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HP TouchSmart 610
HP looks to get out of PC hardware business to focus on software solutions

The bombshells from HP continue to fall from the sky. Earlier today, it was confirmed that HP is abandoning the webOS platform which it acquired from Palm for $1.2 billion USD just over a year ago. Now, were hearing reports that HP plans to announce that it will sell off its Personal Systems Group (PSG) which is responsible for consumer and business PCs.

The company stated in a press release:

HP also reported that it plans to announce that its board of directors has authorized the exploration of strategic alternatives for its Personal Systems Group (PSG). HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction. 

To many, this may seem like a strange move considering that HP is the number one seller of computers in the world (we're sorry Apple, but we're not going to count the iPad).  According to Garner, HP shipped over 14.8 million PCs during the second quarter of 2011 to secure 17.5% of the market. Dell was the next closest with 10.6 million/12.5%.

IDC produced similar figures and reported that HP shipped 15.2 million PCs/18.1% compared to 10.9 million/12.9% for Dell.

Despite HP's beastly PC shipments, the never-ending race to the bottom when it comes to final transaction prices for consumers means that there's little room for profit in this cutthroat business. While Apple can get away with charging customers $999 for an 11" notebook or $2,499 for a 17" desktop replacement notebook, PC users tend to be more price sensitive.

A June report from The Loop suggests that Apple makes more money from selling just one computer than HP does from selling seven. 

Bloomberg reports that HP, which is helmed by Leo Apotheker, wants to leave the hardware business behind and focus on its more lucrative software and cloud services offerings. “This is the direction we want him to take,” stated ISI Group analyst Abhey Lamba. “Get out of a low- margin business and focus more on his core competency, which is software.”

More specifically, HP has laid out these three keys for its new "company transformation":



  • Move HP into higher value, higher margin growth categories
  • Sharpen HP's focus on its strategic priorities of cloud, solutions and software with an emphasis on enterprise, commercial and government markets
  • Increase investment in innovation to drive differentiation


HP also announced its earnings today, and revenue for the third fiscal quarter was up slightly to $31.2 billion USD compared to $30.7 billion USD during the same quarter last year.


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Focus on their software?
By goodsyntax on 8/19/2011 8:31:01 AM , Rating: 2
Uh, have they ever actually used their own software?

Their drivers and other software is horrible! The only software that actually works are the ones that they rebrand from other companies!

RE: Focus on their software?
By Taft12 on 8/19/2011 11:34:46 AM , Rating: 2
You don't even NEED to install drivers for their real printers. You need to buy a printer that costs more than $99.

The bloated drivers are full of junk to sell you online photo printing and various other useless crap. Sort of like the trial AV software preinstalled on your $399 PC. It's how they can sell the stuff so cheap.

RE: Focus on their software?
By mindless1 on 8/19/2011 3:30:06 PM , Rating: 3
Not sure what makes you state that. Either a printer has only minimal functionality using a driver integrated into the OS, or with any modern printer you need to install a driver, including networked printers, including anything over $99.

The drivers aren't bloated, it's the helper apps that are which you can disable as they are not needed.

They can sell "cheap" because like most of the competitors they make back the money on ink and toner, and to a larger extent today the other replacement parts as they break. Used to be you could get a printer that only took up 3 cubic feet of desk space and had 15K to 30K page cartridges. Today it's more like 6K, 10K at most and you can't even pick the things up except in certain locations as the flimsy frame will bend.

RE: Focus on their software?
By mindless1 on 8/24/2011 1:31:57 PM , Rating: 2
Oops, below "took up 3 cubic feet of desk space" should have read "took up 3 SQUARE feet of desk space" (or about 5 to 6 cubic feet).

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