Hewlett-Packard announced Thursday that it is getting out of the consumer electronics business and getting deeper into business software. Calling it "a difficult but necessary decision," CEO Leo Apotheker said the company would pull out of the tablet computer and smartphone business entirely, discontinuing its TouchPad tablets and webOS phones. HP also plans to spin off its personal computer division, instead focusing on business services with the planned $10 billion acquisition of British software maker Autonomy. Is this dramatic "business makeover" wise?
It worked for IBM: The PC market is an "ugly," low-margin business with "fickle consumers," says Shira Ovide in The Wall Street Journal. IBM realized that years ago, and decided to focus on big businesses and their lucrative software needs. It worked out for IBM, and it "makes sense" for HP, too. "The world zigs left, company strategy zigs along with the trend."
"Hewlett-Packard to computers: Drop dead"
But HP might be too late: Getting out is definitely a "solid strategic move," says Erik Sherman at BNET. In a bad economy with tablets and smartphones on the rise, PCs aren't the business to be in. But IBM made its move six years ago, and was more established in business services. HP is bailing "very late in the game" to pull off the same transformation.
"HP to shuck PCs, emphasize software — just like IBM, only way too late"
Wall Street certainly isn't pleased: "To say yesterday's news has not been well received would be a substantial understatement," says Eric Savitz at Forbes. HP's stock dropped 20 percent Friday, reducing the company's market value by $12 billion in a single day. Confidence in CEO Apotheker is depressingly low. "The once might[y] Hewlett-Packard, the world's largest PC company, and one of the globe's most wide-ranging technology companies, is badly leaking, and taking on water." I can only hope it doesn't sink.
"HP: Down 20%; now officially hated by almost everyone"