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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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It was a long time coming
By thisisaname on 8/19/2011 2:22:37 PM , Rating: 2
I don't know how HP has managed to be the number one computer maker in the world, with their lackluster customer service combined with cheap quality, but overpriced, throw-away computers. I'm glad to see them go, only hope Dell follows suit.
Burn HP burn!!




RE: It was a long time coming
By mindless1 on 8/24/2011 1:37:58 PM , Rating: 2
I know how. Lower initial purchase price.

Customer service, (un-)cheap quality, and non-throw away computers (just which computer isn't considered throw away, anyway except one so obscenely priced that service and replacement parts exceed the value of the used system right after the warranty ends?) all reduce overhead so the system can sell for lower cost.

Number one isn't about making what you, or I, consider the "best" product, only what more people consider the best value.


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