HP has a change of heart: Now to figure out its future with the PC

Steve Ranger's Notebook: Tricky decisions ahead for Meg Whitman...

...Whitman "might be able to stabilise HP and return it to its previous status as a strategic supplier to IT."

Analyst group TBR described it as "the smallest surprise" that HP would keep hold of PSG.

It pointed out that having a PC business helps HP find customers for its higher margin offerings, from printers to servers to services. The PC business helps create economies of scale for the manufacture of other hardware which provides entry points for the rest of HP's sales force.

TBR said its research had shown that unsettled customers had already started looking at other vendors, vitally not only for PCs, but also for servers and services, something that would have quickly raised the alarm with HP's board.

One thing that CIOs prize - especially for dull but essential items like PCs and servers - is predictability and reliability. HP's upheaval worried them, and worried partners, both of whom looked to HP for one-stop shopping. And while TBR said HP is capable of rebuilding that trust, it will take time.

Perhaps selling or spinning off the PC business might have worked if it had been handled differently - if HP had lined up a buyer, or worked out all the details of the spin-off, before making the announcement.

As the rise of smartphones, tablets and the cloud has demonstrated, we are moving into either a 'post-PC' or a 'PC-plus' era, so being the biggest PC maker around isn't quite what it used to be. After all, getting out of the PC business worked well for IBM. But even with PSG's future decided, HP still has to articulate what kind of company it wants to be, and how its different businesses will contribute to that. Was the idea of becoming a high-margin software company just a short-lived mid-life crisis for HP, which will now return to a quieter life?

The challenge for PSG and HP will be to make PCs not just relevant but essential again. As Ovum's Lacher points out, that might mean embedding its management software to make PCs easier to manage. Another option is to come up with bundles of products and support to help CIOs implement BYO device programmes. It has to do this while rebuilding customer confidence and fighting off rivals emboldened by HP's indecision, and figuring out what to do about tablets. Windows 8 tablets are likely to be a part of that future but who knows - perhaps the TouchPad could rise, yet again?

That's the job ahead. What's for sure is that the way the initial PSG announcement was made, to be followed by an extended bout of navel-gazing - was always going to be devastating to customer conference and thus the prospects of the PC business until it was resolved.

Whitman has done the right thing in ending the uncertainty, but as a result, even if HP wanted to rid itself of the PC business, it can't now.

About Steve Ranger

Steve Ranger is the UK editor of TechRepublic, and has been writing about the impact of technology on people, business and culture for more than a decade. Before joining TechRepublic he was the editor of silicon.com.

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