HP kills tablets, confirms PC spin-off plans
HP also confirmed it is in acquisition talks with software maker Autonomy (see video, below)
IDG News Service - Hewlett-Packard (HP) on Thursday said it will discontinue operations for webOS devices, specifically the TouchPad tablets and smartphones. It also confirmed that it is exploring the possible spin-off or sale of its Personal Systems Group (PSG), which dominates the global PC market.
The company's board of directors has authorized HP to explore options for the PSG unit. "HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction," the company said in a statement.
HP also confirmed it was in talks to acquire analytics software vendor Autonomy, though it did not provide further details. Reports from Bloomberg and the Wall Street Journal earlier on Thursday put a $10 billion price tag on such a deal.
HP's Personal Systems Group, which sells PCs, tablets and smartphones, has the company's lowest profit margin although it accounted for nearly a third of HP's overall revenues in 2010. PC sales -- particularly consumer products -- tend to fluctuate more than business solutions and services as they are more sensitive to seasonal buying trends and economic trends, said Charles King, principal analyst at Pund-IT.
"By spinning off PCs, HP could effectively isolate potentially volatile financial numbers and their effect on its more stable, higher-margin businesses," King said.
HP is following in the footsteps of IBM, which spun off its PC business to Lenovo in 2005 to focus on the higher-margin software and services business. HP may also feel pressure from Apple, which has released highly profitable consumer products such as smartphones and tablets. Apple's tablets have hurt PC shipments, a market that HP dominates as the world's largest PC vendor.
HP is cutting its losses in the smartphone and tablet market quite speedily: it unveiled its TouchPad tablet and new smartphones with much fanfare only in February.
HP's PC business has been marginally profitable, but the margins have shrunk over the years, said Roger Kay, president of Endpoint Technologies Associates.
"It certainly goes against Carly Fiorina's theory of 'all's well together,'" Kay said. HP bought PC maker Compaq for $25 billion in 2002 when Fiorina was CEO.
Meanwhile, the possible purchase of Autonomy would be "completely in keeping with the increased focus on software and business solutions that HP's board had in mind when they hired [CEO] Leo Apotheker," said King.
Based in San Francisco and Cambridge, Massachusetts, Autonomy provides a variety of portal, enterprise search, content management and analysis tools to organizations.
Q2 worldwide PC shipments
|Company||2Q11 Shipments||2Q11 Market Share (%)||2Q10 Shipments||2Q10 Market Share (%)||2Q10-2Q11 Growth (%)|
- Server makers rush their Heartbleed patches
- HP to pay $108M in bribery, corruption case
- Windows XP expiration couldn't save PC market in Q1
- HP touts speedy Z Turbo Drive PCI-Express SSDs
- HP says never mind about June 3D printer announcement
- After 30 years, HP brings multifunction inkjet printing to the office
- Newest bug bounty touts $10K rewards, appeals for help in finding Flash flaws
- HP has solved two big problems with 3D printing
- Ex-Autonomy chief Lynch slams HP, CEO Whitman ahead of shareholder meeting
- Tech industry needs more diverse workforce
- Aberdeen Group: Marketing Analytics for Manufacturing: Forging Customer Insights There are no recalls for poor marketing. Manufacturers need to get their customer intelligence and messaging right the first time. Learn how.
- The Brave New World of Customer-Centric Manufacturing The Unique Opportunity for Manufacturers to Better Understand their Consumers
- See the Possibilities Utilizing Data Visualization Do you simply want to collect data, or do you want to derive business insights from it? What if you could quickly and...
Changing the Way Government Works: Four Technology Trends that Drive Down Costs and Increase Productivity
This paper discusses four technology-based approaches to improving processes and increasing
productivity while driving down department and agency costs.
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All IT Industry White Papers | Webcasts