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HP may spin off its PC business to escape iPad effect

updated 01:25 pm EDT, Thu August 18, 2011

HP rumored breaking out Personal Systems Group

A potentially landscape-altering rumor emerged Thursday that HP was about to split off the Personal Systems Group that controls its PC business. Contacts with "direct knowledge" claimed the division could happen just as it was set to announce its spring quarter results in the afternoon. Bloomberg suggested HP was hoping to reduce its dependence on computers, where its emphasis on a low profit margin was being hurt as more buyers were opting for iPads instead.

The company for many has come to define the Windows PC field, often focusing on sub-$600 home PCs and embodying many of the practices meant to cut corners and maintain profit margins, such as outsourcing help to the developing world or using cheaper materials and parts. While the techniques have kept HP out in front for market share, it may have proven costly as it has seen home PC sales shrink rapidly as it ends up leading an industry that would still be smaller but was now also less profitable.

Current CEO Leo Apotheker has argued that HP should go more in the direction of his former employer, SAP, and focus more on services and enterprise-level software. HP's enterprise PC sales have also usually fared better as they haven't been as subject to the race towards lower prices and quality as the home space.

Accordingly, HP is rumored to be buying Autonomy, a UK database search developer, for $10 billion.

The rumor is unconfirmed but, if true, could have major ramifications for the computer industry. HP's PC group would no longer have the financial shelter of the enterprise segment and could struggle in the market if it isn't immediately profitable on its own. The mobile group could also be in jeopardy as a result. Any separate firm would have to rebrand itself and could face difficulty shedding the HP name.

By Electronista Staff
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  1. Paul Huang

    Mac Enthusiast

    Joined: Sep 1999


    When the going gets tough...

    The wimp drops the bomb.

  1. SierraDragon

    Mac Elite

    Joined: Mar 2004


    No escape

    Accounting changes just move the same numbers around. For the likes of HP building low end crapware running Win crapware there will be no escaping the iPad effect.

  1. climacs

    Mac Enthusiast

    Joined: Sep 2001


    psst... Google...

    I know of a great company you can buy to help you catch up to the iPad...

  1. Feathers

    Grizzled Veteran

    Joined: Oct 1999


    BC and AC

    This is the defining AC (after Carly) moment where a once great company (before Carly) finally completely sheds all the cr+p that Fiorina dragged the company into producing. Messrs Hewlett and Packard would be smiling at the idea that the HP name will no longer be associated with tacky, cheap, plastic consumer crud.

  1. bigpics

    Fresh-Faced Recruit

    Joined: Oct 2009


    comment title

    The sound of one hand clapping for its latest efforts to stay relevant with Web OS is likely a culminating (but not the original) force. The article notes "Apotheker has argued that HP should go more in the direction of his former employer, SAP, and focus more on services and enterprise-level software," but the move (if it happens) is right out of the playbook of another company HP's been long compared to in a number of ways, IBM, which dumped its PC ops on Lenovo - a move which has done much to help Big Blue regain its mojo, big mo and modern mission (in its second CENTURY of operation). And hasn't worked out badly for Lenovo to date.

    The part of the personal computing industry dominated by HP is shrinking - first relatively and at the moment, absolutely. There were fairly high hopes WebOS could establish it as a player in the emerging consumer device markets of the future, but little of the first full 18 months of work on that has gone well at all (as, e.g., in yesterday's stories about Best Buy wanting HP to take back all the TouchPads sitting in BB warehouses even after price cuts and incentives).

    I personally feel this is more a case of failed execution on a number of fronts (e.g., the rushed roll out of the TP with slow, buggy, wanting software - which is the version that got reviewed instead of the 3.02 update which would have made a much better first impression) - rather than a fundamental flaw, as WebOS has real technological potential, but in any case, the brand is tarnishing and looks like HP's feeling they better get out while the asset still has some tangible value.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010


    This is what Motorola did

    Motorola Mobility was bleeding money. Motorola spun off the group to help its overall corporate-wide profitability. And Motorola Mobility still bled money, even after fully committing to Android.

    So MM pointed the gun at Google's head and said "Buy us or we'll sue all other Android Manufacturers with our 24,000 patents." Not a cross-licensing contract like Nokia + Microsoft. They forced Google to buy the whole raging dumpster fire for better or worse. Probably worse.

    So HP is now selling off their PC business. And what, exactly, is the difference between HP's PC business and Motorola Mobility? MM had a gun. HP's PC division only has harsh language.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010


    This just in...

    HP's newly orphaned PC division has cancelled its existing iPad clones. No more TouchPad. No more webOS devices of any kind for that matter.

    Oh well, we all expected it. Hey, what's for dinner?

  1. SockRolid

    Forum Regular

    Joined: Jan 2010


    On the bright side...

    ... I'm sure HP would be glad to sell webOS to, say, Microsoft. So Microsoft will have something to fall back on when Windows Phone 7 fails.

    I'm sure webOS would cost Microsoft less than $8.5 billion...

  1. qazwart

    Fresh-Faced Recruit

    Joined: Apr 2001


    Why not the entire PC Business?

    They're dropping WebOS and going full desktop just as the corporate desktop PC is nearing its end of life. In a decade (maybe sooner) the idea of a PC on every desktop will be a quaint idea.

  1. Grendelmon

    Mac Enthusiast

    Joined: Dec 2007


    The iPad effect?

    *Rolls Eyes*

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