The Fate of PCs at HP: 10 Questions
How's that for a heady Thursday: HP --the world's largest PC manufacturer-- announces that they aren't really into the whole "building PCs" thing anymore, thanks to double-digit profit margins in many of the other facets of their corporate portfolio. It's a sensible (albeit dramatic) decision, but one without a conclusion: options are being mulled, while foundries continue to crank out desktops and laptops that could very well need a new logo within the next year or two. This leaves lots of questions on the table.
If HP's brand power is off the table, where will consumers turn?
HP was the largest PC manufacturer (by volume), and a household name for time immemorial. Sure, there are plenty of other manufacturers out there, ready to sell you a desktop or a laptop. And while they certainly offer excellent products, the names Acer and Toshiba aren't necessarily the first that'll come to mind for the average consumer. Will these players to step in and fill the void for consumers looking for a Windows machine? Or is Dell out stocking up on champagne?
Is this IBM 2.0?
Spinning off their still-profitable PC business will help the company "focus on enterprise and SMB [small and medium-size business] segments where we can best leverage our value-add." That's a fair approximation of HP CEO Leo Apotheker's statement during Thursday's earnings call, in response to why HP is considering ditching the PC business. Only that quote comes from IBM CFO Mark Loughridge from a conference call back in 2004, when IBM announced they were leaving the PC business for the greener pastures of Enterprise support and software development.
That deal proved to work out in the long run for both IBM -- who has gone on to make strides in supercomputing and AI development -- and Lenovo, who has since become an international player in the PC market. If HP does sell off their Personal Systems Group, will their future be as bright?
Who would buy HP's PC division, anyway?
Back in March, the rumor mill was buzzing (briefly) that HP was planning to sell off its PC business, with Korea's Samsung as the most likely candidate to make an offer. Those rumors were quashed as merely rumors by all parties involved, but, in light of yesterday's announcement, could a deal be back on the table? It would make sense for Samsung -- the corporation has made a strong showing with its laptop wares, with machines like the Samsung Series 9 ultraportable making a strong impression. Snapping up a juggernaut like HP could make a lot of sense for Samsung.
If a foreign company did take the reins, what happens to the HP brand and employees?
When Lenovo purchased IBM's PC business, IBM received a chunk of cash and an 18.9 percent stake in Lenovo. Lenovo took over manufacturing the hardware, while IBM remained the "preferred services and customer financing provider." Lenovo also got to keep the IBM branding for 5 years, as well as absorbing 10,000 IBM employees. What would the future hold for so valuable a brand?
What happens to my warranty?
When Lenovo took the reins of IBM's PC business, IBM stuck around to offer technical support customers who suddenly found themselves owners of a Lenovo IBM PC. I can't speak to the fates of the relative handful of hopeful consumers who grabbed an HP TouchPad or WebOS smartphone. But HP's PCs are in millions of households around the world -- there would be a lot of angry consumers if HP didn't follow suit and offer warranty and technical support, in addition to driver updates so that folks don't find themselves holding an orphaned PC.
Can HP's PSG group survive as its own entity, on the strength of its products?
TouchSmart, Envy, Elitebook, Pavilion -- from All-in-Ones to desktop replacement laptops, HP has its fingers in quite a few PC pies. If HP's PC business is spun off, will it be able to survive without the extensive resources of the HP mothership? Truth be told, an HP PC business that was left to its own devices (pun intended) might do a lot of good, by cutting the crust and focusing on polished, premium wares and leaving the low-end market behind.
Will whatever remains of the PSG take the same approach toward forward thinking, with Synergy and WebOS?
HP had a lot of great ideas on the table that they'd yet to implement. Remember "Synergy?" Actually, you probably don't -- back in March, HP announced that they were drafting plans to bring WebOS to all of their devices. In other words, desktops, laptops, smartphones, and tablets would all share a single ecosystem. Shared contacts and calendars, tapping devices together to share webpages and information -- while you'd have to be invested in the WebOS platform (and HP's ecosystem) to take full advantage of the project, it was an exciting prospect.
With WebOS devices killed off and the future of the platform uncertain, will it be up to Apple (once again) to bring that dream of a unified device ecosystem to fruition?
What happens to the TouchSmart? And more specifically, TouchSmart software?
The All-in-One is what's next for desktops. Large, lush, multi-touch screens coupled with massive hard drives and plenty of connectivity ports deliver the flexibility and performance we've grown to expect from large, stationary PCs. And you'd be hard pressed to find a similarly specced laptop that can compete on price, leaving room in your wallet to pickup an inexpensive All-Purpose laptop for on-the-go computing -- or even one of those new-fangled tablets everyone's talking about.
And when it came to All-in-One PCs that didn't have an Apple logo, HP often came out ahead, serving up speedy machines with a palatable price.
But the TouchSmart line stands out. Even if they didn't always top the charts, I could count on TouchSmart All-in-Ones to be doing something different in the space. The TouchSmart software package made great strides towards making sense of Windows 7's multi-touch gestures, giving users a legitimate reason to set the keyboard and mouse aside and get hands-on with their PC. Beats audio offered a legitimately improved aural experience -- often a sore point for the All-in-One form factor. And then there's the HP TouchSmart 610, equipped with a unique mechanism that slides the 23-inch screen down to a 30-degree angle, encouraging use of its multi-touch screen like never before.
But more importantly, TouchSmart PCs got better and better with every update. PC manufacturers are... stubborn. Case in point: Laptop manufacturers' struggle to compete with Apple's Macbook Air. HP bucked the trend here. Other companies (Apple included) leave their All-in-Ones largely unchanged -- a slimmer chassis here, a curvier bezel there. HP consistently sought out ways to change and improve the user experience on their machines, from a software and hardware perspective. I can't say they were always successful, but at least it gave us something different to look at down in the PCWorld labs. Would an independent PC division have the drive (or more importantly, the research and development resources) to carry on this tradition?
Is this (finally) the end of Compaq?
Oh right, Compaq. A familiar tune: they went from being the largest supplier of PCs in the world to being picked up by HP for $25 billion back in 2002. Their technology and products were shuffled into the PSG group's various product lines. With HP's PC business in limbo, what will become of this vestige of a vestige?
Should consumers steer clear of HP's products?
This one is tricky. An HP desktop like the TouchSmart 610 is still going to be a fine machine a week from now. But PCs are long term investments -- HP might not be out of the PC business just yet, promising that it's business as usual while they investigate their options. With no clear idea of the PC business' fate, should someone hoping to pick up a new laptop or desktop consider HP, with the knowledge that their PC's support network might be owned by an entirely different company well before their warranty is up?