There are two likely reasons why LG bought Palm’s operating system from HP, and both reasons could apply (they aren’t mutually exclusive). One is that it plans to become an Apple-like vendor where it owns the operating system and this reflects just how upset some of the OEMs are with Google and Android. The other is because this platform comes with a ton of intellectual property that could allow LG to weather the litigation storm from Apple and push back on the license fees from Microsoft more effectively (also likely reflecting poorly on Android). The consistent part of both reasons is that the OEMs aren’t that happy with the litigation defense surrounding Android and this likely suggests that LG is kind of tired of competing with Google on phones and tablets and getting its but kicked by Samsung (its historic rival).
There are some clear opportunities. Because Android has become a malware magnet with an estimated 41 percent of Android devices infected, there is every likelihood that there will be a major breach at a national/international level that could scare people and carriers away from the device and provide a real opportunity for someone else to come in and steal share from Samsung and Google. But this won’t be a walk in the park because there are a series of issues that LG will need to overcome before it can get to even with the other challengers like BlackBerry and Microsoft.
We saw this when the original Palm OS separated from Palm Hardware and tried to go it alone. You need apps, developers and a critical mass of cell phone users on the platform. This is that painful cart and horse problem, and while WebOS actually had a decent set of app developers while it was with Palm, those folks left when there were no WebOS devices coming out anymore. Yes, there are some apps, like the infamous Chubby Checker (an app that allowed someone to estimate the size of someone’s penis from his foot size) but they are now several years old and not all that compelling. (The Chubby Checker app was pulled by HP after it was sued by the real and aging Chubby Checker who likely didn’t want to be redefined by that app).
So LG will need to make WebOS relevant again and LG isn’t known for being good at getting developers. I can recall Samsung trying to get developers years ago for a prior OS that it was pushing for PDAs and it basically stole the apps that the developers submitted which didn’t bode well for the success of the result. Korean tech companies are typically not known for strong ecosystems or generosity. It doesn’t seem to be in their DNA, which is going to make creating a successful app ecosystem problematic for LG.
Can LG Be the New Apple?
However, Apple is vulnerable; without its charismatic and unique CEO it has been slowly losing margins, put under increasing pressure by investors to give up its massive cash reserves (before it loses them), and has been systematically destroying its premium image by increasingly using value channels like Wal-Mart.
But Apple is unique in the market and it got to be as powerful as it did by carving out the premium side of music, PCs and personal devices. LG does a nice job with premium appliances and it runs hard against Samsung in that space. In fact, personally I’ve had more luck with LG than I have with Samsung in this regard so I think it actually has a shot at carving out a space similar to Apples if it can get developers on board.
It actually had the phone that many of us thing Steve Jobs got the idea for the first iPhone from, the LG Prada. In fact, LG thinks Apple stole its design, which is likely why LG thinks it might be able to do this. I’m less convinced, but I can see the potential here and if LG can do the needed heavy lifting; it, because of the Prada, actually has more history than Samsung does going after Apple’s premium market.
Wrapping Up: Long Shot
Given how badly WebOS has fallen and that both Microsoft and Blackberry are in front of LG in this effort, I have serious doubts about whether LG can pull this off. But Apple’s success with the iPhone was even more unlikely at the time, given it hadn’t ever done a phone before and it approached the market with a form factor that the market had seemed to have rejected. So just because LG’s success is unlikely doesn’t mean it is impossible and maybe the company that becomes the next Apple has to prove, like Apple did, that for it, Impossible is Possible.
President and Principal Analyst, Enderle Group
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