Market Insight

LG announced deal to acquire WebOS

February 28, 2013

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LG Electronics announced on February 25, 2013 the acquisition of the WebOS operating system from HP, to be used in its Smart TVs starting early 2014. With this deal LG will obtain the source code, associated documentation, remaining engineering talent and related websites. HP will keep the cloud-based service and patents related to WebOS, which they will license to LG. Acquisition terms were not publicly disclosed.

WebOS was initially developed by Palm and launched in early 2009 on the Palm Pre smartphone. In April 2010, HP acquired Palm, which later announced the use of WebOS as the universal platform across multiple devices including smartphones and tablets. After HP decided to cease offering WebOS products and discontinued the HP TouchPad tablet and Pre 3 smartphone in 2011, HP made the platform open source.

The purchase of WebOS has its roots in some of the key issues currently affecting the Smart TV market: application development and user experience. With major TV manufacturers using different standards for development environments, fragmentation has been an issue for TV application development.

As an open source product, WebOS could provide LG with a larger application ecosystem than it currently has. But developers have deserted the platform over the last 18 months due to lack of products and uncertain support from HP. This makes it an unattractive choice as a software platform for smartphones or tablets: Even HP knows this, and has just announced an HP-branded Android tablet. LG may hope to use WebOS as a hedge against Samsung dominance of Android smartphones but because of the lack of development of WebOS since 2011 we believe it has fallen too far behind the mobile market to be useful in that role.

The use of WebOS gives LG the opportunity to bring an improved and more dynamic user experience, as well as further develop interactivity features capabilities on their next-generation of smart TVs - which we expect  to be introduced next year at CES 2014. This also represents the first time that LG will have an engineering group for their Smart TV division in the US, which can help the TV manufacturer attract more content partners in North America, and shows the significance of this region at the forefront for the development of the smart TV market.

However, these potential benefits must also be balanced against the potential difficulties in implementing WebOS on the TV. As an operating system developed initially for mobile devices, LG will need to customize the highly touch-centric WebOS for use with a remote control, and also for viewing on a much larger device, without compromising its core features. Additionally, any applications that are developed for WebOS will also need to be compatible with LG's original commitment to the Smart TV Alliance, whose specifications were published in its SDK, following CES 2013.

In addition, LG must ensure it is able to innovate with WebOS without owning the cloud features such as cloud backup, sync and other cloud services that were at the heart of the original WebOS platform. HP retains ownership of them. Also, as LG adapts WebOS to the TV, it will have to persevere without most of the engineering talent that created WebOS because most key individuals have long departed HP.

The core purpose of the Smart TV Alliance is to reduce the fragmentation of TV application development - with LG having co-founded the Smart TV Alliance, together with Toshiba and TP Vision in June 2012. Panasonic have also since joined the alliance, which was set up to allow developers to create apps using open standard systems that can successfully run on all the platforms supported - in essence creating a joint development environment. It is important to note however that this is purely an issue of simplifying (and thus increasing) cross-platform app development - each member of the Smart TV Alliance maintains its own Smart TV platform. Within this context, the acquisition of WebOS is primarily an attempt by LG to improve their user experience with a proprietary platform while reinforcing their HTML5 support and participation in the Smart TV Alliance.

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