The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (

Trefis

) --

HP

's

(HPQ) - Get Report

third quarter FY11 results included the announcement that HP "will discontinue operations for WebOS devices, specifically the TouchPad and WebOS phones. HP will continue to explore options to optimize the value of WebOS software going forward."

Effectively HP has killed the WebOS platform, which it acquired by buying Palm for $1.2 billion in 2010. The company's WebOS competed primarily with

Google

's

(GOOG) - Get Report

Android,

Apple

's

(AAPL) - Get Report

iOS and

Microsoft

's

(MSFT) - Get Report

Windows Phone 7 in the mobile computing market (smartphones and tablets).

In light of Google's recent Motorola deal and Apple's unwillingness to license its iOS to third parties, we believe that Microsoft will be one of the primary beneficiaries of the death of WebOS. We currently have a

$28 Trefis price estimate for Microsoft, which implies a 10% upside to the current market price.

Microsoft is making the most of WebOS's demise. The company has been wooing the abandoned WebOS developers with free phones and goodies in order to attract them to the Windows Phone 7 platform. After HP announced that it would discontinue WebOS, Brandon Watson, Senior Director of Microsoft's Windows Phone 7 business, announced on Twitter that Microsoft will be giving free Windows Phone 7 phones and training to all published WebOS developers. With WebOS dead, and the future of RIM's QNX looking bleak, Microsoft's Windows Phone 7 remains one of the most promising alternatives to Google's Android and Apple's iOS platforms.

Apple doesn't license its software to other hardware manufacturers, and Google's recent Motorola acquisition has prompted other smartphone and tablet makers like HTC, Samsung and LG to start looking at other alternatives. HTC, Samsung and Nokia are already working on a new range of Windows Phone 7 devices which will compete with Android and iOS across the entire price spectrum.

Windows 8 a Contender in the Tablet Market

While Microsoft's Windows 7 phone operating system is currently targeted at smartphones, Microsoft has been working on Windows 8 which will be a unified operating system for desktops and tablets. Android for tablets still has a marginal market share with the iPad dominating the tablet market currently. Windows 8 has an opportunity to become one of the dominant tablet platforms. Tablet manufacturers may be reluctant to rely on Google's Android operating system in light of the Motorola deal.

While Office and Windows remain Microsoft's most profitable businesses, the Entertainment and Devices division, comprised of the Xbox and Windows Phone 7 had the highest growth last quarter.

Windows Phone 7 could turn out to be Microsoft's next billion-dollar business and gaining a significant share of the tablet market with Windows 8 could boost revenues for Windows business even more.

Check out our complete analysis of Microsoft.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.