HP to spin off PC business to focus on enterprise software

Posted:
in AppleOutsider edited January 2014
Hewlett Packard, the world's largest PC maker, has announced plans to spin off its PC business and scrap its recently acquired webOS smartphone and TouchPad tablet business to focus on software and services.



According to a report by Bloomberg, HP "has been aiming to lessen its dependence on lower-margin PCs, where growth has stalled as consumers flock to tablet-style computers like those made by Apple."



Recent reports have documented HP's slide, along with most other top PC makers, in shipments of new computers as Apple continues to grow its sales of Macs and particularly iPads.



Apple was the only maker in the top 5 PC vendors of Western Europe to experience growth in computer shipments, and the company just surpassed HP in mobile PC sales, largely due to booming sales of iPads.



HP has been unable to gain traction for its own iPad alternative, despite a campaign launched last year to buy Palm for $1.2 billion and use its webOS to power a new generation of mobile devices.



HP is scheduled to announce quarterly earnings after the market closes today, and is expected to detail its $10 billion plan to acquire Autonomy Corporation, the second largest UK software maker, headquartered in Cambridge, as it spins off its PC hardware unit.



Autonomy develops enterprise search and data processing technologies that look for meaning in text, voice and video data, whether in a database, files or streams. Much of its technology has origins in research conducted at the University of Cambridge.



Changing landscape of personal computing



Apple's cofounder Steve Wozniak originally worked for HP, but the firm didn't see any value in his design for what would later become the first Apple computer. Wozniak subsequently worked with Steve Jobs to develop his design into a business.



Jobs was forced out of Apple a decade later, only to return in another ten years and convert the company he helped originate into a revitalized powerhouse, building not just computers but also the iPod, iPhone and iPad; a global chain of retail stores; the world's largest media store and new online services.



Following a series of mergers and acquisitions, HP represents a combination of Apollo, DEC, Compaq, 3Com and Palm, but is now valued at just $62 billion, compared to Apple's current market cap of $338 billion.







Apple acquired HP's vacated "Executive Briefing Center" Pruneridge campus in Cupertino, California, and has plans to develop the site, along with adjacent land it already owned, into a futuristic new "Apple Campus 2" site, located one freeway exit away from its current Infinite Loop headquarters.



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Comments

  • Reply 1 of 253
    tenobelltenobell Posts: 7,014member
    The iPad is winning.
  • Reply 2 of 253
    aaronjaaronj Posts: 1,595member
    Does "spin off" mean something along the lines of what IBM did with Lenovo? Or does it means something else entirely?



    Sorry if this is a stupid question.
  • Reply 3 of 253
    Aim at the wall, keep throwing... Eventually, something must stick!
  • Reply 4 of 253
    Some say Apple should buy Dell, but the synergy may be ripe for HP.



    Though it is expensive.
  • Reply 5 of 253
    It sounds like HP is following IBM in an orderly exit from the hardware business. They're going to do software and services.
  • Reply 6 of 253
    cvaldes1831cvaldes1831 Posts: 1,832member
    Quote:
    Originally Posted by AaronJ View Post


    Does "spin off" mean something along the lines of what IBM did with Lenovo? Or does it means something else entirely?



    Similar, but not exactly.



    A more accurate comparison would be HP spinning off its testing instruments group as Agilent in 1999. A more recent scenario was Motorola Inc. separating into Motorola Solutions and Motorola Mobility (the former is considered the direct corporate descendant of Motorola, the latter the spinoff).



    Lenovo had existed as a separate company for almost twenty years prior to their purchase of IBM's PC Division in 2005. There was no spinoff, it was a direct transfer from IBM to Lenovo. Same with IBM's exit from the hard drive business; I believe they sold the division to Hitachi.
  • Reply 7 of 253
    This sounds like a smart move by HP. Reading the tea leaves over manufacturing PC hardware must be a grim reality these days.



    This is good for Apple. One wonders what a major retraction in large name brand hardware vendors will mean for PC sales in general? When faced with PC brands that are unfamiliar will consumers pause and then go for a Mac instead?
  • Reply 8 of 253
    gprovidagprovida Posts: 248member
    Sounds like IBM, will Lenovo buy HP-PC or Dell or Toshiba or better yet Google.
  • Reply 9 of 253
    apple ][apple ][ Posts: 8,739member
    Quote:
    Originally Posted by JimDreamworx View Post


    Some say Apple should buy Dell, but the synergy may be ripe for HP.



    Though it is expensive.



    Michael Dell made a really dumb comment about Apple many years ago.



    Apple should buy Dell and then shut them down, fire everybody and call it a day. Liquidate the entire company. Apple would end up getting the last laugh.



