Should HP get out of the PC business?

Is Hewlett-Packard making a supremely savvy move by dumping its PC business or a supremely stupid one?

Is Hewlett-Packard's attempt to jettison its PC business really the uber-shrewd strategy of a forward-looking executive? Or just another supremely dubious move in a series of dubious moves by HP in the past year or so?

Maybe HP is outsmarting itself by getting out of the PC business.
Maybe HP is outsmarting itself by getting out of the PC business. HP

I lean toward the latter. And analysts I've talked with are mystified. But the Wall Street Journal offers up one of the best quotes yet. Courtesy of Jayson Noland of Robert W. Baird & Co.

It's "like McDonald's getting out of the hamburger business."

Or Boeing suddenly dumping its plane business because it's tired of trying to compete with Airbus. What company gets out of a market, any market, when it's No. 1 in the world? With all the benefits that accrue to that position. Especially after spending tens (possibly hundreds) of billions dollars (not to mention an incalculable amount of blood, sweat, and tears) to achieve that status?

And CEO Leo Apotheker's decision to make this move was initially communicated on August 18 as a parenthetical in a press release about its acquisition of Autonomy. Though the company released a separate statement later in the day explaining its plans about a possible spin-off of the PC business, it was clear that HP's priorities had changed.

My guess is Apotheker is too "smart" for HP's own good. What seems like a draconian but an inescapably logical decision (PC profits are relatively low) may actually turn out to be quite the opposite: a myopic vision of HP's future. As though the only future for a major U.S. computer company (a la IBM) is software and services.

Imagine Steve Jobs' Apple--indisputably the most successful computer and consumer electronics company in the world--making the same decision. "Oh, we'll leave the laptop, phone, and tablet design stuff to Dell, Acer, Motorola, Samsung, and Lenovo. We'll just supply the software and services."

Sadly, HP is the victim of one too many CEOs. A world-straddling colossus like HP can tolerate just so many serial CEOs. Each one imposing his or her narrow vision of the future of computing. And then the company lurches yet again in another direction discarding valuable institutional knowledge and painstakingly constructed infrastructure.

"People are really looking at Apotheker cross-eyed right now," according to one analyst I spoke to. He described three "boneheaded" moves by Apotheker. One, HP overpaid for Autonomy. Two, Apotheker announced the spinoff of the PC company without any plan or timetable, "thus devaluing the PC company without deriving any benefit," he said. And, three, shutting down the "high-mobility" tablet business. Probably the hottest device market right now.

But don't take my word for it. For a long list of dubious moves by HP just see the Journal article.

Correction: I stated that HP communicated the spin-off of the PC business as a parenthetical statement (what I described as a "footnote") in a press release about the company's investment in Autonomy. That, in fact, was how HP initially communicated the news on August 18. HP, later that day, also released a statement entitled, "HP to Evaluate Strategic Alternatives for Personal Systems Group", which provided more details on its plans to spin off the PC business. --Brooke Crothers

Updated on August 29 at 11:25 a.m. PDT: with correction about HP press releases related to plans for the spin-off of the PC business.

About the author

Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.

 

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