HP credibility threatened by WebOS, Touchpad and PC decision

Stan Beer
Friday, 19 August 2011 14:48

IT Industry - Strategy

The credibility of the world's largest computer company Hewlett-Packard as a predictable IT supplier is under threat, the wake of its shock announcement today that it will in effect ditch its personal computing business, according to a leading analyst. However, the period of uncertainty may provide some opportunities for IT buyers to pick up some bargains.

 

The big news reverberating around the IT world today is HP's decision to drop its portable computing platform WebOS, inherited from its Palm acquisition last year, and thus drop its intentions of playing in the tablet and smartphone space. The shock announcement comes just as the much publicised WebOS based HP TouchPad came into major retail stores in Australia.

According to Carter Lusher, Research Fellow at Ovum, creating even more uncertainty is the fate of HP's PC business, which the computing giant has signalled its intention to ditch.

Lusher says: 'While the divestiture of the Personal Systems Group (PSG) might make strategic sense - after all IBM sold its PC Division in late 2004 with minimal negative impact - in the short run this move could impact HP's credibility as a predictable strategic IT supplier.

"That is because it was only on March 15, 2011 - a scant five months ago - at the HP Analyst Summit that CEO Léo Apotheker re-confirmed the strategic importance of PCs to HP. For enterprise and public sector IT executives, predictability is a critical trait for major technology vendors and HP continues to reinforce the impression that it is unpredictable.

"HP's plan to spin off the PSG will have ripple effects far beyond the products in PSG, some of which can be anticipated while others cannot. Areas that will be impacted include the overall supply chain that also feeds the enterprise server, storage and networking products; partner ecosystem; commitment to countries and regions; enterprise services, and strategic customer relationships."

According to Ovum, IT managers could well use this period to squeeze HP for good prices.

Ovum recommends that enterprise and public sector IT managers use this period of disruption at HP as an opportunity to drive hard bargains in product and services procurement projects. HP is going to need to every dollar, euro, yen, pound, and yuans to offset the drop in sales that come with uncertainty that naturally follows announcements like the PC division divestiture, Enterprise Services shake up, and major software acquisition of Autonomy.