Analysis - HP to get out of personal computing

HP's decision to get get out of the PC game might make CIOs nervous. Here's our take on why there's not much to worry about.

When IBM decided to leave the personal computer business, selling the division to Chinese upstart Lenovo, few predicted that both IBM and Lenovo would benefit. However, Lenovo has managed to reinvigorate the ThinkPad brand and IBM has continued to deliver strong results on the enterprise side of the computing fence. So, can HP do the same with its decision to explore alternatives for its Personal Systems Group?

First things first - if you're a CIO with a substantial fleet of HP hardware you're not going to be stuck without a vendor any time soon. HP says that the decision making process for what happens to the PSG group will take 12 to 18 months. That's more than enough time for IT departments to make decisions about hardware platforms for end user devices.

HP can clearly see the writing on the wall. PCs are a commodity business. There's low margin on products, volumes need to be high and there's continual cost-cutting pressure in the market. While many pundits say the iPad has been the death of the netbook, the reality is that sub-$400 notebooks have been a big part of the problem as well.

In simple terms - if you want to get rich, selling consumer computers isn't the best market to be in.

Like IBM, HP has a very strong and growing infrastructure business. HP's acquisition of 3Com in late 2009 bolstered its networking business and HP is now competing head-to-head with Cisco for enterprise networking. Offering lifetime replacement warranties, aggressive financing and solid support, HP is starting to make inroads in some sectors.

Similarly, their server products are well regarded and popular. On the other hand, their notebook and PC products don't stand out from the crowd.

So, what's all this mean for a CIO?

Firstly, if you've invested in server and networking equipment from HP, there's little to be concerned about. HP has announced that they will be acquiring Autonomy Corporation plc - "a global leader in infrastructure software for the enterprise with a customer base of more than 25,000 global companies, law firms and public sector agencies, and approximately 2,700 employees worldwide." Given the recent investment in EMC, it seism that HP is serious about increasing its share of the lucrative enterprise market.

If you have a fleet of HP desktops and notebooks there's time to see what will happen. If the HP/Compaq brands are purchased by another party then it will be a question of whether the new owners will be able to maintain the products you need. HP's other alternative is to spin the Personal Systems Group into another business. if that happens, that will give CIOs even more time to see who the dust settles.

The real tragedy for technophiles is that this seems to the be the final nail in Palm's coffin. It seemed that HP threw the Palm business a lifeline when they purchased them and committed to the new WebOS. The first tablets hit the market just a few weeks ago but there was an almost immediate round of discounting as sales seemed to stall before they even got started. The WebOS division was officially shut down today. For most CIOs, this might be greeted with a nostalgic sigh but we don;t know of a single widespread corporate deployment of the WebOS tablet anywhere. So, for most CIOs it will be little more than a "blink and you missed it" moment in the continuum of tech time.

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