to have a huge winner in the market against Samsung and HTC.

I believe that once LG saw that Google acquired Motorola Mobility they realized it was time to find a way to own their entire stack from hardware to mobile OS to software and services.

On Feb. 25, LG announced it had acquired webOS from HP thus becoming the third owner of the OS in three years after Palm and HP.

LG says its initial focus for webOS will be in connected consumer electronics products like smart TVs. LG says they will continue to support webOS as an open OS, but I think they are going to focus on building products in which they manage the entire stack from hardware to mobile operating system to software and services to give them a differentiated set of products in the market.

Future LG handsets based on webOS will give LG control over the entire platform and user experience and, thus, be able to play in the market more like Apple. Users today are not going to care about the operating system as much as they care about the total user experience, especially in developed areas of the world such as North America and Europe. That’s in part why Nokia has been able to begin selling lots of units using Windows Phone OS (they have been operating almost like a single company lately on hardware, software and services).

I expect LG will quickly design smart TVs that are very advanced technically, incorporate webOS and provide an integrated user experience, followed by other devices, presumably handsets and tablets. LG also inherits the Enyo application development framework that has received positive reviews that enable LG and their partners to easily create webOS applications and services.

Their challenge it to get developers to build apps for webOS, but that is easier than other mobile platforms because webOS is based on standard web development environments. And, they should be able to offer a number of services such as synchronization from folks like CompanionLink, music, news, weather and sports through various partnerships.

I commend LG for taking this bold step but, more important, I can’t wait to see how they roll out devices, software and services based on webOS. This move certainly isn’t going to hurt their cause. And, it just might launch a big success for them.

Where does LG go from here?

The smartphone market is still growing as it takes more of the worldwide market share against feature phones. There’s easily another one to two billion new smartphones going to be sold each year over the 900 million or so smartphones being built this year. LG could have a much more successful mobile business due to the acquisition of webOS.

Now, what does this mean for Samsung? They clearly realize that their success is due more to great design and engineering and less to using Android. Samsung tells analysts like me that they are focusing efforts on applications and services to provide a better, more integrated user experience right out of the box.

While they could continue to use Android, it wouldn’t surprise me to see them utilize their own mobile OS at some point whether it be bada, Tizen or even BlackBerry.

As another example, Microsoft is building mobile hardware for the first time with their Surface tablet and with a smartphone based on Windows Phone 8 likely in the near future.

Thus, we could end up a couple of years from now with each of the major mobile vendors building smartphones and tablets all using their own mobile operating system.

(A version of this article originally appeared in MobileTrax and is published with the permission of Gerry Purdy).

Gerry Purdy is the Principal Analyst with MobileTrax, a mobile analysis firm

If you are a tablet industry professional and would like to contribute a vendor-agnostic analysis piece to our Opinions section, please contact Michael Singer, Business editor.

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