They didn't give up on WebOS per se, they are giving up on WebOS hardware as we know it. I believe they intend to continue using it on printers and are open to licensing deals.
Building such an innovative platform focussing highly on web based developers and now switching to printers is not really good. The technology they have underneath is pretty much cutting edge and they still have a nice chance to be a leader by open sourcing (unlike Android though) and letting developers innovate right from the platform itself. My thoughts. And also, They shelled a lot of money on advertising on stupid Music Videos and Movies which they shouldn't have done and actually launch the product out as soon as the announcement.
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