Neither Palm devices, nor the HP TouchPad were ever going to be able to showcase webOS properly. That’s why yesterday’s news that HP was shutting down its webOS hardware development should have been welcomed by the company’s Personal Systems Group, a source familiar with the matter has told The Next Web. Update below.

Instead, the announcement was handled poorly, producing confusion about the future of webOS that may hurt its chances to survive.

HP made the announcement that it was ceasing to make webOS hardware, but neglected to get a hardware licensing deal in place before doing so. This seemed to drive home the point that webOS was dead in the water, when in fact it is very much alive and was never the issue. It was the hardware that was killing HP’s OS.

If HP had announced a licensing deal before the discontinuation of the hardware, the news would have gone much differently today. There would be no stories about the ‘death of webOS’, an OS that many of us thought was just starting to get good.

But HP did not secure licensing and now the most popular byline is about the death of webOS. But the whole inside story of the shuttering of HP’s webOS hardware division is far more interesting than the way it appeared from the outside and things might not be as grim for webOS as they first appear.

How it went down

Almost everyone at HP found out about the death of the TouchPad and Pre hardware as the public did, in the press release. Only the top executives knew anything about this decision and even senior staff as high as Ari Jaaksi, the Vice President of webOS software, didn’t know about the shuttering of hardware before it happened.

After the press release came out, there was a company wide meeting filled with a bunch of ‘corporate speak’, in which staff were told that they were going to be in limbo for 3-4 weeks.

The Next Web has also learned that way that the shuttering was announced shocked many inside the company because they knew that eventually HP was going to have to seek better hardware, ditching the current TouchPad and Pre in the process. Perhaps in a year, maybe longer, but only after HP had deals set to license the OS to a manufacturer that would make next-gen devices.

Although the rumors were that webOS was going to be licensed to a manufacturer like Samsung or HTC, no announcement was made at the meeting. Company-wide, however, the message has been, and continues to be, that webOS is going to be licensed to another hardware manufacturer, not completely trashed and not sold off.

skitched 20110819 020509 An inside look at HP killing webOS hardware: Here’s how it really went down.

What is the future of webOS?

Currently, the party line internally to the company is 100% licensing to another hardware manufacturer. There are no talks of selling whatsoever. This is something that most of the employees working with webOS would welcome as the current hardware was not showing off webOS well at all. There have been some indications that this is the case, although HP CEO Leo Apotheker is keeping mum on the exact future of webOS, at least publicly.

Because of the way that the hardware cancellation was announced, the future of webOS was made to look incredibly uncertain, which it very well could be unless a licensing deal is struck. Because HP didn’t announce a licensing deal up front, many employees working on webOS are unsure that they will have a job and HP stands to lose a lot of talent as employees get restless and begin looking for opportunities elsewhere.

We’re sure that at least some of the employees at HP’s Personal Systems Group have already begun receiving a lot of calls from recruiters working for other large Silicon Valley companies like Facebook, Google or Apple. There is a lot of talent at HP and they would be silly not to.

From what we were told, most HP employees are incredibly proud of webOS. They feel that they were building an OS with better design and interaction than Apple because they were more agile. Apple is seen as locked in to its design, unable to make drastic changes without affecting hundreds of developers and confusing customers. HP felt that this was its chance to shine against Apple by being more flexible and creating a unique experience with the interface of webOS.

HP saw Apple as its only close competitor in terms of design and software. Android was considered ‘utterly crap’ as far as customer experience and interaction and Apple was clearly the one to beat. People working on the project are apparently devastated by the fact that they might not get to continue their work and most at HP want a hardware partner that it can use to finish what it started with webOS.

What now?

Despite the uncertainty, the mood at HP was described to TNW as light and hopeful. These are incredibly dedicated and talented engineers who helped to create what many believe to be the one real potential contender with a fraction of the polish and presence of iOS. All they want is for the OS they’ve created to shine on hardware that is worthy.news hp touchpad 220x203 An inside look at HP killing webOS hardware: Here’s how it really went down.

HP’s hardware division is obviously taking the brunt of the hit, and an entire building of hardware and industrial engineers has been let go already. Some of these hardware engineers were most likely responsible for the 2-year old TouchPad hardware that caused HP to pull the plug. But these were also the same engineers working to make the next generation of webOS hardware better. They will never get the chance now.

The media made the situation far worse by pounding away at the “Death of webOS” headlines, when the fact of the matter is that the true future of webOS is, at least as of now, undecided. The hardware is dead, but webOS very well may live on, if, and only if, it can find a new home.

Update. From what we’re hearing now, the employees losing their job have not yet been detailed, this differs from the information we first heard. This means that, although it is not unusual to think that the hardware staff will be let go, they have not been told of it yet.