HP’s decision to keep PC business includes a commitment to tablet biz

by David Needle

October 27 2011

Another day, another change in strategy for HP. The computer giant today announced that contrary to its earlier announced plans to either spin off or sell its PC business it has decided to keep things the way they are. HP, the leading seller of PCs worldwide, said that after a careful analysis it concluded that spinning off the what it calls the Personal Systems Group would be too expensive and not in the company’s best interest.

HP’s new CEO Meg Whitman also reaffirmed the company’s commitment to the tablet market in a call with analysts after the announcement.

The comments about the tablet market are important since HP’s high profile failed launch of its TouchPad line based on the webOS software it acquired as part of its billion dollar purchase of Palm. After a few months in the market, the TouchPad only achieved a few percentage points of share in a market dominated by Apple’s iPad, and to a much lesser extent, Android-based tablets. 

HP earlier offered the TouchPad at a $99 fire sale price to clean out inventory and the device sold out quickly. But Whitman only talked about HP’s Windows tablet business and plans to offer Windows 8 tablets due out later next year, not webOS. 

"We're going to make another run at this," said Whitman. But just how quickly IT shops will be interested in an alternative to iPad and the growing number of Android-based tablets coming to market is an open question. The search firm Gartner has forecast Windows 8 deployments will be slower than Windows 7. 

Todd Bradley, who heads HP’s PSG, a division that accounts for over a third of the company’s multi-billion dollar revenue, took exception to a suggestion that HP was behind in the tablet business. 

"We're at the beginning stages of a new segment in personal computing. I hardly believe that a few months in we can be classified as too late,” he said. 

HP already offers tablets based on Windows 7, but Windows 8 sports additional features and a new interface that’s supposed to be more optimized for the tablet form factor. 

Bradley and other HP officials had said the company was committed to webOS even after it announced plans to spin off the PC division. Before the PC announcement, then CEO Leo Apotheker said HP planned to license webOS to other PC makers and bundle it with new PCs starting in 2012. 

Whitman didn’t dismiss the idea that HP still plans to leverage webOS in some way going forward, but she wasn’t specific. 

“webOS is the next piece to complete. The whole team is working very hard to make the right decisions,” she said, adding that a decision about webOS’ long term future would be made in the next couple of months. 

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