HP Will Keep PC Unit (UPDATED)

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...

Comments

[matt spedale]

03:54 PM on 10/30/2011

Maybe HP should go somewhere other than Microsoft for software.

http://www.techspot.com/news/46053-microsoft-starts-bundling-ie-with-windows-after-anti-trust-terms-expire.html

[becky bradshaw]

12:57 PM on 10/30/2011

Many people will give Hewlett-Packard one more chance. HP has suffered from horrible leadership for the last decade. Carly Fiorina, Mark Hurd, and that other guy (he wasn't around long enough for me to learn his name) ran the company into ground.

Hewlett Packard has completely focused on mergers and acquisitions, and they made some "paper" money, but the real value of the company was netherware. HP really doesn't make PC's anymore, they just paste their label on a computer made in Asia or Mexico. HP's only real product is printer ink.

Meg Whitman has her chance. We will be watching.

[ezer]

10:00 PM on 10/30/2011

Very true. Sadly even the ink is partially made by Canon in Japan.
Also HP never made a laser printer. Their Laser printers were always re-badged Canon printers.

[Fractal122635]

05:49 PM on 10/28/2011

I've had all sorts of computers from Gateways and Dells, to no names and ones I built myself. I had just purchased a new Touchsmart laptop from HP before their announcement. I had one reason to call their customer service, and was shocked to find 1)real humans; 2) who actually cared, and 3)who stayed on the phone until the easy problem was fixed.

Frankly, with this laptop, I can't see the reason for a tablet, as it does everything a tablet does, but with the power and memory of a full pc.
In other words, I'm glad HP is staying in the biz (even as their ink prices are obscene).

[rainbow69]

04:31 PM on 10/28/2011

Who cares what they do or don't do? Besides their products being crap, I would never buy any product that Meg Whitman was involved with. Never! I don't usually wish bad things on people or other intities but I hope HP fails miserable under the "leadership" of the infamous Meg.

[Fremon]

02:12 PM on 10/28/2011

First, they are keeping it because no one would buy the unit. HP produces cheap computer product that reaps about 6% profits as compared to higher priced quality Apple computers of around 21% profitability. The HP computers are in Best Buy, etc and go always on sale. I have had 3 and all were dogs. With the lousy MS software, it is lethal. My first laptop went down the first week and they had to put in a new mother board. I am writing on one using Vista a bad edition and the battery went dead after about 2 years. My wife got an HP from her daughter who went Apple. That HP lost its ability to connect to the internet. When she inquired to tech support they said the repairs would be over $300. Now how many computers fail because they can't get to the internet. To do a quick fix, she went to a card system for $60. HP is crappy and makes crappy computers and combined with crappy MS software it becomes even crappier. I was sitting in a bar recently while my wife was away and got to talking to the guy next to me, and while watching the ball game engaged in conversation. He said he worked for MS, and I started to unload. He was not in the tech end or development but he told me that Steve Ballmer's the CEO's kids wanted and used Apple computers.

[plmyfinger]

03:49 PM on 10/28/2011

Hp makes great comps! I have 4 laptops from HP, and all rock.
If you cannot connect to the internet, I really doubt it has anything to do with your hardware, unless your network card somehow stopped working.
Anywho, the profit is exactly why I like HP. You can get an apple (which is a great product) for about 2x time cost of the HP. That double in price is due to apple's wonderful profit margin. I'd rather have a good computer, then a shiny white arty object that does half of what I need.

[NerdyStudent]

04:12 PM on 10/28/2011

Circumstantial made up story, sounds circumstantial and made up.

[camanokat]

02:06 PM on 10/28/2011

I will never buy another thing from HP. A few years ago, I bought a laptop from HP. It died just a few days after the 1 year warranty was up. Turns out that they were using faulty components...HP successfully sued the vendor but continued to use the product anyway....saved money, ya know.

They acknowledged that the part was bad when it was installed in my machine but still refused to fix it. Never again, HP. You are on my boycott list.

[NerdyStudent]

04:13 PM on 10/28/2011

Yes, I bought one thing from RCA in 1988, and it broke two weeks later! Ever since! No RCA!

Mass produced goods aren't allowed to be broken! Forget anything about warranties, and 30 day money back guarantees from the retailer, I WILL HAVE NONE OF IT!

[middleagerage]

01:40 PM on 10/28/2011

Do people still buy PC's other than employers?

