Linked by Thom Holwerda on Thu 18th Aug 2011 19:34 UTC
Hardware, Embedded Systems Major bombshell, and sorry, but this certainly requires a breaking tag as well: HP has announced it is discontinuing operations for webOS devices - effective immediately. Just like that... The TouchPad and Pre 3 are dead. Eh. Raise your hands if this brings back those painful memories of that infamous 'Focus Shift'. In addition, the company also announced its intention to sell its personal computer business.
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Makes sense to me.
by Darkmage on Thu 18th Aug 2011 22:48 UTC
Darkmage
Member since:
2006-10-20

HP might be selling their PC business but there's no proof that they are going to stop making corporate desktops or servers, both of which would be their most profitable segments. HP ditching Compaq makes a lot of sense. Since it's a lot of overhead cost without too much gain. The entire home user market is so low price dog-eat-dog that it makes little sense to invest in it. Corporate desktops/servers are where the money is at right now. Laptops will be a future growth segment and there's no sign that they are abandoning that area.

Reply Score: 1

RE: Makes sense to me.
by elsewhere on Sat 20th Aug 2011 19:53 in reply to "Makes sense to me."
elsewhere Member since:
2005-07-13

HP might be selling their PC business but there's no proof that they are going to stop making corporate desktops or servers, both of which would be their most profitable segments. HP ditching Compaq makes a lot of sense. Since it's a lot of overhead cost without too much gain. The entire home user market is so low price dog-eat-dog that it makes little sense to invest in it. Corporate desktops/servers are where the money is at right now. Laptops will be a future growth segment and there's no sign that they are abandoning that area.


They aren't dumping their server line, but they're dumping corporate desktops and laptops. There is no money in them.

At one time, when companies were shelling out $1500-$2000+ for desktops, they rarely hesitated attaching a service contract to them. That's where HP made their money.

Nowadays, companies use $399 throw-away desktops where if something breaks, they pull a spare out of the closet and fire it up. There's no more money in it for HP to sell on-site maintenance contracts.

As for the laptops, it is growing, mostly at the expense of the desktop market, but that doesn't mean there is money in it. Dell, HP, Lenovo et al. have their laptops manufactured by the same pool of Asian mega-manufacturers, there's really little to differentiate in any sort of profitable way.

The PC space is their only division that has low single digit margins and is declining.

Cisco came to a similar realization that the consumer market was simply not worth the investment to compete in. They dumped the flip line despite the investment they made, rather than continuing to throw resources at it. There's talk that they're looking to dump Linksys as well, and with their entry into the enterprise server space, they're aiming squarely at HP's core business. Add to that Oracle leveraging their Sun acquisition to target HP, and the fact that IBM has already put their loss-leading PC business behind them and successfully re-invented themselves as a enterprise services-oriented organization, and the writing is on the wall.

There's absolutely no way this was a quick decision. I suspect it was part of the conversation when the board started interviewing him for the job and that he was hired to do precisely what he has just announced.

I wouldn't be surprised if the Touchpad was released simply to try and increase the value of Palm as an asset to sell, but realizing that it was tanking, they simply pulled the plug to reduce their loss rather than throwing more resources to keep it alive.

Reply Parent Score: 3

RE[2]: Makes sense to me.
by zima on Tue 23rd Aug 2011 18:11 in reply to "RE: Makes sense to me."
zima Member since:
2005-07-06

... , Lenovo et al. have their laptops manufactured by the same pool of Asian mega-manufacturers, there's really little to differentiate in any sort of profitable way.

Lenovo is an Asian mega-manufacturer; apparently doing decently & growing.

Ah, it would be cute, in a historical sense, if they would grab the remnants of HP PC business - including Compaq, the implementer of pretty much first IBM PC clones. Just a few years after they also grabbed IBM PC business ;)
(but yeah, I don't see any reason why they would want the ballast of HP PC division which by now most likely outsources most everything anyway)

Reply Parent Score: 1