HP's Whitman moves swiftly to retain PC division

By Sooraj Shah
28 Oct 2011 View Comments
Meg Whitman is chief executive at HP

HP's new CEO Meg Whitman has said that the company will keep its PC division, overturning former chief executive Leo Apotheker's plan to spin it off and marking a change in direction for the technology giant.

In August, former CEO Apotheker made an announcement that  the company would spin off its PC business. He also announced the acquisition of enterprise search firm Autonomy for $10.24bn (£6.2bn).

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In addition, HP said at the time it would discontinue its webOS devices after struggling to compete with Apple's iPad.

These strategy announcements caused confusion in the markets and led to Apotheker being heavily criticised within the industry.

In September, Apotheker stepped down as president, CEO and director of the company and former eBay CEO Whitman replaced him.

Whitman has moved to quell criticism from analysts, HP's partners and members of the board by addressing this confusion instantly.

In a statement she highlighed the importance of the PSG (Personal Systems Group), the division that deals with HP's PC business.

"HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It's clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders and right for employees.

"HP is committed to PSG, and together we are stronger," she added.

In the HP statement, it stated that the PSG still has revenues totalling $40.7bn (£25.2bn) for the financial year of 2010.

However, Apotheker also initially praised the PSG, five months prior to his announcement that it was to spin off the division. This may leave HP's investors wondering if the same could happen again.

Ovum analyst Carter Lusher believes that Whitman should be applauded for acting quickly, as he feels that Apotheker's contradictory August announcement diminished the former CEO's credibility.

"Apotheker's PSG decision sent shockwaves of uncertainty through IT executive circles as it called into doubt HP's ability to execute a clear strategy for any product or solution.

"IT executives need insights into strategic vendors' intentions in order to make multi-year commitments and HP's actions called its stability into doubt," said Lusher.

Lusher also said that although IT executives believe that PCs are an important part of the current infrastructure, HP does need to adapt to modern technology and prove that its strategy is future proof.

"For example, HP needs to embed technology in its PCs that make them better to manage using HP's management software suite. It is not just in the products that HP has to change to make PSG more relevant," he said.

Lusher believes that to become more relevant, HP must incorporate new business models. For example, by supporting a bring-your-own-device-to-work policy in association with retailers and channel partners.

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