[NerdyStudent]

04:13 PM on 10/28/2011

Trololololo

[Grady Klein]

11:52 AM on 10/28/2011

Glad to hear this. Aside from building my own, I refuse to buy a factory made PC from anywhere else but HP. Toshiba's die faster, Dell's have the worst customer service, and I just prefer HP overall :)

[Zack B]

11:27 AM on 10/28/2011

Todd Bradley, head of HP Personal Systems Group, favored the personal computing division spinoff before Whitman was appointed. Not sure he will survive now that the spin-off division has been reversed. Carly bought Compaq because she didn't have a friend among HP's rank and file. Meg might have decided to keep the personal computing business because she knows nothing about the enterprise part of the business. Maybe she will try to sell HP laptops and notebooks on EBay.

[trumbull desi]

03:00 PM on 10/28/2011

She was really an odd pick for CEO.

[bryanzth]

11:19 AM on 10/28/2011

OK. So if I need a PC laptop or desktop, I still have as an option HP. Hehe. BZ.

[NerdyStudent]

04:14 PM on 10/28/2011

Asus.

[bryanzth]

07:18 PM on 10/28/2011

Is that what you have? Can you get it with OEM Linux distro?

How's your weekend going to be? I hope you're having some fun, eh?

BZ.

[BlueDog1]

11:07 AM on 10/28/2011

Wow HP must have the Netflix Board of directors. I will never purchase another HP machine, tried to get some help from HP tech group for my PC and of course sent to India (off shore) biggest joke of my life.

HP has not been a value added company since Carly Fiorina did them. (HP)

[camanokat]

02:08 PM on 10/28/2011

I hate HP. Terrible products, horrible customer service.

[NerdyStudent]

04:14 PM on 10/28/2011

You told us, you purchased one HP item and it was broken--and you gave up.

Wooptie darn do!

[Amadahy]

10:44 AM on 10/28/2011

Of course they will. Microsoft just reported a 7 percent increase in profits exceeding analyst estimates. The fact is, the PC still has a place in our lives at home and at work today, and very large employers like the one I work for are already planning on sticking with Microsoft tomorrow. My employer is supplementing, not replacing, their PCs with tablets for special occasions. The rest of the core business activities will continue to be completed on Microsoft PCs and Servers. My shop isn't HP, but I know some that are.

[blueken]

08:48 AM on 10/28/2011

I have been a loyal customer of printers from a company known as "Big Blue". I'm not talking PC printers, I'm talking production iron. They were always easy to configure, reliable and had great service. Then the "spun" the printer business off. The first 2 printers designed by the new company that I bought were terrible. Paper jams, lousy to network, yada, yada, yada. Hi tech companies at one time believed in seamless, top to bottom products. Now everyone just wants the cream and no one wants to compete with Apple. How are we going to maintain a hi tech advantage with that philosophy?

[muadibe]

09:09 AM on 10/28/2011

Good point. As much as I like Apple products, we need the competition. But as you say, too many companies just go the easy route. No vision of anything but their bottom line.

[blueken]

10:29 AM on 10/28/2011

My son works for "Big Blue". His group was given millions of dollars to develop a chip that would make your TV the central player in all the devices in your home. Telephone, internet connection, wireless router the whole 9 yards. The vendor that ordered the chip cancelled it, because there was a "rumor" that Apple was working on the same thing. They let "Big Blue" keep the millions, but when did companies shy away from competition? Build it better, market it better, beat them to market. Compete.

[blueken]

10:33 AM on 10/28/2011

I was once a vendor to Digital. At one point the bean counters decided to buy up land for further expansion on Rte. 495. The value of the land sky rocketed, so the bean counters decided to invest in more land on Rte. 495. When Digital had bought up most of the industrial land on Rte. 495 they discovered they had created their own bubble. You couldn't give away office space it was so over developed. What happened to Digital? Talk about a lack of vision.

[RattleCat]

08:39 AM on 10/28/2011

I guess Meg could not find anyone to Buy It Now.

[BryanTheRegOps]

08:38 AM on 10/28/2011

Yay! They're keeping their over-expensive cheap plastic PC's on the market. Woohoo!

[NerdyStudent]

04:15 PM on 10/28/2011

Never mind their industry leading printers.

[ezer]

10:45 PM on 10/30/2011

Even the printers are OEMed (re-badged) Japanese printers. Mostly from Canon.