    If I was Steve Jobs, I'd buy Dell, not for their expertise, their know how, their knowledge or anything like that. Making shitty, cheap PC's and selling them for dirt cheap is something that a crackhead bum is probably qualified to do. That is not a market that Apple wants to be a part of.
  • Reply 10 of 253
    aaronjaaronj Posts: 1,595member
    Quote:
    Originally Posted by cvaldes1831 View Post


    Similar, but not exactly.



    A more accurate comparison would be HP spinning off its testing instruments group as Agilent in 1999. A more recent scenario was Motorola Inc. separating into Motorola Solutions and Motorola Mobility (the former is considered the direct corporate descendant of Motorola, the latter the spinoff).



    Lenovo had existed as a separate company for almost twenty years prior to their purchase of IBM's PC Division in 2005. There was no spinoff, it was a direct transfer from IBM to Lenovo. Same with IBM's exit from the hard drive business; I believe they sold the division to Hitachi.



    OK, gotcha. Thanks.
  • Reply 11 of 253
    A Spin Off is the first step for another company to purchase part of your business. So, the million dollar question is, who is going to buy the HP PC Division?
  • Reply 12 of 253
    rp2011rp2011 Posts: 159member
    This is bad news for all of us. We need strong competition to drive innovation and competitive pricing. Hopefully the spun off HP can survive and thrive. Or be sold to capable hands.
  • Reply 13 of 253
    c4rlobc4rlob Posts: 277member
    All these companies can't handle the heat when it comes to designing, marketing and supporting hardware. They're dropping like flies.
  • Reply 14 of 253
    tenobelltenobell Posts: 7,014member
    The reality is that the PC is an old technology and becoming an outdated business model. For future competition, others need to develop viable technologies and businesses that will meet the future demands of the market.





    Quote:
    Originally Posted by rp2011 View Post


    This is bad news for all of us. We need strong competition to drive innovation and competitive pricing. Hopefully the spun off HP can survive and thrive. Or be sold to capable hands.



  • Reply 15 of 253
    Quote:
    Originally Posted by AaronJ View Post


    Does "spin off" mean something along the lines of what IBM did with Lenovo? Or does it means something else entirely?



    Sorry if this is a stupid question.



    i hope not, IBM to Lenovo lowered quality slightly after a year or so of crappy designs (if you wanted to upgrade RAM that is)



    imagine worse quality HP, they would have to deliver all computers by hand and Laptops probably wouldn't move around so well....



    (also, as a note, Lenovo grew globably, including Europe and USA...(anouther note, it is not in the top 5 (.7% behind apple on 23.1% growth)))
  • Reply 16 of 253
    cvaldes1831cvaldes1831 Posts: 1,832member
    Quote:
    Originally Posted by noexpectations View Post


    A Spin Off is the first step for another company to purchase part of your business. So, the million dollar question is, who is going to buy the HP PC Division?



    Not necessarily.



    In my earlier example, I mentioned HP spinning off Agilent in 1999. Agilent is still a separate corporation and trades publicly on the NYSE under the symbol A. No one acquired Agilent.



    The attractiveness of the spun-off PC unit will be based on several factors, including things like the patent portfolio, transfer rights to the HP brand, etc. My guess is that some Chinese computer company would be most interested in picking up the brand.
  • Reply 17 of 253
    Quote:
    Originally Posted by JimDreamworx View Post


    Some say Apple should buy Dell, but the synergy may be ripe for HP.



    Though it is expensive.



    When "they" say shit like this I have to wonder where that idea comes from. Why would Apple buy one of two loser companies when they are doing just fine as Apple? Take a look at their numbers much?



    Dell shouldn't be bought by Apple. They should be flushed down the toilet.
  • Reply 18 of 253
    Doesn't HP also have a large server business?



    Is that affected by the spin-off?



    Trading on HPQ has been halted for the 2nd time today!
  • Reply 19 of 253
    Quote:
    Originally Posted by rp2011 View Post


    This is bad news for all of us. We need strong competition to drive innovation and competitive pricing. Hopefully the spun off HP can survive and thrive. Or be sold to capable hands.



    True, but HP isn't offering competition. They suck at what they do. That's like the Pittsburgh Steelers playing a local high school football team.



    True competition comes from innovation and balls. HP has neither. Nobody is willing to put what it takes into coming up with new ideas and new ways of doing things. They'd rather copy Apple and come up with cheap crap. Don't make the mistake of calling that competition.
  • Reply 20 of 253
    quinneyquinney Posts: 2,526member
    I wonder where the imaging and printing business and enterprise storage and servers business will wind up in the spinoff. Right now services and software are only about one third of HP's business. It would be strange if the company that existed after the spinoff was such a small piece of the current company. And who will replace HPQ in the Dow Jones Industrials?
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