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LG's new Tele-vision

LG Electronics has acquired HP’s WebOS for an undisclosed amount. When last it changed hands WebOS was part of Palm which was purchased for $1.2 billion in 2010.

Palm has thus been effectively divided into several smaller pieces distributed as follows:

HP will own:

  • Support of existing Palm users
  • Palm back-end assets including source code, infrastructure and talent
  • webOS patents

LG will own:

  • Stewardship of the Open WebOS and Enyo open-source projects where the source code resides
  • Associated talent
  • WebOS websites
  • License for IP related to webOS

LG announced that it plans to offer an “intuitive user experience an Internet services across a range of consumer electronics devices.” In an interview, the CTO of LG said that given the current situation with Android, LG does not plan on making smartphones running webOS but will use it in televisions and other devices such as cars, signage and appliances where there are no embedded OS’s. “We’d like to secure a software platform across all devices.”

Most commentary regarding the deal focused on the use of the platform for TVs but management seems to consider all devices, perhaps even phones, at some future date, to be webOS targets.

The TV however seems to be low hanging fruit today. The TV as an app platform will be the new ecosystem war and no platform today has a lock on the developers or users. The way this rivalry will shape up will not mirror other device classes for the same reason that current device classes are platform silos.

PCs, music players, tablets and phones all have different super-majority platform leaders. The association of a platform with a device class depends first on the distribution model, which favors a specific business model which favors a specific vendor which favors a specific platform. As each device is distributed differently, a different platform takes precedence.

Consider that the PC has historically been purchased by IT departments which led to a monoculture of Windows which led to a persistent leadership for Microsoft.

The music player created dominance around iTunes mostly because the distribution model for music labels was baked-in. With network effects, the iPod quickly gained and perpetually retained market share leadership.

The smartphone business initially favored Symbian and BlackBerry because they had the market access through operators. After the touch UI became dominant (and incumbents failed to respond in a timely manner), Apple and Google took leadership as soon as they accepted the operator distribution model. Android in particular is especially resonant with operators and has been developed with their requirements in mind.

The tablet business is more like the PC business but without enterprise requirements or patterns of purchase. This has meant that app/content ecosystems and retail distribution were the key gating factors. The story is still unfolding but so far Microsoft has not found a foothold while iOS and Android and Amazon have.

That leads to the question of how will smart TVs be sold and which business model (or go-to-market strategy) will succeed. Steve Jobs pointed out the difficulty in trying to deliver innovation into a value chain dominated by cable companies which can effectively block it. A TV which is an application execution device rather than a content terminal will require a re-definition of the category. That will require a re-positioining of this product. Few companies are able to do that. [See also my post Tele Vision from mid-2011].

Which brings us back to the question of webOS. As long as LG sells TVs as content terminals they might not obtain much value from webOS. If, on the other hand, LG were to use webOS to re-define their televisions to be something else entirely, namely software execution devices, sold differently and hired to do a different job than a TV, then webOS becomes not only necessary but potentially a source of great prosperity.

  • http://twitter.com/JessiDarko Jessica Darko

    On the other hand, many times corporate acquisitions, even massive ones, are done for reasons that make no sense, or even with good reasons, after large sums have passed hands, the acquirer does nothing with the asset.

    HP’s time owning WebOS is a good example.

    For LG to do something useful with WebOS would require a certain amount of vision. LG is not the worst company, but they are not really known for their vision. I’d love to see the TV be the next App platform, with Apple participating. I just don’t think LG is the one to set off that spark.

    I think they will ship some uninspired products (including TVs and phones) with webos and it will be just a better version of the uninspired software they already ship in their CE devices.

    I don’t know why, but these asian CE manufacturers don’t seem able to make good software, even when it is clear they are trying very, very hard.

    • SimonCopenhagen

      There is a cultural reason to why Asian manufacturers are bad at software. Because good software departs from a deep understanding and accept, you could even say respect, of the user. The authoritarian and hierarchical culture in many Asian countries is a block to this. The focus for a great software developer must be his user. The focus for an employee in most Asian companies is his boss.

      • KirkBurgess

        That’s a strange viewpoint considering the decades of creativity from Japan’s gaming studios.

  • http://twitter.com/Charlesknight Charlesknight

    Can someone clarify something for me – a lot of reports have talked about LG gaining access to *palm* (as opposed to WebOS) patents but my understanding is that all of the patents owned by Palm were actually sold off a decade ago when Palm was spilit into Plamsource and Palm One and are now owned by acacia – who in turn simply licensed them to HP.

  • obarthelemy

    I’m struggling to make sense of LG’s move. Embarking on an ecosystem project does not make much sense: whatever technical/UI advantage WebOS had initially has long been nullified and does not translate well to TV (the “flicking” gestures), WebOS’s apps, while nice, are few and no more than “at par”. I don’t see LG as having the size nor the skills to succeed where MS, Blackberry, Nokia.. have failed or are failing.

    It might mean they want an alternative OS, to not be completely beholden to Android, maybe to run on modest hardware. WebOS was probably cheap, Tizen seems to be quite controlled by Samsung… I’m surprised they didn’t go with Firefox OS.

    They might have struck a bilateral deal with HP: “we help you get rid of WebOS, you buy screens from us”.

