Stay on Top of Emerging Technology Trends Get updates impacting your industry from our GigaOm Research Community

Things were looking up in early 2013 for the team behind webOS, a pioneering but star-crossed mobile operating system. After surviving the implosion of Palm and a rocky acquisition by HP, LG stepped in to buy the team. The consumer electronics giant seemed like a white knight with a plan: To make webOS the core of LG’s next-generation smart TV platform, and use the brains behind webOS to create a much-needed engine of innovation at LG. To create a unit that was meant to help the company to beat competitors like Samsung with Silicon Valley smarts. A disruptive force.

Eighteen months later, the acquisition looks a lot like a failure. About a third of the webOS team has left [company]LG[/company] since the acquisition, including some recent high-profile departures. Others are close to making the jump, as early euphoria has been displaced by disillusionment and frustration. The LG Silicon Valley Lab, as the webOS unit is now officially called, introduced LG’s first webOS-based smart TV at CES in January, but the road to Vegas was rocky, and the device unveiled at the show almost didn’t happen, save for a few lucky accidents.

I’ve talked to a number of current and former webOS team members as well as people with knowledge about the decision making process within LG over the last couple of weeks, and the picture emerging from those interviews is an ugly one, full of fights and corporate politics. It’s a story about about a failed acquisition, but also about the changing realities of consumer electronics, which are transforming from simple appliances to smart devices at a speed that often leaves big, slow-moving companies at a loss.

Critics loved LG’s new smart TV at CES

From the outside, LG’s webOS acquisition may seem like a success story. The Korean consumer electronics maker made a big splash at CES in Las Vegas this year with its first webOS-based smart TVs, which proposed a radically different interface for connected televisions. Instead of busy home screens full of app shortcuts, LG’s TV featured a simple tab-based launcher at the bottom of the screen that was somewhat reminiscent of the original webOS, while adapting its design philosophy to the TV environment.

LG’s webOS TVs didn’t have separate menus for TV inputs, apps and web content, but instead treated everything like tabs on a horizontal launch bar. The launcher incorporated a kind of history, surfacing apps that users most recently launched and hiding rarely-used services, while still offering users a way to personalize their own experience.

This was very different from LG’s previous smart TV system, which was a convoluted mess of competing menus, shortcuts and app stores, and its clear vision also set itself apart from much of the competition. Critics seemed to like this approach, calling it “very, very well executed,” “more intuitive than most other smart TVs” and even “the best smart TV UI we’ve ever used.”

How LG really wanted its webOS TV to look like

To the webOS team, these accolades were doubly rewarding. That’s because the team had been in a several-month-long battle over the interface with LG managers in Korea, who preferred a vision that’s been described to me as a mixture of the traditional LG smart TV platform and the user interface [company]Samsung[/company] first introduced at CES 2013.

If Korea had had its way, webOS TVs would have had an additional menu gallery of vertically-scrolling cards, including one for personal media sharing, one for browser bookmarks and one for all installed apps. Altogether, the UI was to consist of close to a dozen such cards that consumers would have had to rotate through to find the apps or content they wanted.

The Silicon Valley team fought this interface tooth and nail, but LG moved forward with it — only to realize eventually that it had become too resource-intensive to run smoothly on its TV hardware. CES was approaching quickly, and LG’s engineers ran out of time trying to make their complicated interface work, so the decision was made to go with the webOS launcher instead in order to have anything up and running at all.

“We got lucky,” said one member of the original webOS team, who like others in this story declined to be identified by name.

Feature bloat as a result of ill-conceived corporate policies

I’ve been told that this anecdote was symptomatic of many of the struggles the webOS team was facing across all parts of its operation, including engineering. Despite repeated requests, LG never hired more engineers for the Silicon Valley group. Instead, it put them at the mercy of engineers in Korea who were beholden to their local management, and frequently built features that the webOS team didn’t ask for, or worse, had long fought against.

