Posts Tagged‘mark hurd’

HP, WebOS and the Future of the Tablet Space.

So last Friday saw the announcement that HP was spinning off their WebOS/Tablet division, a move that sent waves through the media and blogosphere. Despite being stuck for decent blog material on the day I didn’t feel the story had enough legs to warrant investigation, I mean anyone but the most dedicated of WebOS fans knew that the platform wasn’t going anywhere fast. Heck it took me all of 30 seconds on Google to find these latest figures that have it pegged at somewhere around 2%, right there with Symbian (those are smart phone figures, not overall mobile) trailing the apparently “failing” Windows Phone 7 platform by a whopping 7%. Thus the announcement that they were going to dump the whole division wasn’t so much of a surprise and set about trying to find something more interesting to write about.

Over the weekend though the analysts have got their hands on some juicy details that I can get stuck into.

Now alongside the announcement that WebOS was getting the boot HP also announced that it was considering exiting the PC hardware business completely. At the moment that would seem like a ludicrous idea as that division was their largest with almost $10 billion in revenue but their enterprise services division (which is basically what used to be EDS) is creeping up on that quite quickly. Such a move also wouldn’t see them exit the server hardware business either which would be a rather suicidal move from them considering they’re the second largest player there with 30% of the market. More it seems like HP wants out of the consumer end of the market and wants to focus on enterprise software, services and the hardware that supports them.

It’s a move that several similar companies have taken in the past when faced with downwards trending revenues in the hardware sector. Back when I worked at Unisys I can remember them telling me about how they now derive around 70% of their revenue from outsourcing initiatives and only 30% from their mainframe hardware sales. They used to be a mostly hardware oriented company but switched to professional services and outsourcing when they had negative growth for several years. HP on the other hand doesn’t seem to be suffering any of these problems, which begs the question why would they bother exiting what seems to be a lucrative market for them?

It was a question I hadn’t really considered until I read this post from John Gruber. Now I’d known that HP had gotten a new CEO since Mark Hurd was ejected over that thing with former PlayBoy Girl Jodie Fisher (and his expense account, but that’s no where near as fun to write) but I hadn’t caught up with who they’d hired as his replacement. Turns out it is former SAP CEO Leo Apotheker. Now their decisions to spin off their WebOS (and potentially their PC division) make a lot of sense as that’s the kind of company Apotheker has quite a lot of experience in. Couple that with their decision to buy Autonomy, another enterprise software company, it seems almost certain that HP is heading towards the end goal of being a primarily serviced based company.

Of course with HP exiting the consumer market after only being in it for such a short time people started to wonder if there was ever going to be a serious competitor to Apple’s offerings, especially in the tablet market. Indeed it doesn’t look good for anyone trying to crack into that market as it’s pretty much all Apple all the time and if a multi-billion dollar company can’t do it then there’s not much hope for anyone else. However Android has made some impressive inroads into this Apple dominated niche, securing a solid 20% of the market.  Just like it did with the iPhone before it no single vendor will come to completely decimate Apple in this space but overall Android’s dominance will come from the sheer variety that they offer. We’ve still yet to see  Galaxy S2-esque release in the Android tablet space but I’m sure one’s not too far off.

It’ll be interesting to see how HP evolves itself over the next year or so under Apotheker’s leadership as it’s current direction is vastly different to that of the HP in the past. This isn’t necessarily a good or bad thing for the company either as whilst they might have any cause for concern now this transition could avoid the pain of attempting to do it further down the track. The WebOS split off is just the first step in this long journey for HP and there will be many more for them to take if they’re to make the transition to a professional services company.