HP Fiddles While Microsoft Does (Really Slow) BurnHP Fiddles While Microsoft Does (Really Slow) Burn

It's hard to say what's more astonishing—the news that HP will ship WebOS on every PC starting next year, or Microsoft's lackadaisical response to the fact that its biggest hardware partner is no longer exclusively wedded to Windows.

To recap the latest events in this industry-changing saga, HP CEO Leo Apotheker told Bloomberg News that HP had "lost its soul" under former chief executive cost-cutter Mark Hurd, and that he would work to restore Palo Alto's reputation as an innovator by focusing on software. As part of that plan, every PC that HP ships next year will carry WebOS as well as Windows, possibly as a dual-boot option or with WebOS running on top of Windows.

"You create a massive platform," said Apotheker, referring to his intention to stretch WebOS across smartphones, tablets, and personal computers.

This news came amid reports earlier in the week that Microsoft won't have a truly tablet-compatible version of Windows until the 2012 back-to-school season, when it plans to release an edition of Windows 8 geared to run on ARM's mobile processors. That leaves a massive gap of 18 months during which time HP will seed the personal computing market with non-Windows technology, the iPad will have hit its third iteration, and Google’s Android (which can run smartphones, slates, and netbooks) will rack up more double-digit market share gains.

This is the equivalent of a land, sea, and air assault on Microsoft, to which the company's leadership seems bizarrely blase. CEO Steve Ballmer had this to say about tablets at last summer's financial analysts meeting: "Blah, blah, blah, blah." That's really what he said; you can check the transcript here.

Also troubling is the fact that Ray Ozzie, the one senior executive in Redmond who seemed to grasp the gravity of threats facing Microsoft, has been nudged out the door. Ozzie wrote a memo late last year that spelled out the doomsday scenario facing Microsoft if the company doesn't discover some resiliency and adaptability—fast.

"Certain of our competitors' products and their rapid advancement & refinement of new usage scenarios have been quite noteworthy. Our early and clear vision notwithstanding, their execution has surpassed our own in mobile experiences, in the seamless fusion of hardware & software & services, and in social networking & myriad new forms of Internet-centric social interaction," Ozzie wrote.

"We at Microsoft know from our common past—even the past five years—that if we know what needs to be done, and if we act decisively, any challenge can be transformed into a significant opportunity. And so, the first step for each of us is to imagine fearlessly, to dream," he said. But Ozzie had already decided that there wasn't much post-PC-world fearless dreaming going on at Microsoft—his memo was published 10 days after it was disclosed he would be leaving the company.

Ballmer needs to write his own manifesto in which he makes clear he understands the severity of the challenges to the Windows franchise—sales of which could be cut by a quarter permanently if HP ultimately ditches the OS completely. His Alfred E. Neuman act isn't going to cut it much longer with investors, customers, and employees who are confronted daily with tech headlines that show just how badly Microsoft is getting outflanked by a whole new group of rivals.

Windows has built up so much complexity over the years—it’s now up to about 50 million lines of code by some accounts--that it may indeed be impossible for Microsoft's engineers to rearchitect it for multiple platforms in anything less than a year-and-a-half. But Microsoft should at least be sending out signals that building a new Windows client for the post-PC era described by Ozzie is a top priority. Instead, we're getting a troubling nonchalance.

"Blah, blah, blah?" Really, Steve? That's all you've got to say about what may be the most disruptive technology the industry has seen in a decade? About a technology your company's failure to deliver in a timely fashion caused your biggest partner to throw its hands up and buy its own tablet OS, which it's now aiming squarely at your precious desktop franchise?

Microsoft needs to do many things to respond to the serious threats it’s facing. It should start by acknowledging them.