On the engineering side, the webOS team also struggled with a culture clash of sorts that pitted company politics against its attempt to simplify the company’s smart TV platform. Sources told me that LG had a policy in place to reward managers with bonuses or even promotions if their features were part of the final product. The result was a constant feature bloat, as everyone tried to add on one more thing.

The result of that policy can still be seen on LG’s previous-generation smart TVs, which long featured not one but two app stores, forcing consumers to decide whether the app they were looking for was a “premium app” or a “smart world app.” To consumers, those TVs were simply confusing. Insiders on the other hand recognized a representation of LG’s internal power struggles, with each team getting their own, dedicated section in the UI, whether it made sense or not.

The constant fight against this feature-bloat wore the Silicon Valley-based webOS team out. One member told me that the two sides were “like water and oil.”

The tumultuous history of webOS

Of course, it wasn’t all smooth sailing for the webOS team before the acquisition through LG. The Linux-based operating system was originally conceived by [company]Palm[/company] as a successor to its dated Palm OS, meant to prepare the company to compete with Apple and Google in the smart phone world. But Palm failed to gain traction in a world that quickly became a two-way race, and was eventually acquired by [company]HP[/company] in 2010.

The computer giant also had big plans for webOS, and wanted to make it the center of its mobile strategy. But soon after, HP did a huge turn-about when it released the webOS-based Touchpad in early 2011, only to kill the project a few months later, and sell all remaining inventory at huge discounts. In late 2011, HP turned webOS into an open source project, and spun off the webOS team into a separate corporate unit called GRAM.

GRAM was supposed to operate in stealth mode and incubate a whole range of new products and services for HP, but none of it actually ever launched. When LG eventually acquired the unit, spirits were high, because it seemed like an actual product launch was finally a real possibility — and because LG representatives told the team that it would was one of the most valuable assets within LG, with a clear mission of innovation. Here’s how LG CTO Scott Ahn put it at the time of the acqusition:

““This groundbreaking development demonstrates LG’s commitment to investing in talent and research in Silicon Valley, one of the world’s innovation hotbeds. It creates a new path for LG to offer an intuitive user experience and Internet services across a range of consumer electronics devices.”

Internally, the team was told that it shouldn’t get bogged down by bureaucracy, and promised to operate largely independently. “But when push came to shove, nobody would back us up,” said one team member.

LG is not alone in its struggle to understand this new world

In a way, LG’s struggles with webOS aren’t surprising at all. It’s not just that the company is a giant organization with long-established internal bureaucracies; it’s also a company that for decades has made billions with producing and selling washing machines, refrigerators and vacuum cleaners. For a long time, TVs were just another appliance for LG, something that consumers bought based on size and picture quality, and then replaced every five to ten years. The product was clearly defined, and so was the market. Sure, some players changed, some markets were up for grabs, but Samsung had long been the biggest competitor that had to be matched or beat on all fronts.

With the emergence of streaming services and connected devices as well as the growing dominance of Chinese TV manufacturers, the field has begun to change more dramatically, and companies like LG are at a loss at how to respond. LG’s first attempt to build an Apple TV competitor was a colossal failure and its own smart TVs were a complicated mess. Attempts to get a stronger and easier-to-use platform by using Google’s Google TV system didn’t go anywhere either.

But LG isn’t alone with this at all. Companies like [company]Sony[/company] have been all-but-steamrolled by the market changes, and even [company]Samsung[/company] long stumbled to get smart TV right, at times introducing products that were completely detached from reality.

In a way, investing in webOS made a lot of sense for LG’s TV plans, and the introduction of the webOS TV as well as initiatives like its Connect SDK showed that the company was on the right track. But with its huge attrition rate, damaged morale, and decisions about the future of webOS TVS being shifted to Korea, one has to wonder how much of that vision will survive the coming months. “I don’t have a lot of faith in this operation,” said one team member.

The bottom line is that save for a miracle or a radical change in course, LG may simply have screwed up this acquisition. “I see this as a failed experiment for LG,” said a former team member who left the company in recent months. “We didn’t change LG.”