Just two months after it became available, HP announced in a press release it would discontinue its TouchPad tablets and smartphone devices that run webOS, the Linux-based operating system it inherited in the $1.2 billion purchase of Palm in April 2010. Sluggish sales and complaints from retailers about unsold inventories led HP to cut prices on the tablets several times, eventually slashing them to US$ 99 and US$ 149 for the 16GB and 32GB models, respectively. That set off a buying frenzy for the reduced-price tablets at online merchants and big box retailers, some of whom had already shipped their inventories back to HP. The lack of inventory and sudden demand caused prices for the tablets to rise in some aftermarket online auctions to as much as $300, and the sudden interest even led HP to start a Twitter feed to keep people updated on future Touchpad availability. With the unexpected demand and their manufacturing partners reportedly stuck with parts for a large number of the devices, HP announced on its blog that it would produce a limited number of TouchPads in its fourth fiscal quarter, which ends October 31.

In addition to price, Touchpad critics disliked the hardware and lack of apps, but webOS seems to have been reasonably well regarded, even by HP. In the week before the announcement, an HP spokesman was quoted in a Wall Street Journal piece saying HP had plans to try to license webOS for use in household appliances and automobiles. And while the Touchpad may be toast, HP said it will “continue to explore options to optimize the value of webOS software going forward,” which has led to speculation that firms such as Amazon, HTC, Facebook, or Samsung may have designs on acquiring it. Samsung CEO Choi Gee Sung was later quoted in Berlin as saying his company would "never" make such an acquisition, and that “It’s not right that acquiring an operating system is becoming a fashion." Samsung has its own mobile OS, Bada, but uses Android in its Galaxy line of tablets.

It seems clear that the patents behind webOS are valuable, but their ownership appears complex, which may complicate any HP effort to sell or license them, and HP has announced no concrete plans on either front. The firm has, however, apparently decided to split management of the former Palm software assets, including webOS, from their hardware brethren. The site www.precentral.net published information from two leaked memos to employees of HP’s webOS Global Business Unit that revealed plans to move management of the software to HP’s Office of Strategy and Technology, while leaving the hardware under its Personal Systems Group.

In the wake of the Touchpad fire sale, at least two different groups announced plans to get Google’s Android operating system running on the Touchpad hardware, and one group, CyanogenMod, aims to make the Touchpad bootable by multiple operating systems, including webOS. The group has released a video showing an alpha version of its Android variant booting up on a Touchpad. Another group, which dubbed its effort TouchDroid, posted plans on a RootzWiki forum to develop a port of Android 2.3 (Gingerbread) on Touchpad hardware, and has also launched a Touchdroid Wiki for developers who may be interested.

Adding another wrinkle to the saga, Microsoft is reportedly offering phones, development tools and training on their Windows phone platform to webOS developers who have had applications added to the webOS arsenal, and as many as 1,000 have reportedly contacted the firm about the offer.