Let's hope the PC drama at Hewlett-Packard Co. (NYSE: HPQ) has played itself out for now.
Yesterday, HP made a 180-degree turn on its PC business, announcing it would not spin the $40 billion unit off after all. New CEO Meg Whitman doesn't deserve all the credit -- she had endorsed the spinoff plan earlier in her five-week-long career with HP. (See: HP Needs a Higher Bar for Whitman.)
HP's off-again, on-again relationship with its PC business has not impacted the supply chain so far. In fact, the decision to use up inventory on a last run of its TouchPad no doubt eased the oversupply situation the supply chain finds itself in as it enters the fourth quarter. (See: HP Chooses the Lesser of Two Evils.)
The real question facing HP -- as well as all other PC makers -- is the fate of the overall PC market. Supply chain executives got some guidance this week at the Electronic Components Industry Association executive conference. Len Jelinek, director and principal analyst for semiconductor manufacturing at IHS iSuppli, said the tablet fan base is still missing one significant group: IT managers. Until tablets make the transition from entertainment device to workhorse, they won't get a share of the all-important IT business budget.
"PC is still the dominant system," Jelinek told the conference. "It is still at the point where it is a computer. It sits on the desk. It computes. It needs another innovation. The desktop computer is still loved by the IT guys because they can still control the content."
HP and Acer Inc. have done well in the PC market, he said. The netbook, an attempt to change that market, started out well because of its price point. However, there were too many other choices in the market, and demand dropped off.
The ultrabook -- the super-thin notebook computer on which many component makers are pinning their hopes -- may be the form factor that lifts the PC out of the doldrums. It still faces power consumption issues, and it will have to integrate a touch screen. The ultrabook needs to be a flat tablet with all the operating power of a PC. "That could be the killer app," Jelinek says.
Will HP turn its eye toward the ultrabook? If so, it probably has a lot of catching up to do. The company is throwing all its marketing muscle behind its new suite of security services, measuring itself against IBM (which exited the PC market more than a decade ago). Still, as IHS iSuppli pointed out in September, HP sold more computers in the second quarter than any other vendor without even trying. (See: The 'Whoops' Business Strategy in the Supply Chain.)
If it applies itself fully to the next-generation PC, I wouldn't bet against HP. Its corporate mantra (I think) still is "Invent."