BREAKING STORY: Struggling in the tablet market Hewlett-Packard has decided to do an IBM and exit the PC market, possibly leading to major retrenchments in Australia. Later today Harvey Norman is set to have talks with HP about the future of the HP Web OS tablet.
AH-P has announced plans to spin-off or sell its personal systems group (PSG), which markets PCs, tablets and smartphones, and discontinue sales of its WebOS-based tablets and smartphones.
The PSG also markets technical workstations, personal storage solutions and Internet services.
The company said it “will continue to explore options to optimize the value of WebOS software [for tablets and smartphones] going forward.”
Earlier today it was confirmed that Hewlett-Packard and Harvey Norman are set to hold urgent meeting today to discuss the possible withdrawal from sale of the new HP tablet which went on sale exclusive to Harvey Norman stores.
The announcement in the US that HP is set to exit the PC and Tablet market effectively means the HP TouchPad , the first tablet computer produced by the world’s biggest computer maker, is a dud and that up to 1200 Australian consumers could be in a position to demand a refund.
Ben McIntosh, the general manager of Harvey Normal’s computers and communications division, told the Australian newspaper the company’s retail outlets had sold about 1200 TouchPad tablets since it went on sale.
Mr McIntosh said Harvey Norman realised there were issues coming up with the TouchPad as it had a close relationship with Best Buys, which reportedly had sold just 2500 of the 270,000 tablets they had purchased from HP since sales began in the US in July.
H-P is the world’s biggest marker of PCs but that market has slowed as consumers and corporations scoop up tablets and smartphones. In the third quarter, revenue in H-P’s PC business fell 3% from a year ago.
The announcements came as the company announced preliminary results for its third fiscal quarter, which posted revenue of $31.2 billion compared with a year-ago $30.7 billion. Preliminary GAAP diluted earnings per share was $0.93.
Another brand that could be taken over by an OEM manufacturer is Compaq. Former CEO Carly Fiorina acquired Compaq in 2002 for $17.6 billion, making Hewlett-Packard the world’s biggest seller of PCs. Fiorina won shareholder approval for the deal after a proxy fight that pitted her against heirs of the company’s founders.
Since then Compaq which use to be the #1 brand in Australia has slid after HP chose to push Hewlett Packard product over the Compaq brand.
Mimicking IBM, the founder of the PC sold off its computer division in 2004 to Chinese company Lenovo for US$1.8 billion. At the time, the decision to exit the market so early was questioned, but in retrospect IBM believes it was the vanguard of on era, predicting a decline in PC profit margins.
Once bowing out of the market, IBM’s profits grew by 4 per cent in the next quarter, the first of many indications its gamble would pay long term dividends.