    The Smart TV angle especially baffles me. Putting a computer inside a TV links 2 devices with widely differing lifespans (5+ years for a monitor, 2 years for a computer). I’d much rather buy a good TV, and a $50 Android dongle to make it smart.

    • Walt French

      Maybe I can’t make sense of the move, but I can make a rationalization. Off the top of my head, you understand…

      Suppose I run LG’s TV group. I make a large fraction of the world’s screens, but I’m in the shadow of my big brother down the street, a competitor who not only has a larger share, and I know to be an aggressive competitor, but also presumably wants to bundle his leadership positions in TVs and mobile devices, too.

      I already pay maybe $15 to Microsoft for each Android copy, and if the Oracle appeal and/or some other lawsuit lands, my already thin margins on TVs don’t support a prohibitively expensive $50 per unit. With WebOS, I have much less risk in developing the type of apps and games that Horace suggests. I put an AirPlay type tool into my phones/tablets, and also build a simple controller app for games that run inside the TV, and I now am the low-cost provider of Smart TVs.

      WebOS was probably very cheap for a robust UI. If Android runs into obstacles for any of the many reasons, I bought a cheap option on my future. I’ve also bought a way to leverage my position in TVs to tie together home automation — yeah, the refrigerator! — and my mobile devices businesses. Oh, btw: WebOS got a bad rep for sluggishness, but the devices we’re talking to all plug in and CPU’s are no longer hobbled nearly so much by needs of battery limitations, anyway.

      Do I actually believe all this? Well, conditioned on the fact that LG actually did the deal, something like it must be what’s going on. And maybe, looking back over what I just dreamed up, I actually like it!

  • Andriba

    “That leads to the question of how will smart TVs be sold ….. ”

    I think I have a “smart TV” in that it connects to the internet, both over LAN and WiFi, and offers up “applications”. I didn’t want or choose any of that, it all just came with the TV I chose, because of its image quality, a Sony Bravia. I therefore probably paid several hundred dollars more than I needed to if Sony had sold a TV without this smart connectivity.

    Somewhere I think I heard that the Sony TV runs some form of Linux. I have tried the various apps and online subscription services it offers, but mostly use my plugged-in Apple TV instead.

    What would work best for me would be a TV that had absolutely no connectivity, no LAN, WiFi, OTA tuners or even loudspeakers, only a connection to an Apple TV via HDMI. Everything else could come from the internet via my computer. Sony should be able to sell such a device much more cheaply than the one I bought.

    So, if LG is going to use WebOS to build an equivalent device to the Apple TV, good luck. If LG is going to use WebOS to replace the Linux stuff that Sony uses, then probably “don’t bother” is the best advice. The simple question therefore is, does the former Palm WebOS allow LG to sell high-quality TV’s at lower prices?

    If so, and if there is any point to this purchase, it must be due to the internet connectivity.

    • neutrino23

      I’m have no clear idea about this myself, however, I’d say that perhaps your focus is too narrow. LG sells around the world. It might not make that much sense in the US but it might help them in other countries that are structured differently.

  • Sacto_Joe

    The one advantage that I see is that this gives LG a path to touchscreen interfaces that doesn’t involve Google, Microsoft, or Apple. It’s a differentiator. Also, I’d be surprised if the ties to HP weren’t kept exceptionally close, which could be highly useful to both companies down the line.

    • http://www.isophist.com/ Emilio Orione

      Touch-screens interfaces for a TV?
      I find them awkward on laptops, on TV are absolutely absurd.

      • r00fus

        Perhaps @Sacto_Joe:disqus meant for tablets and phones, not TV.

        Unless it’s for a remote… that’d be nice. If I could control my TV/receiver volume using my AppleTV remote (or remote.app), I’d be set. We spend almost all our TV time through the aTV.

      • Sacto_Joe

        You’re correct, r00fus. I use my iPhone as my tv remote, and that’s the idea I was thinking of.

      • http://www.isophist.com/ Emilio Orione

        I have a Logitech Harmony One remote, it has a touchscreen interface, it is on market since many years, as many others touch remotes have been.
        A touch remote is not a differentiator and does not require a full complex OS like iOS or Android or webOS.
        An App executing television is a game changer but does not need touch. How will be the interface and the remote for such an object?
        That is one question.
        The google tv remotes (not touch by the way) are so horrendous that it seems that only Apple will be able to give the answer and everyone else will find it obvious and will copy it soon after.

      • TDC123

        You can use kinect or leap motion app

      • http://www.isophist.com/ Emilio Orione

        Those are not touch-screens

  • MD

    And to seriously analyze the possibilities for building a “software execution device”, one must identify the input method to be used, along with its strengths and weaknesses for various classes of applications. Combined with the content/business model per your Tele Vision post, input method will drive every decision from industrial and software design to ecosystem viability.

    Re: WebOS, most of the key talent must be gone at this point and as others have noted the original advantages of the platform either don’t translate to TV or have since been superseded.

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  • John Arnold

    LG could have partnered with Blackberry (and its QNX based OS) to achieve the same goal…given Blackberry’s position, I would assume they could have struck a deal on good terms…looks like a solid software / hardware partnership to me.

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