HP have just dropped a bombshell, they are pivoting the company in a big way. During their quarterly earnings call, HP said “These are tough decisions. There are four elements to the path."
- "First, sector trends impacting PSG as consumers change habits. The tablet effect is real, and sales of the TouchPad are not meeting expectations."
- "Second, our enterprise service business needs to be reshaped."
- "Third, there are tactical issues that we are facing. We are confronting the challenge of the Japanese earthquake on our printer business."
- "Fourth, we must address the needs of our customers, which we are accelerating with the acquisition of autonomy."
The new direction from HP means they will focus on enterprise and infrastructure, namely cloud technologies. This morning they also announced a new Vice President of Enterprise Services which will report directly to CEO Leo Apotheker. With this focus on enterprise, it seems HP is destined to become the next IBM – a company that’s important, but not in the consumer eye.
Many are reporting this morning that the PC division is being killed off, that’s not actually true right now. They are evaluating a range of options including a spinoff, which is expected to take 12-18 months to complete. While its certainly a strong indication the company’s focus is moving from consumer to enterprise, the largest PC manufacturer is not as of today pulling the plug.
News for the Mobile division isn’t good, HP management we brutally honest saying “Due to market conditions, continuing to execute in this market space no longer makes sense for HP’s shareholders." Essentially they tried to compete with Apple and Google and lost. This means they are killing off the HP Touchpad and mobile devices which run webOS. The mobile operating system they acquired from Palm. Device shutdown will happen in Q4 2011.
HP will no longer make webOS devices, but will continue to develop it and licence it. “We are not walking away from webOS.” says webOS GBU VP Stephen DeWitt. This move seems the most diss-jointed of the whole announcement. If HP itself couldn’t make it work, what would make a 3rd party manufacturer take it on?
HP are also making an acquisition as part of this new direction, enterprise software and search company Autonomy will be swallowed up be the end of 2011.
The one part of the business HP are keeping hold of is Printers. While we would all like to think printing is going away, the reality is, businesses print.. a lot and will continue to do so for the foreseeable future. While not legal to do it, the printer business is pretty much a licence to print money with relatively low hardware costs and premium renewables.
This dramatic change in direction appears to have come by surprise with HP sending out TouchPad review units as recently as yesterday and recently telling ThisIsMyNext editor Joshua Topolsky they are committed to tablets.