Microsoft, HP split: the backstory

This is a happy Valentine's Day for Steve Ballmer, who has a new best friend forever in Nokia, the world's biggest phone company.

It's just in time, since Microsoft's relationship with the world's biggest PC maker is on the rocks. Hewlett-Packard last week said it's going to use its own operating system for tablets, mobile phones and even PCs going forward.

Thirty years after the PC emerged — and Microsoft won the most profitable franchise in history — the cards are being reshuffled.

PC sales are slower, computers now fit in your pocket and the mix of devices people use to compute, connect and communicate is in flux.

As this new era of mobile computing gets its stride, there's no single winner yet. Not in the way Microsoft dominates the PC, Google owns search and Nokia used to lead the mobile-phone business.

HP and Nokia traded places, and not just in Ballmer's little black book.

Nokia pretty much gave up on building its own smartphone software, and decided to use Microsoft's platform on hundreds of millions of pocket computers it will produce in the coming years.

HP went the opposite direction. It pronounced that its next big push into mobile computing will be based on its own software. It aims to build more than 100 million devices a year on the WebOS platform it acquired when it bought Palm last year for $1.2 billion.

To learn more about this split with Microsoft, I buttonholed Phil McKinney, chief technology officer of HP's personal-systems group, during the WebOS launch event in San Francisco. Here are edited excerpts of our conversation:

Q: You said there are operating systems "appropriate for the job." Are you going to dump Windows?

A: No, there's a huge user base that still wants the PC. The key is that even on their PCs, people want to have it integrated with their devices. We have our PCs, you have your pads, you've got your phones. How do they work together? In today's world they all act as individual information islands. What WebOS does is bring all that together.

Q: It sounds like a shift in your PC business to WebOS?

A: The PCs and laptops, it will be a combination of taking the existing operating systems and bringing WebOS onto those platforms and making it universal across all of our footprint.

Q: Will you use virtualization to run both Windows and WebOS on PCs?

A: No, it's not virtualization. It's an integrated WebOS experience we're looking to bring.

Q: When will we see these PCs?

A: We haven't announced that yet.

Q: Microsoft's building Windows 8 now. Why didn't you just tell Microsoft what kind of operating system you wanted?

A: We have a great partnership with Microsoft. You think about the number of PCs we sell, we're Microsoft's largest customer. We have a huge installed base of Microsoft platforms. We're working with Microsoft on the future of Windows and we're very optimistic on what that future is, but what we think is, we can bring an enhancement to that.

Q: So you started heading down the path to WebOS five years ago?

A: Five years ago, when we started the original Slate tablet work in my team — my innovation team — we did a bunch of consumer research. We built 60 devices and put them in people's hands. We quickly realized what people were looking for was not just what they have on their desktop or laptop crammed into a small form factor.

It really is a different kind of experience. We could go off and develop our own operating system from scratch, but when we saw and did the due diligence on WebOS we really saw the power of what WebOS already had built into it, the power that could deliver to us. ...

Q: Is this a fork, with Windows staying on your business line and WebOS for consumers?

A: The key is what we see as the consumerization of IT. Look at how many technologies going into the enterprise are really decided by the consumer. I go out and buy a consumer phone, bring it into the workplace and say, 'I want my e-mail on this consumer phone,' right? I buy a pad, I bring a pad in.

What you're seeing is this collapse — this lack of differentiation — that's going to happen between what is a consumer technology and what is an enterprise technology. What the enterprises really want is manageability, security. There's an entire WebOS road map to build in all of the security models so not only is it a great consumer device.

But it will be the best and most friendly enterprise device that allows the enterprises to manage it, control it, secure the piece of information that's important to the enterprise, but all in one device experience.

Q: Going forward, will HP put most of its resources into WebOS devices vs. Windows?

A: Yeah. I mean, you're obviously seeing the huge effort here. We do have the Slate 500 Win 7 device that's out there. It's an enterprise-focused device. Enterprise customers like that from the standpoint that they can install their own security models that they're quite familiar with. But when you look at where we think the mobile platform operating system is, our obvious focus is WebOS.

Q: Are you going after new markets with WebOS, or will it take share from Windows?

A: I don't think we're taking away. The market is in expansion — it's not like we're all at a stable market and, therefore, everybody's trading market share. For us the advantage is we're in 174 countries. We've got supply-chain logistics, 88,000 retails stores. We're one of the largest consumer-electronics companies in the world simply by the shelf space we control in retail on a global basis. ...

Q: Did you opt for your own operating system because of the cost or technical limitations of Windows?

A: When you think about mobile devices, you can go at it two different ways. You can say I'm going to take that legacy and bring it forward. Or you can say I'm going to take it from the users' perspective: what's the real experience I want to develop, let me think about that experience, then let me look for the technology solution best to lever that experience.

When we started this project five years ago we threw out any concept that we were going to use anything that existed today and we focused purely on the user. When we looked at WebOS we quickly zeroed in. That was the platform that we felt was going to be the platform to go forward. ...

Everybody else — they built it on a legacy thought model whereas the WebOS guys came at it from a different perspective.

Q: So Microsoft's plans to put Windows 8 on system-on-chip hardware wasn't enough of a fresh start?

A: I can't talk about the future of Microsoft's products. We're working very closely with Microsoft; we have in the past. We ship more PCs with Windows on it than anybody else in the world. We have teams working with Microsoft on future versions and what we think those future versions need to be.

Windows is a great operating system and it's appropriate for the tasks it's designed to do. And there are other operating systems that are designed for different kinds of tasks.

Q: Is this because you see a bigger shift happening — traditional PCs giving way to mobile devices — so it's time for a new approach?

A: I think this is a little misnomer. Everybody talks about PCs going away. I don't think PCs are going away. It's not the fact that I'm not going to carry a PC or not going to have a PC at home. It's a situation where mobility, the role of mobility, has become such an important role.

Q: So now the question is, is there a new set of devices that kind of fill in what I need to do at any given point in time?

A: We're going to see a whole wide range of products coming from a wide range of manufacturers. It's going to inject a little bit of confusion in the consumers' minds as to "oh my gosh, which device?"

... It's really about allowing people to pick the two or three devices that they want and so the sizes, shapes and capabilities of all these devices are going to vary. Do you want a Pre3 [phone] and a TouchPad or do you need a laptop and a whatever?

Q: So HP's taking Apple's approach, with integrated software and hardware development?

A: I think the key is that if you want to differentiate in the marketplace you need to be able to control the key points of the differentiation.

Brier Dudley's column appears Mondays. Reach him at 206-515-5687 or bdudley@seattletimes.com.