Half a billion dollars, the lottery, and webOS | webOS Nation
 
 

Half a billion dollars, the lottery, and webOS 28

by Derek Kessler Wed, 28 Mar 2012 7:08 pm EDT

Half a billion dollars, the lottery, and webOS

Even if you've only been casually following the news this week, you've likely heard the big story. No, it's not that the Supreme Court is debating the constitutionality Obama's healthcare plan, nor is it that the Pope went to Cuba or that Syrian President Assad seems to have accepted a peace plan put forth by Kofi Annan. It's not even the Hunger Games movie, American Idol, or a Jet Blue pilot suffering from a mental break at 40,000 feet. No, the big story this week is five hundred million dollars - the estimated jackpot for the Mega Millions lottery drawing on Friday.

It's the largest jackpot in lottery history, hitting half a billion dollars for the first time (and if by some insane happenstance nobody wins it this week, it'll go even higher). It's also approaching half the price of what HP paid for Palm, and likely right around (or higher) what HP was getting offered for webOS when they were trying to sell it. HP's since gone open source with webOS, but there's still a big hurdle to be overcome: hardware.

Needless to say, buckets of hardware ain't cheap. Palm and HP spent billions of dollars building software and hardware with limited success. Now there's the chance HP to could make webOS hardware again, but the success or failure of Open webOS will depend on more than just HP. Other manufacturers have to get involved.

The question is - who would want to make that hundreds of millions of dollars investment? We already tackled the numerous obstacles that have to be overcome with making a smartphone or tablet, but in the end it all boils down to the Benjamins. Half a billion dollars could go a long way, wouldn't you say?
Now, we're not encouraging anybody to go out and buy a few dozen Mega Millions tickets and commit your hypothetical winnings towards starting a company to make webOS devices. It's your money, and your hypothetical winnings, you can spend it how you wish.

After taxes the winner of the lottery can probably expect to take home something closer to $300 million, which is still a good chunk of change. With only minimal software development to pay for, that whole chunk of change could be dedicated to personnel recruitment, supplier contracts, hardware development, and all the other things that need to happen to make a smartphone or tablet. Heck, if you're willing to plunk down a few hundred million (after saving some for yourself and that super sweet Gulfstream G650 you've had your eye on), you might find that others are willing to chip in a few million as well.

So, just for fun, we have to ask: What would you do with half a billion dollars?

28 Comments

I wonder if somehow... I could get a prototype Touchpad Go?

Then you are as masochist as me, because I'd love to put my hands on one - just to feel the pain of another lost opportunity.

I had my hands on one 2 weeks ago. It was sweet! A "mini" touchpad with front and rear facing camera, removable battery and very responsive. Oh........ What could have been if Leo had not killed it all at birth.

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Hmm...ok, bear in mind this is off the top of my head, so don't beat me up too much if it's not completely thought through!

If I had a few hundred million of my own money, I wouldn't spent it all on webOS. I would spend maybe up to $10 million on it, and only after I have a firm timeline on OpenMobile ACL, firm evidence that the performance and compatibility will actually be as advertised, and more information from HP on what open webOS will entail, what it will include, and whether phone support will be included. (I think it's crazy that they haven't told us that yet, by the way!)

Once those questions have been answered, and assuming I'm satisfied with the answers, I would probably spend a few million on webOS. I'd license the designs of the current webOS devices from HP (TP, TP Go, and Pre 3), and then spend a few million setting up a hardware design team to improve on them, adding the features we've all complained about them being left out, addressing the inadequacies, bringing them up to our projected next years standard for tablets and phones. (This is of course assuming that open webOS will originally be geared towards these devices - if not then I would license other reference hardware). With that done, I'd produce a small run of a few thousand devices, testing the market with the webOS faithful.

