According to the Guardian, internal HP sources have revealed that the company will be shutting down WebOS. HP had just confirmed yesterday that it will be keeping its PC business, reversing plans to spin-off the PSG division, and although it had insisted back in August that it would continue to support the WebOS software, a complete shutdown of the division looks to be imminent.

There are currently about 500 employees working in the WebOS unit, but several top-level staff have recently left, which is a telling sign. Its believed that some WebOS staff will be moved to a different division within HP, while others will be laid off. "There is a 95% chance we all get laid off between now and November, and I for one am thinking it’s for the best" said one WebOS employee.

After HP thought it had enough of Palm and decided to stop producing the phones and the TouchPad, it was only a matter of time before the retail stores that were selling these devices exclusively would be shuttered.

Before the shops were closes, however, HP did offer some tantalizing discounts on the remaining products to clear the stocks. On the last day, the HP Veer was being sold for $50, the Pixi for $25 and the TouchStone was being sold for $2.50.

After HP announced that they will no longer be producing webOS products, and after watching people stampede their local Best Buy stores in order to snatch up one of those the newly discounted $100 TouchPads, folks started wondering if webOS, which has some amazing potential, will disappear.

According to two internal HP memos leaked to PreCentral, webOS will live, but now in the way that you would expect. The first memo, from Todd Bradley, Head of HP Personal Systems Group , otherwise known as the division that is responsible for personal computers and webOS devices, and the division that HP wants to either sell off or spint out, says: "The teams in webOS software engineering, worldwide developer relations and webOS software product marketing join the Office of Strategy and Technology) under Shane Robison. This change is effective immediately. The remainder of the webOS team, under Stephen DeWitt, will continue to report into PSG, later today, Stephen will reach out to these teams with an update."

As for the second memo, this time from Shane Robison, he details how things are going to work: "The webOS software engineering, developer relations, and software product marketing teams will become a part of OS&T, effective immediately. Ari Jaaksi, senior vice president leading webOS software engineering, and Richard Kerris, vice president leading webOS worldwide developer relations, will report to me. Lee Ott, the senior director of webOS software product marketing, will report to Ari. The webOS software employees join HP Cloud Services, Vertica, and Business Solutions as an incubating business group. However, while these teams will be joining OST we have decided not to initiate any integration activities. These teams will continue to operate under their current systems and processes until further notice."

Its been four days since HP announced they will discontinue the webOS phones and tablets. Since that day a lot has happened.

First, HP slashed the TouchPad price to $99 in the USA. Hours later most of the retailers were out of stock. The same thing is expected to happen in Europe any day now, but there is nothing official so far and no significant price cut has been witnessed on a large scale though some users report temporary price drops at some retailers.

Second, Microsoft has made a move to the webOS developers, offering them free Windows Phone tools, phones and training.

Thirdly, the Android community stepped up and founded a project that aims to port the open-source Android to the Touchpad in an attempt to breathe life into the otherwise nice-looking hardware.

Today HP went ahead and did the same thing with the just released HP Palm Pre 3. The US geeks might have been lucky to get cheap TouchPads, but they will not be able to do the same with Pre 3. HP is cancelling the Pre 3 launch there before it's even happened.

The European HP Pre 3 however is already rolling out so HP now plans its next logical move slashing the price of the phone down to $99 (SIM-free). The price cut is expected any moment now in France and in the UK. The Pre 3 is already out of stock in Germany so it won't get it is out of the promotion before it's ever happened.

If you were wondering what would happen to all those TouchPads sitting in warehouses after HP decided to abandon webOS, you now have the answer. HP just announced a mouth-watering discount on the ill-fated tablet, with the base 16GB model now costing a mere $99 and the 32GB for $150.

Of course this means that now everybody wants one. Most places that were accepting bookings for the device are now flashing the "Out of Stock" sign and you would have to be lucky to get one. Thats just for the online stores though. Starting August 20, you can get the TouchPad at the new price in brick and mortar stores, but again, only if you get there in time cause I believe there will be quite a demand for these at those prices. But if you do get one it would be quite a steal. The TouchPad may not have done so well but it still is a decent tablet and for that price is terrific value.