Hewlett-Packard's choice to abandon manufacturing PCs could have some very negative ramifications, according to analysts.
Hewlett-Packard's plan to spin off its Personal Systems
Group, its PC manufacturing arm, could damage the company's position with
small to midsize businesses, according to a pair of analysts.
"Our prognosis is that without PSG, HP's value proposition
will be much weaker in SMBs," Sanjeev Aggarwal and Laurie McCabe, analysts with
the SMB Group, wrote in an Aug. 31 research note. "PSG not only provided an
entr??Â«e to upsell servers and services, but has been, for all intents and
purposes, HP's major marketing arm and -voice' to these businesses."
In addition, they added, HP's sudden shift could open the
door to SMBs reconsidering their relationship with the manufacturer: "When HP
hands off its PC business, both SMBs and HP VARs that serve them-many of whom
are small businesses themselves-will have the opportunity to rethink whether
they want to or should stick with HP on the server side."
Apple and Dell could benefit from the vacuum created by HP
abandoning the PC scene. As it exits hardware, HP has been shifting its focus
onto software and services, where it will face some aggressive competition from
the likes of Oracle and IBM.
Besides shedding its PC manufacturing business, HP has also
terminated its TouchPad tablet and smartphone initiatives, although it revived
the former for a limited-production run after consumers began snatching up the
devices at a greatly reduced price. Both the TouchPad and smartphones run
webOS, the operating system HP acquired along with Palm in 2010.
Flooding the market with additional TouchPads could boost
the value of webOS if HP decides to sell off the asset, according to an
analyst. A "larger installed base of TouchPad and webOS devices should increase
the value of webOS in a potential sale," Sterne Agee analyst Shaw Wu wrote in
a research note widely circulated on Barron's
and other financial Websites. "We believe logical buyers may include Samsung
Electronics, Research In Motion, HTC, Amazon.com, Facebook, Sony, Microsoft and
The first weekend after HP announced it would kill the
TouchPad, Best Buy and other retailers slashed the price of the 16GB tablet
from $399 to $99, and the 32GB edition from $499 to $149. That came on top of
the $100 discount instituted by HP at the beginning of August, which drove the
sticker price for the TouchPad down from $499 and $599, respectively, for the
16GB and 32GB models. HP's own Website also lowered the entry price to $99.
The ensuing rush of customers was enough for HP to revive
the tablet, zombie-style, for one last go.
"Despite announcing an end to manufacturing webOS hardware,
we have decided to produce one last run of TouchPads to meet
unfulfilled demand," Mark Budgell, an HP spokesperson, wrote in a corporate
Aug. 30. "We don't know exactly when these units will be
available or how many we'll get, and we can't promise we'll have enough for
In the meantime, HP evidently has some very big issues to
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