The encyclopedia · Strategy & Leadership · Strategic decision · 2010–2011
Palm invented the smartphone — then HP bought it for $1.2B and killed it in 14 months
Palm created the PDA and webOS. HP acquired it for $1.2B in 2010, launched the Pre, and discontinued the entire line in August 2011.
Palm · Hewlett-Packard · 2010-04
What happened
Palm, founded in 1992, pioneered the personal digital assistant. The PalmPilot (1997) defined the category, and Palm OS powered millions of devices. By the late 2000s, Palm had fallen behind Apple and BlackBerry, but its new webOS platform — launched with the Palm Pre in 2009 — was praised as the most innovative mobile OS since the iPhone.
In April 2010, Hewlett-Packard acquired Palm for $1.2 billion, primarily to own webOS. HP planned to use webOS across its entire product line — phones, tablets, and printers. The HP Veer and HP Pre 3 launched in 2011, along with the HP TouchPad tablet.
On 18 August 2011 — just 14 months after the acquisition — HP's new CEO Léo Apotheker announced the discontinuation of all webOS devices. The TouchPad, which had launched six weeks earlier at $499, was fire-sold for $99. HP wrote off the entire $1.2 billion acquisition. In 2013, HP sold the webOS assets to LG Electronics for an undisclosed sum. The platform that reviewers called 'the iPhone killer' was dead in under four years.
Why it happened
- HP bought Palm for webOS but had no mobile strategy — the acquisition was a technology grab, not a market entry plan.
- CEO Léo Apotheker, who had no consumer product experience, killed webOS to focus on enterprise — a decision made 14 months after a $1.2B investment.
- The TouchPad launched into a market already dominated by the iPad, with no app ecosystem and no carrier relationships.
- The $99 fire sale destroyed any residual brand value and signaled to developers that the platform was dead.
The lesson
Acquiring a platform without a strategy is a $1.2B donation to the seller. HP bought webOS, had no plan, and killed it 14 months later.
Aftermath
LG acquired webOS in 2013 and uses it in its smart TVs. The Palm brand was licensed to TCL in 2018 for a small companion phone. The PalmPilot is in the Smithsonian. The case is cited as the definitive example of a large company acquiring innovation and then destroying it.
Sources
- Palm, Inc. — Wikipedia (founded 1992; PalmPilot 1997; webOS/Palm Pre 2009; HP acquired April 2010 for $1.2B; all webOS devices discontinued 18 August 2011; TouchPad fire-sold at $99; webOS sold to LG 2013)
- Forbes — Wait, What? HP Kills WebOS Devices, TouchPad (18 August 2011; HP to discontinue webOS device operations; TouchPad launched July 1, 2011; Palm acquired for $1.2B in April 2010; HP to explore options for webOS software value)
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