HP Kills Off Tablet & Smartphone Products, Looking to Sell its PC Division

Palo Alto, CA-

In an abrupt and drastic shift, Hewlett-Packard, one of the world's largest manufacturers of IT products, has decided to sell or spin off its PC business--the largest in the world--as well as its tablet and smartphone divisions.

HP CEO Leo Apotheker admitted that HP's recently-released tablet, the TouchPad, "has not been gaining enough traction in the marketplace," and neither have their smartphones. So HP has decided to do away with their mobile industry business, which is built around their proprietary webOS. WebOS, which HP acquired in its $1.2 billion buyout of Palm, has consistently had good reviews from critics overall, but has suffered the same fate as their mobile products. HP was late to the mobile game to begin with, suffering several delays in the development of their TouchPad. The rise of Apple's iPad tablet, which by far dominates the tablet PC market, along with the unending proliferation of Google's ubiquitous Android OS effectively shut HP out of the mobile industry altogether, before they even got a chance to get started.

Their PC business is the largest one out there, with more than 17% market share, and also brings in the largest portion of their revenue, which totaled $126.3 billion in 2010; however, their PC business is also the company's least profitable branch. And it's been on the decline as well. Apotheker stated, "the tablet effect is real... Consumers are changing how they use PCs." That's not conjecture: HP's consumer PC sales plummeted 17% between May and July. Some of that was due to the Japan earthquake, but overall PC demand was down 23% in the first quarter of this year, according to CNNMoney.

HP has also confirmed that it will buy British software company Autonomy for about $10 billion in cash--one of its largest acquisitions to date. Autonomy makes enterprise software for companies with large networks and a lot of unstructured data such as emails, phone calls, and other data which isn't stored in an easily accessible, structured database.

As a result of the dramatic turnaround and refocusing, HP has dropped its revenue forecast by 9% and profit forecast by 16%. HP has already laid off tens of thousands of workers; no word yet on how this move will affect their remaining employees.


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