iOS app Android app More

HP Will Keep PC Unit (UPDATED)

Hp Pc

The Huffington Post   First Posted: 10/27/11 05:09 PM ET Updated: 10/28/11 08:45 AM ET

This post has been updated.

Hewlett-Packard will continue making PCs after all.

In August, the hardware giant dropped a bombshell announcement that it would kill off its tablet and smartphone products and would consider spinning off its PC business as it moved to complete a massive deal to acquire software company Autonomy.

After weeks of deliberation, the world's biggest PC-maker has finally decided the fate of its PC arm.

In a statement release on October 27, HP said it would not spin off or sell its personal computer business (called Personal Systems Group, or PSG).

“HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees,” said Meg Whitman, HP president and chief executive officer, according to HP's press release. “HP is committed to PSG, and together we are stronger.”

A former eBay chief, Whitman replaced Leo Apotheker as HP's CEO in September. "We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead,'' the HP board's newly-appointed Executive Chairman Ray Lane said of Whitman's appointment at the time, according to Reuters.

HP's decision to keep its PSG branch flies in the face of departed CEO Apotheker's vision to “transform” HP from a hardware leader to a company focused primarily on “enterprise information management." Citing what he called a "tablet effect," Apotheker suggested a shift in consumers' preferences away from PCs and toward tablet devices such as Apple's iPad and the numerous Android offerings in that space.

Analysts also cited intense competition from heavy hitters Apple and Google as a major influence on HP's decision to kill off its tablet and smartphone devices, a move that HP did not say it will reverse. “HP was competing for developer attention against companies that, as in the case of Apple, have a large head start and a strong base of developers,” NPD analyst Ross Rubin told the Huffington Post in August.

The October 27 press release states that the PC unit's revenue for the 2010 fiscal year was $40.7 billion. Figures released this month by research firm Garner revealed that HP's PC market share actually grew by 3.2 percent in the third quarter of 2011.

In early October, HP finalized its $12-billion purchase of Autonomy, whose software "searches unstructured data like emails, phone calls and tweets that do not fit into traditional databases," reports Reuters.

Netflix recently issued a huge backtrack of its own, announcing that it would kill the yet-to-launch Qwikster service, which would have been a standalone DVD rental site. The launch would have split Netflix into two separate businesses, with the original "Netflix" site becoming a streaming-only service.

Developing...

FOLLOW HUFFPOST TECH