Hewllett-Packard Co. (NYSE: HPQ) will turn its WebOS software into an open-source project, aiming to get other hardware makers to embrace the struggling operating system as an alternative to software from Apple Inc. (Nasdaq: AAPL) and Google Inc. (Nasdaq: GOOG).

WebOS, acquired in last year’s $1.2 billion purchase of Palm Inc., will be offered under a license that lets hardware manufacturers and software developers access its source code and use it freely in products, the Palo Alto, California-based company said today in a statement. Hewlett-Packard will remain active in developing and supporting WebOS.

“The thing we recognized about WebOS is it really is a remarkable platform,” Chief Executive Officer Meg Whitman said in an interview on Friday. “It was not the right thing to just shut it down. It shouldn’t be wasted.”

The plan resolves a months-long debate over how to deal with software that drew praise for its innovation when it debuted in 2009, yet failed to help its owners gain market share in mobile devices. Hewlett-Packard will make WebOS available to makers of tablets, smartphones and other devices under a license that requires companies using it to contribute their changes back to the project, company executives said.

The company also plans to set up a “governance committee” of as many as six members, including Hewlett-Packard technicians and outside developers, to approve changes to WebOS code.

No ‘Fractured’ Systems

The move is designed to help prevent fragmentation of the software that would slow its momentum by letting device makers bring incompatible versions to market, Martin Risau, Whitman’s chief of staff, said in an interview.

“We want to do it right,” he said. “We want to make sure WebOS is not going to be fractured.”

The company announced in August that it would stop producing hardware that used the operating system, including Palm Pre phones and the TouchPad tablet.

Whitman considered options for WebOS, including shutting it down and selling the intellectual property, or striking a partnership, she said. Now, Hewlett-Packard itself will benefit from the decision, and will likely release new WebOS-based hardware devices in 2013, she said. The company probably won’t release any more smartphones using the software.

“I think we’re out of the smartphone business,” she said.

Hewlett-Packard’s decision would benefit electronics makers that want alternatives to Google’s Android operating system and Microsoft Corp.’s Windows Phone and planned Windows 8, said Tim Bajarin, president of researcher Creative Strategies Inc.

Google, Microsoft Counterweight

“The hardware developers have been looking for a third OS option, especially for tablets,” he said. “What they really want is a third OS with no strings attached.”

Developers can also write WebOS applications using the HTML5 programming language, Bajarin said.

Now, Hewlett-Packard’s task will be releasing the open- source version of the code in a timely fashion while attracting more interest in the platform.

At the same time, the company is working to replace portions of WebOS’s source code licensed from companies including Microsoft and Oracle Corp. (ORCL) with open-source alternatives, said Sam Greenblatt, chief technology officer for advanced technologies at Hewlett-Packard. For example, the system uses Microsoft digital rights management software and the Berkeley DB database from Oracle, he said.

Sales Shortfalls

WebOS was developed by Palm under its former CEO Jon Rubinstein — now a Hewlett-Packard executive — before the computer maker bought Palm in July 2010. The operating system powered Palm smartphones and the TouchPad, which Hewlett-Packard introduced in July of this year.

In February, then-CEO Leo Apotheker said he’d planned to install the operating system on every Hewlett-Packard personal computer. The company also said it would include the software on certain printers.

After disappointing sales, Apotheker pulled the TouchPad and WebOS phones from the market on Aug. 18. That day Hewlett- Packard also announced a $10.3 billion acquisition of software maker Autonomy Corp. and discussed spinning off the PC division. Investors sent the shares tumbling 20 percent the next day, and Apotheker was ousted a month later.

WebOS has been a drag on profit. In fiscal 2011, which ended in October, Hewlett-Packard posted $1.64 billion in expenses related to the decision to stop making WebOS devices.

In a July reorganization, Rubinstein took a new product development job in the PC group. Then in August the company’s WebOS software developers joined a group headed by then-chief technology officer Shane Robison, who has since departed.

Whitman has been revisiting her predecessor’s decisions as she tries to stabilize the company. On Oct. 27, she scrapped Apotheker’s proposal to spin off the company’s $39.5 billion PC division.

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