Another day, another strategic direction for HP - or a U-turn, as the rest of us call it. Just five weeks after announcing that it would be selling or closing its multi-billion dollar generating Personal Systems Group (PSG), HP has decided that it will stay in the PC business after all. Martyn Warwick reports.
Meg Whitman, HP’s new CEO dropped the bombshell during a conference call with analysts and jounalists and rationalised the corporate volte face by claiming, "The decision was very straightforward. HP and PSG are better together. It makes strategic, financial and operational sense to retain it" because it would be "right for customers and partners, right for shareholders, and right for employees." That's more or less the exact opposite of what she was saying way, way back in dim and distant days of September.
So what happened in all that time? Well, since the sacking of her short-lived predecessor Leo Apotheker, it seems Ms. Whitman has had sufficient time to re-appraise his strategy to turn HP into just one more "me too" software company and has seen it for what it was - applied lunacy.
Just remember what Apotheker did or wanted to do: dump the PC business and stop making the HP TouchPad that featured webOS, an iteration of the operating system HP got when it acquired Palm a year earlier.
He also paid an astonishing US$10 billion for the UK-headquartered data analytics company, Autonomy.
Now though, it seems the Personal Systems Group is secure (at least until the next review of strategy) and also that production ot the TouchPad is to continue and that webOS itself might also be rescued from the dustbin of history. Todd Bradley, the executive VP of the Personal Systems division said on Friday that the company "will make a long-term decision about webOS software in the next couple of months.”
Meanwhile, the senior VP of operations at PSG, Tony Prophet, added that the cost of closing, selling or otherwise spinning-off the unit would have cost at least $1.5 billion in the initial phases and more further down the line. He said, "As the analysis unfolded, it became clear the costs were much more significant than any potential benefit. You can be certain that there was deep and thorough analysis behind this."
As indeed there was (allegedly) when it was decided to abandon PC production.
Apotheker's decision seems all the more irrational in the light of the latest figures from research house IDC showing that HP was leading PC manufacturer in the world in Q3. Ir shipped 16.6 million PCs, up 5.3 per cent on Q3 2010. The man was determined to kill the goose that lays golden eggs - fortunately he was stopped before he could actually swing the axe and pluck it.
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