Market feedback would determine what I did next - if it was negative, then that would be the end of my foray into webOS hardware. Sorry to say that, but when it comes to things like this I tend to be all ones and zeroes. If the feedback was positive, then I'd seek investor backing to go to larger scale production and launch in a few targeted markets. No, I wouldn't use my own money for that - I already made my investment doing the R&D and testing the market - at that point it's time for others to play their part and share in the risk. I also wouldn't try to take on the whole world at once either. Rather than making one big bet I'd want to see how it performs in a few markets of regular people rather than webOS fanatics, saving cash so we would be in a good position to be able to address any issues that are revealed when the devices get into the hands of the average consumer. When I'm confident that we have a device that justifies it, that's when we'd commit to large scale production, and again, financing that with other investor's money.

What would I do with the rest of the money? I'd tithe, donate to charities I believe in, invest in promising companies, do some long term investments (most of the money most likely would go there), finance a couple business ideas I have, buy a couple properties in places I like to travel to, save a lot of it. I wouldn't really change my lifestyle - I'm mostly quite content where I am now. I would travel more though - that's probably the main thing that I can't afford to do as often as I would like.

Don't lotteries normally offer the choice between a smaller lump sum payment or the full amount spread out over a lengthy number of years? If choosing the lump sum payment, I'd expect it to be even less than $300M after taxes.

Of course, it would still be a huge amount of money.

The estimated cash option is ~$360M

you would be taxed about 40% on that money though so it would be around 170M take home,

I would hire a dozen top hardware engineers from Apple for 10 millions each. Then I would hire back Matias for another 50 million. Another 250 million will go to the remaining openwebOS team. Each one of them gets a million for sticking around. Of the remaining 80 million 20 million goes to me and the family savings. Finally the remaining 60 million will be spent on creating prototypes of webOS phones (Pre3 form, a 4 inch slab and a more powerful pixi)

P.S:- My team will compete with the folks who are porting webOS on Samsung Infuse :).

You forgot that the half-billion is an annuity over 26 years and you still have to take out taxes ;)
That, and the lump sum is around $360 million before taxes, around $250m after taxes.

Then it will be half of what I proposed.

No way I'd spend it on webOS. Two companies have tried that already - one with about $0.5B (and smartphones in their DNA) and the other with about $3.8B - and failed. Other companies with much more than the lottery winnings have taken a pass. Like any good investor, history + status quo + lack of news suggesting change = walk away (in this case).

However, I'd have a blast inventing other ways to spend that money. I might even go find a certain ex exec on a certain beach in certain Spanish speaking country and ask him certain questions.

Curious what those questions will be.
Are you going to ask WHY ? or are you going to ask if webOS is technically capable if money,resources were abundant ?

We all know the answer to the "money, ressources were abundant" question (whether we want to admit it or not). I'd say a $3.8 Billion loss is enough money to hire abundant resources for a platform that was in round 2 (meaning HP wasn't starting from scratch).

No. My questions would start along the lines of "what were you thinking...?" and go from there. Lots of topics fall under that general category (like itunes sync, the veer, sticking to sliders when the market wasn't responding to it, screwing up the chance at a good first impression with the TouchPad, hardware choices for the original Pre, etc.).

Cool, I really would like to know the answers.

However my question remains , that means technically webOS is the worst thing out there. There is no hope ?

Here's a question for you. Where in any of my posts have I stated anything "that means technically webOS is the worst thing out there"?

In this article, I've pointed out the following facts:

- webOS' history is one of failure (both with a company that invested a bit more than the estimated lottery winnings mentioned AND with a company that invested significantly more than said winnings),

- its current status is one of an OS that has been passed over by companies with deep pockets and actual smartphone "smarts",

- there is nothing concrete pointing to any change in situation

Based on that, I drew the following conclusion:

- webOS would make a very bad investment and all signs say "walk away".

"Hope" is irrelevant when it comes to investing. You don't (or at least shouldn't) invest in something because you "hope" it will be good. You invest because your research "suggests" it's a good investment. Solid research can still be wrong, but if the research does not cover history, current status AND future indicators, there is a very high probability the picture it paints is way off base.

@gpb..I wouldn't tell you invest or not invest in WebOS if you won this kind of money. I just hope that you wouldn't rely on this forum to make that decision. There are people that think they know what they are talking about but don't, as I sure you already know.

@gbp, yes, please disregard anyone with a difference of opinion because they obviously don't know enough to give them the right to have an opinion in the first place..."as I sure you already know."

