HP Looks Panicky as It Dumps Valuable Mobile, Consumer Product Assets

By Wayne Rash  |  Posted 2011-08-20 Print this article Print

News Analysis: The first question that comes to mind as HP abruptly changes direction is what were they thinking? The second question has become were they thinking at all?

HP's Aug. 18 announcement that it was getting out of the consumer business by simply shutting down its newly built-up mobile division and trying to sell its consumer PC business makes one wonder just how carefully management considered this action. This sudden announcement smacks of a panicked reaction to what should be short-term market setbacks.

The day before the announcement, HP was still touting its new TouchPad as the best thing since night baseball, sending out newsletters on how great the new world of webOS was going to be and how the new OS would be in everything from phones to refrigerators.

Then, without notice, HP shut the door. The change in direction was so fast that I'm still getting emails from HP trying to sell me a TouchPad. Apparently HP has decided that it wants to be the next IBM, focusing on the data center, enterprise software, servers and storage. This is understandable, since these are high-margin markets and HP and the rest of the world likes high margins. But is this the right way to go about it?

Many analysts have compared HP's pending departure from the consumer market to IBM's similar exit a few years ago. But there are significant differences in the manner in which IBM's exit took place. First, IBM's move was extremely well-planned and deliberate. The PC business was moved to Lenovo, which is the company that had been building ThinkPads and IBM PCs for years. The move included a five year-transition plan that's still underway. If you call for tech support on your ThinkPad, you still get IBM.

Contrast that to HP's actions. There's no carefully prepared plan. There's no company in line ready to take over HP's line of laptop and desktop computers. It's not clear which products will be dumped, which will be sold to some other manufacturer, what will happen to existing customers and their support needs. There hasn't been any discussion of what will happen to webOS or all of those TouchPads that people bought thinking they'd have HP around to provide support and foster app development.

"I think they've kind of decided that they're going to wait out the next wave of innovation in a nice air-conditioned data center," remarked the Yankee Group's Carl Howe. The move was really reactionary, Howe said, noting that it will have profound effects on the PC industry as well as the mobile industry. "The smartphone OS market got consolidated in a big way. We've gone from six smartphone operating systems to four."

Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel