Less than two months after launching what was supposed to be its answer to the iPad, HP shocked the tech earth on Thursday with an announcement that it would stop producing tablet computers along with mobile phones, and that it is considering selling off its PC division.
The bold alter in strategy for the earth’s largest machine maker signals a shift away from consumer electronics and toward developing software for large businesses, analysts said. The abrupt alter in direction comes only a year after HP made a billion dollar commitment to selling smartphones and tablets by acquiring Palm.
HP also said that it intends to acquire infrastructure software corporation Autonomy for nearly $10 billion, further evidence of its fresh commitment to wooing large corporations, as it all however abandons its consumer business. HP CEO Leo Apotheker, who replaced Mark Hurd in 2010 after serving as chief executive of enterprise software firm SAP, said in an earnings call that he plans to “transform” HP to focus on the “enterprise data management hour.”
The news was particularly surprising given that HP is a household designation with a strong track record building consumer electronics, yet is immediately stepping away from the fastest growing area of consumer electronics: mobile.
Analysts clarify HP’s shift as a defacto surrender: a tacit admission that Apple’s iPhone and Google’s Android mobile operating system have made unshakeable progress into consumers’ pockets that would capture also much money and also much age to dislodge — and would be an endeavor that might ultimately prove fruitless.
Android, which leapfrogged its competitors to become the most well loved smartphone operating system in the U.S. in less than a year, commands 40 percent of the market, while Palm’s webOS has seen its share slide to below 5 percent, according to comScore. Apple, meanwhile, recently overtook Nokia as the earth’s largest smartphone vendor.
“WebOS would require significant investments over the following five years, generating risk without clear rewards,” HP’s chief financial officer Cathy Lesjak said during the corporation’s earnings call.
Attracting users to HP’s webOS devices has become an much greater challenge since of a fresh reality ushered in by the iPhone: these days, attracting consumers also requires attracting developers who build applications, a key feature considered by users when deciding between phones. Unfortunately for HP, competition for these developers is fierce and the platform with the most users usually wins.
“HP was competing for developer attention against companies that, as in the condition of Apple, have a large head commence and a strong base of developers,” said Ross Rubin, an analyst with the market research corporation NPD collection. “We are seeing consolidation among the major ecosystem providers — Google, Apple and Microsoft — and this year we’ve seen a abundance of shifts in terms of the smaller players in the operating systems hour.”
HP also attributed the shutdown of its two divisions to consumers’ shift away from PCs and toward tablets that the iPad has helped precipitate.
More than a year ago, Steve Jobs predicted users would go toward a “advertise-PC earth,” and machine sales have indeed slowed. As GigaOM noted of HP’s announcement, “HP is not the only corporation that is finding itself on the incorrect side of PC history.”
Much as many consumers have shifted toward tablets and away from PCs, fresh offerings such as HP’s TouchPad, which reportedly sold just 25,000 units of the 270,000 shipped to Best Acquire, have had distress making inroads against the iPad. HP PCs have not fared much bigger: Apotheker acknowledged that the corporation has been feeling the pinch and might spin off or sell its machine operation.
“There is a clear movement in the consumer PC hour,” Apotheker said. “The tablet effect is absolute.”
So is this a win for Apple and Google? Analysts doubted that it would be a game-changer for either, noting that webOS, which may eventually be licensed or sold, posed small immediate threat to Silicon Valley’s smartphone leaders given its dwindling market share.
“WebOS had not gotten strong or fascinating enough. Nobody was sweating HP,” said Frank Gillett, an analyst with Forrester, a technology and market research corporation. “The remaining players all benefit from the reduced distraction in the extended run, however frankly, I don’t reckon anyone was worried about webOS since HP didn’t place enough into it to constitute it a factor.”
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