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Why couldn't an upstart, or even a strong nondescript foreign company - possibly in Asia - make a deal with HP. Take the Pre3 and juice it up; work a back-end loaded royalty deal, and pump out a 100,000 units. I would buy one for $500 without a contract.

Sales could go through HP store - for a fee - and who knows what happens next. HP could even bundle them with a desktop system. As for the software end, HP will need to get its' act together on tablets, and they can't just focus on MS's version. That's where webOS can grab a part. And given time, the Touchpad could be the stronger part of HP tablet sales.

Somewhere though - somehow - someone will try this gamble. With the developments in technology, along with lowered R&D costs (the pre3 is already here, as is the Veer, and Touchpad), the risks are manageable.

It will take some patience - a valuable commodity around HP these days - being as Open Source webOS will need time to test itself.
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I don't think that volume is enough to make money esp for designs that haven't sold well like Pre 3 (even though I like the vertical slide). I say choose a established device (HTC, samsung, etc) with current hardware specs and slab form (which market demands) and put openwebos in it. The costs of hardware design would be very low, the cost of manufacturing would be lower since factory already are set up. If open webos is good enough then this company wouldn't need a lot of software/hardware engineering support and it would just run with minimal modification. Think about those specialty low volume auto companies that modify mainstream cars like mustangs for higher performance. Their financial resources are a lot lower than the big companies but they can afford to improve an existing design and sell it with good targeted marketing.
The sales would have to be online first since none of the big carriers would touch it even with appropriate certification. The cost of each device would have to be higher since no subsidies through carriers. IF this worked on small scale then they can expand. A small nimble, smart company can succeed. Trying to recreate a better palm and recruit designers and engineers to restart from scratch is too expensive. Even Nokia and poor RIM are having terrible trouble making new phones and you can believe they threw lots of money at the problem.
HP can give webos a bit of life by putting it on their tablets and dualboot or even pcs. That's relatively cheap and differentiates hp from all the other struggling pc makers (other than apple)
That's the only reason I can see HP keeping webos alive for the small hope of recouping at least some of their investments. I think there will be small startups and companies looking at webOS but they're going to keep their mouth shut until they see openwebos and whether it is mostly plug-and-play on current devices. If it isn't, they won't put their money into it. HP might make some money by hosting app markets with their recently announced cloud services. This plan might be do-able with a couple hundred million.

If I won, and all those TV cameras are on me, I'm going to say "I wouldn't be here winning today without webOSnation. Then I'd walk off the stage and let them be puzzled by it. You will then have 100,000 new members that will all buy Jay's $1 guide.

I'll get into a limo and start spend it on hookers and booze, but I'd put aside 20k for that rehab trip I;ll probably need.

give to the needie ....ME

Donate to survival of webOS!

buy a Pre3 and have god deliver it in person ;-)

I think that you keep taking the wrong approach.

I don't remember who it was but I read and interview that kept repeating "due to Palm was doing everything inside" as the reason the some devices where canceled and the other came out late.

HTC and a few others started building devices for the "big ones", I think that is the right approach, have a few good people that understand the hardware design on the "high level" and contract all the rest to a external company.

I read somewhere that for 50.000$ you get a "last year top device" built.

Cheers
JD

First, the Pope went to Mexico, that was a bigger story compared to him going to Cuba (no offense to the Cubans).
Anyway, I'll hire someone to find Leo Idiotheker and take him to a remote jungle and abandon him there for a week or so. If he survives, I will find another way to make him pay for the stupidest thing he did in his life; killed webOS!
I would take 20 or 30 millions apart for me and my loved ones. The rest might be heavily invested on making webOS devices. They would have to be sold without contract and compatible with most carriers.

Indulge every automotive fantasy I've ever had.

And when I get bored, maybe start a business or two....... or ten

I'd teach Charlie Sheen how to party...

I'd spend it on buying 5 Pre3's , 10 Pixi's , 10 Pre 2's , 10 Veer's , 5 Touchpads , & I'd donate some to HP's Palm division .

You're up to around $6,900 by my rough estimate. 2500+400+2000+1000+1000