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HP's Shift On PCs Could Boost Acer, Dell and Lenovo
CWmike writes "With HP spinning off its PC business, rivals will be looking for a way to get a bigger piece of the hardware pie. HP's PC unit news, among other industry-rattling announcements, including pulling out of the tablet market and shuttering webOS, rocked the hardware industry since HP is by far the dominant maker in the world. So while HP decides what to do, rivals should be plotting their next move, say industry analysts. Who could benefit the most from any change-up in PC sales? The obvious suspects: Dell, which passed Acer in the second quarter of this year; and Acer is looking to make up some lost ground and could see HP's shake up as an opportunity. And don't forget Lenovo, which holds the third-largest market share. Despite the general downshift for PCs, Lenovo is riding some great momentum right now, reports Gartner. In the second quarter of 2011, the company saw 22.5% growth in its PC shipments."
A related article ponders the fate of webOS, looking at a number of potential buyers as well as the unlikely possibility that HP will open source it.
If they sell of their computer business what do they think they can sell?
"Personal computer business" != "computer business". Their Q3 2011 financial review indicates that, in earnings from operations in the quarter ending July 31, 2011, the rest of the computer business - "Enterprise Servers, Storage and Networking" - was third, after the services business and the printer/scanner business, and ahead of the PC business.
I certainly would have never figured out that the largest PC maker leaving the market would benefit its competition
Knowing when to cut your losses is a pretty rare skill among computer industry management. Apotheker might turn out to be HP's Lew Gerstner.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
In the tech industry, there is a lot to see here of interest.
First, notably, a lot of the financial commentators are praising the dump of PSG because of the relatively weak ~5% margin. It is clear that a lot of the vocal members of that circle tear into the numbers piece by piece without consideration of how it relates to the whole. For example, dumping PSG means a lot of big contracts (like the NASA deal they were touting so heavily not so long ago) are going to be at high risk for cancellation. That means not only are they losing the PC piece of that pie, it means they are forfeiting some amount of server sales. The ability to sell all a company's IT needs from datacenter to desktop was actually a non-trivial advantage over IBM for a lot of procurement situations, this means they will forfeit that advantage going forward and lose server sales. There is also the reputation damage associated with companies that bet their business on the consistency of HP to potentially lose the bet. This last part will depend heavily upon how they handle existing contracts and make things right. Another consequence is on HP buying components. When you ship a whole lot of PCs, component vendors will be aggressive on margin and make it up in volume. If you are ordering only parts for servers, expect a hit to server base material cost due to lower purchase volumes. This applies to common components, but more critically distinct components sourced from the same suppliers even if they wouldn't fit in a laptop.
The whole palm acquisition handling demonstrated a complete lack of strategic direction, regardless of your opinion of WebOS. Either there was no market opportunity in the first place, meaning HP bet a couple billion based on poor marketing skills, Palm's team was a lost cause from the start, which HP should have figured out before the 1.2 billion dollar check, whatever capability was there was destroyed by HP mismanagement, or it would've worked but they canned it before even really trying. Of course, it's a combination of all of the above, but I do recall a mass exodus of nearly every single 'visionary' person who could take credit for the features about WebOS that garnered any praise, meaning HP either booted them out or at least failed to retain them, which reeks of mismanagement. Launching after the iPad2 at price parity with 0 mind share was absolutely insane.
Another thought I have is around their declared intent to move to software and services instead of PC industry. A lot of people describe this as IBM like, but IBM was *very* firmly entrenched in the software industry before they exited. HP is not nearly so robust in the software industry, and while they may be making moves in the name of getting there, they should be hedging their bets before betting those efforts will bear fruit. I do wonder if the Apotheker leadership is a bit biased from his SAP experience and assuming the answer to any company regardless of current positioning just just become a software development company. I wouldn't be surprised to see the guy handed CEO of McDonald's and tell them to shutter their fast food business and start coding.
In general, they lost 20% of their company value because 1 year ago, they said 'we want to be just like apple' and threw billions at the problem to say in only one year "we want to be nothing at all like apple". They've been showing more and more shortsightedness in their spending in the last couple of years, spending on the magnitude that demands long-term engagement and then changing their minds on short-term timescales.
XML is like violence. If it doesn't solve the problem, use more.
That explains why IBM is out of business, unless you think that servers and POS are carrying all the load.
Right... but for the last few years HP has claimed it's competing with IBM Global Services, but I don't see much real evidence of that. And I don't see HP making a lot of software either... IBM has the DB2 and WebSphere product lines (sales of which are driven by their Global Services contracts). I don't know if IBM's hardware outsells HP's, but they have a lot of products available there, too, and they cost money.
But then again, although I have two consumer-market HP PCs here in my office, I'd categorize the tower as "average to meh" and the laptop is pretty much junk. I'd love to see HP clear some space in the retail channel if it means someone who actually knows how to make a decent PC takes their place.
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