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Dancing on HP’s Grave? Not Yet

The last {complink 2376|Hewlett-Packard Co.} laptop I bought crashed six months into the warranty period. I sent it to HP, which diagnosed it as a problem with the hard drive and fixed it. Then, it died for good, less than a year later (warranty expired). Since HP couldn't fix the laptop in less than two weeks and I relied on it for my freelance career, I bought a {complink 2189|Gateway Inc.} in the interim.

The Gateway still works.

The same thing happened to the HP printer I bought with the aforementioned laptop — HP blamed Vista for the problem. Although the printer will operate, none of the laptops I now own want anything to do with it (seems to be a software issue). So it sits on my desk as a storage unit for the paper that goes into my other HP printer.

Still, I'm not dancing on HP's grave — quite the opposite. I think HP's intention to spin off its PC business is the right move — but not because HP is exiting PCs. I want HP to reboot the PC business so we can stop talking about the “post-PC era” or the “Apple vs. everyone else” world. Is HP right to get out of tablets and smartphones? Oh yes. But there's still opportunity in PCs. Maybe PCs will be relegated to “workstation” status — PCs do all the heavy lifting, while tablets and smartphones sail around the world. But are PCs ready to be doorstops? Nope.

From the business standpoint, an HP PC spin-off is the right thing. HP is not only still reeling from all of the high-level subterfuge of a few years ago — it never really did justice to the Compaq acquisition. (Check out some of the jokes circulating about the spin-off — I'm not sure re-naming the unit Compaq is such a bad idea.) There's still a lot of legacy technology in HP's PC business, which might make for a nice patent “going out of business” sale, or as a foundation to build on.

Unfortunately, indications are that HP is scrapping PCs altogether to focus on enterprise hardware and networking. It's acquiring Autonomy Corp. for $10 billion. In doing so, HP's looking a lot like IBM. And IBM's former PC business is doing pretty well:

    Lenovo Group today reported results for its first fiscal quarter ended June 30, 2011, and for the seventh consecutive quarter, Lenovo grew faster than any of the top five PC manufacturers, helping the Company to become the world’s third largest PC vendor in total shipments. During the first quarter, Lenovo’s worldwide PC shipments grew 23.1 percent year-over-year. Comparatively, industry PC shipments increased just 2.7 percent worldwide for the same period, marking the ninth quarter in a row that Lenovo has grown faster than the industry. Consolidated sales for the first fiscal quarter increased 15 percent year-over-year to a record of US$5.9 billion. The Company’s gross profit for the quarter increased 41 percent year-over-year, with gross margin at 12.5 percent. Operating profit for the quarter grew 51 percent year-over year to US$123 million. Operating profit margin continued to expand, even after the Company’s reinvestment in branding, R&D, and mobile Internet business to drive future growth.

You could argue the industry doesn't need another Lenovo, or a Dell, or an Acer, or _______ (fill in your preferred PC brand here). HP probably doesn't have the cash to invest in PC R&D. And could anything top the Macbook Air? I don't know. But it seems everyone has already written HP (and the PC) off, and I'm not quite there yet. Anybody else ready to rally behind HP?

26 comments on “Dancing on HP’s Grave? Not Yet

  1. Anand
    August 19, 2011

    Anybody else ready to rally behind HP?

    Barbara,

     I bought HP laptop 18 months back and I am still using the same system. So far I haven't faced any problems. And now since HP is selling its PC unit I am worried if I will get good serivce to my HP system.

  2. Clairvoyant
    August 19, 2011

    Good point, Anandvy. I'm sure there are many HP computer users that are / will be thinking the same thing. Will HP computers continue to be supported or not?

  3. AnalyzeThis
    August 19, 2011

    The support issue very important, my former employer (a very large, well-known, giant corporation) had a contract to use HP PC's exclusively. I wonder if that deal is still in place, and if so, for how long?

    Anyhow, HP has obviously made quite a few mistakes the past couple of years. It's really hard for me to speculate as to what their future holds, but I'm fairly confident the HP brand will continue to exist. I don't think the company is doomed, but I do think the HP of ten years from year may be barely recognizable from its current incarnation.

  4. hwong
    August 19, 2011

    I think that HP needs to keep supporting the old computer business in order to keep customers loyalty. Because if someone is pissed off about the quality of the computer and get no support, it will ruin the brand when it comes to look for future other businesses.

  5. Nemos
    August 19, 2011

    I thought that HP PC is one of the top brands in reliability and in product quality. And I Believe also that all the high-tech products such as pcs and mobiles aren't reliable as were few years ago. The competition to catch up the top, includes to produce a lot of new models that minimize the research time, the testing time and finally, the evaluation time.

    If we sum up the above, we have the answer to why we have too many fault units even from big brand names.   

  6. t.alex
    August 19, 2011

    I bought HP Deskjet printer a few years ago, and now is still functioning well. The only bad thing is the ink cartidge being expensive. Perhaps only PC from HP is degrading, not others.

  7. Anna Young
    August 20, 2011

    I wouldn't want to dance on HP's grave yet either, because my first computer bought in 1990, was a HP and served me for my years without any problems.  

    I know HP have done pretty well in the PC division which have generated revenue over many years.  However, lets face it, this is the best ever business decision for HP. It's been long awaited. pulling out of tablets and smartphone market after a massive poor sales record is a good move.

    I hope HP is able to continue  support services for existing customers.

