End of an Era

In the wake of the ominous PC figures from Gartner and the almost laughable performance of its tablet, the Touchpad, HP has decided its future no longer lies in traditional PCs and the new category of tablets. It's exiting them both in favour of a refocus on software.

It is also paying $7.1bn for UK software company Autonomy to augment this incredible U-turn. HP's interim CEO, Leo Apotheker, a former SAP CEO, has reversed decisions made even in the latest strategic review where WebOS, their tablet operating system, was to be a part of their strategy for the future.

I am not sure what is the most worrying about this - Apotheker's decision to reverse strategic review decisions in short order or the surrender of the PC business to arch rivals like Dell, Acer and even Apple, but this the end of long road for HP. Considering this business once included not only traditional mid range HP systems and PCs, it then bought mini-computer vendor Digital and then Compaq, the largest of the PC vendors. It has been a long, sad demise of several of the world's top hardware brands. As a former HP man, it is very sad that companies that brought out the first 32-bit workstation and launched its first PC with innovative touch screen all those years ago, has exited an arena that it technically excelled in.

But times change. What perhaps is surprising is the disaster in the tablet market. Best Buy has sold no more than 10% of a huge order of over 250,000 HP Touchpads we are told and the product has acquired various derisory names in the process. How could HP have got it so wrong in this hot space, rumoured to be a higher margin and high growth sector?

Well, just take a look how Apple has created and built this sector. The innovations came on the back of blending leisure and business and driving down software costs by encouraging thousands of developers to give away or sell cheap Apps designed to change the way we interact with computers. If you look at HP's App Shop on their website there are less than 10 available. It's a mis-calculation that Microsoft are making in deciding that it's tablet OEMs cannot use Windows Mobile in their products as this automatically means that any App Store is going to be same old software, at same old prices.

The market has moved on. What is absolutely certain is that HP has recognised the demise of the PC as we know it and capitulated to Apple in the tablet space. With pressure on RIM in this area, it appears that there will be only two dominant operating systems in the tablet market - Google and Apple as Microsoft languishes in its own mistakes.

By 2014, it is estimated that one third of the UK global PC installed base will have been converted to tablets. This makes HP's surrender all the more perplexing as it can only go higher from there. What it certainly means is that Apple has killed off a major competitor and had its market activities validated without hardly trying. It's likely that a fair proportion of HP's marketshare in traditional PCs will get taken up Apple's Mac products as well as the insertion of iPads.

That, you have to say, is just pretty awesome news for Apple.



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