It seems that CEO action man Léo Apotheker is considering a full or partial separation of PSG from HP through a spin-off or even selling off the business.
Spinning off HP’s PC business is likely to prove popular with the founders. David Packard only reluctantly agreed to focus on PCs in the early 1990s after he was given a chinese burn by the Winsome Carly. And Walter Hewlett, a board member and son of co-founder Bill Hewlett, mounted an unsuccessful campaign to block the 2002 acquisition of Compaq. That deal pushed HP to the top of the PC industry, but appears to have soured as the PC market has been suffering lately.
As Michael Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management told Bloomberg, PC profits are waning amid competition from Asian rivals.
HP’s DNA never included being a commodity consumer products manufacturer, which is what the PC has become, Cusumano said. There is no action and innovation in the business these days. While the PC unit accounted for 30 percent of sales last quarter, it only generated a 5.9 percent operating margin.
It seems that Apotheker has dismissed webOS as too consumery as well. The killing of webOS though is a surprise as this was being touted as a “cure for cancer” by HP a while back. It suggests that the mobile boom which has cost many CEO’s jobs might have just been an Apple marketing fantasy after-all and is going no where.
HP appears to hope that it might get some of its money back on WebOS by using it to connect some of the hardware it is keeping, however Apotheker does not seem particularly interested.
At $10.2 billion the Autonomy deal will be one of the most expensive things that HP has done. The outfit develops a variety of enterprise search and knowledge management software based around adaptive pattern recognition techniques.
HP’s president and chief executive officer, Leo Apotheker appeared in his element when he announced that HP bought Autonomy for “higher value business solutions that will help customers manage the explosion of information”.
In fact Autonomy is very similar to the sort of operation that Apotheker is used to – esoteric business software.
He said that with Autonomy, HP can re-invent how both structured and unstructured data is processed, analysed, optimised, automated and protected. It is as exciting as an SAP press release.
What appears to have happened is that Apotheker has pushed HP away from becoming a big hardware and software outfit towards being a more business orientated operation. There is the normal comments about the Cloud and other business software systems, but it seems that Apotheker has defaulted to esoteric business software systems as the safest direction for the printer ink maker.
But there is a down side to this strategy. While the PC business is probably best left to the cheap and cheerful asian market, Apothiker is ignoring the possibility of bring in business related mobile systems which could have been a money spinner for HP.
WebOS based tablets and mobiles integrated into business networks could have been part of an strong HP package. Now it seems that Apothiker is going to leave that market to Microsoft, Google and RIM.
Still we have to say that we did not think that Apothiker was built of the stuff of radical change. True he has made HP even more duller than IBM, which takes some doing, but he has pushed through a revolution which has not been seen at the maker of Printer Ink since the winsome Carly left.