  8. mfbertozzi
    August 20, 2011

    General feeling is net margin from PCs, as line of business, is approaching “zero” threshold and trend will be negative, quite soon. For other products in consumers segment, as t.alex has well mentioned, net margin is still alive due to continous needs of replaceable components. Imo, HP has taken that decision to launch definitely WebOS as new asset and business line for making better financial results.

  9. Houngbo_Hospice
    August 20, 2011

    “I bought HP Deskjet printer a few years ago, and now is still functioning well. The only bad thing is the ink cartidge being expensive.”

    The same with me and the HP laptop computer I I have been using for a year and half is still working fine. However, the CPU is AMD technology and it used to overheat. I wondder what would happen if I ever have to replace it. 

  10. Adeniji Kayode
    August 20, 2011

    I quite agree that Hp produces on the the best PC and printers but the ink like you rightly said are just too expensive and some how this opened the market for the fake  HP products or should I say less quality products

  11. Adeniji Kayode
    August 20, 2011

    This is really a big concern,I am thinking of the number of HP pc that are in circulation right now. Hp products are known for their durability and stability and more so availability and right now people know HP, probably more than other manufacturers and people still prefer their laptops and printers.

  12. Adeniji Kayode
    August 20, 2011

    @Hwong,you are right, I feel HP will allow for more less quality products in their name if they stop supporting old pc business. They have made a name and that name can be taking advantage of .

  13. Parser
    August 20, 2011

    Dancing? How about crying on HP's Grave? HP PCs were always more expensive and touted as better product, but costumers did not see it that expect for some corporate deals. I am surprised that after acquisition of Compaq things did not improve in HP image. With Lenovo and other computer manufactures quality has improved and price was always lower than the equivalent HP product. On the other hand a competition is good.

  14. t.alex
    August 21, 2011

    I wonder what will HP focus from now on? Servers and software services?

  15. Wale Bakare
    August 21, 2011

    And I Believe also that all the high-tech products such as pcs and mobiles aren't reliable as were few years ago. The competition to catch up the top, includes to produce a lot of new models that minimize the research time, the testing time and finally, the evaluation time.

    @Nemos am thinking that might be the reason why HP intends to abandon that sector. You have correctly analysed it!  Searching for materials, astronomical demand for quality products from both consumer and enterprise, time and money spending on those are far too huge.  In software technology sector, hardly can such huge amount of time expending in software development.

    Servers and software services? @t.alex if you take tour to IBM servers and software, especially IBM's  Power System, Systems P, I and Z( mainframe) are perfect example and in particular enterprise market with attention on cloud/virtualization computing. May be HP is also eyeing similar market sector –  software and servers for enterprises of all levels.

     


  16. JADEN
    August 21, 2011

    HP Spinning off its PC manufacturing business is an opportunity for other vendors like Dell, Acer and Lenovo to start plotting their next move to have a way of getting bigger piece of the hardware cake.

  17. Anne
    August 21, 2011

    Agreed Jaden, HP shift is a good news to other major vendors like Dell, Lenovo and Acer who want to take this advantage, after consumers may not so quick to buy HP desktop or laptop if they feel the company or their products are in flux.

  18. Daniel
    August 22, 2011

    Barbara, like you many customers had faced similar problems with HP. I think that could be one of the reasons behind their recent announcement of winding up PC business. From their point of view, it’s may be better to concentrate on software business. But they are not saying anything about extending the supporting part for existing PCs and Laptops. I think they may continue the other arm Compaq, with the normal business of laptops and PCs in small to medium scale.

  19. FLYINGSCOT
    August 22, 2011

    I remember when an HP badge on any piece of kit meant quality and durability.  Sadly that is no longer true.  I believe HP needs to shed businesses that is cannot be at least number two in and focus on what it does best……question is what does the HP of today do best?

  20. Adeniji Kayode
    August 22, 2011

    You are right flying scot,Hp has always been a name that stand for durabilty and quality but has been allowed to go down the drain due to inconsistency and instability which does not neccessarily come from HP but less quality products carring the name.

  21. Barbara Jorgensen
    August 22, 2011

    I'm glad to see readers' experience with HP was generally positive. I was actually surprised when my PC and printer both had problems, becuase the HP reputation was so good. I'll chalk it up to bad timing…or Vista

  22. Kunmi
    August 26, 2011

    Backing off of HP fro PC and Laptop will be an advantage for other companies like Dell, Lenovo and others to have more room for expansion. If I may project, Dell will acquire the household name in PC and Laptop as soon as HP lay down the baton. Other companies will also have lion share of the market.

  23. Kunmi
    August 26, 2011

    This is absolutely true of HP. The quality of their PC and Laptops are not reliable as it used to be. Once a standard is lowered, quality will be compromised and that could be part of HP challenges. Come to speak of some of these HP printers/Scanners, nce you use it for few months, the scanner will not allow you to scan or copy anymore. I can't immagine how many HP printers that i have bought for home use…. sad and discouraging when it comes to quality.

  24. mario8a
    August 26, 2011

    Hello

    they provide uBGA for some smarthpones, will HP focus their core bussiness to IC's ?

     

  25. Adeniji Kayode
    August 26, 2011

    @Kunmi, you are right, HP backing off will definately open the market for other PC manufacturers and I wonder what would happen to alot of people with HP products,will HP not spoiling the good name they have built over the years and losing their intergrity to Dell and others

  26. Barbara Jorgensen
    August 26, 2011

    Good point, Kunmi. Dell has a real opportunty here, although they seem to be shifting focus to the cloud as well. They've lost ground in the PC market reputation-wise–their service and support took a beating awhile back. But I hate to see the PC business relegated to the ODM model without the HPs, Dells etc. still in the design chain

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