Bloomberg News caused a big stir in the tech world today with a report that Hewlett-Packard is looking to spin off its PC business to focus more on software and cloud services, in connection with a possible acquisition of software maker Autonomy. HP is the largest PC maker in the world, shipping more than 15 million PCs last quarter, according to IDC data.

HP just confirmed the news and also delivered another shocker, saying it will “discontinue operations for webOS devices, specifically the TouchPad and webOS phones.”

More on that in this follow-up post.

About the PC business, HP said its board “has authorized the exploration of strategic alternatives for its Personal Systems Group.” It added, “HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction.”

The Personal Systems Group includes business and consumer PCs. It’s possible that HP will spin the PC business off as a new publicly traded company. But it’s also possible that HP could end up selling the PC business to an existing company.

Which raises the question: Why not Microsoft as a buyer?

Even suggesting this will be heresy to most people in Redmond. Getting into the PC business would be a huge break with tradition for the company, which long ago decided to focus on Windows and applications for a variety of hardware makers. It was a major key to the company’s success. Getting into the PC business would mean competing with its partners — existing Windows PC makers.

Yes, it’s a stretch. I mean, who would be crazy enough to compete with its own hardware partners?

But as I’ve said publicly in the past, I believe the approach that leads to the best computing experience is when the computer is treated as a single product, and a single experience, allowing the operating system and core features to be tightly integrated with the hardware.

Yes, it’s the Apple model. We can debate this forever — and we probably will — but more often than not, in my experience, using Mac OS X on Apple hardware is smoother than using a Windows PC, overall. Macs feel like a single product that come from the same place, or even the same mind.

Again, speaking just from my experience, it’s rare to find a Windows machine that feels like that.

Maybe if Microsoft owned a line of PCs — from the applications to the OS to the drivers to the underlying hardware — it could set an example that would take the Windows ecosystem up a notch.

It might not be the worst thing in the world. But no, of course, it’s not going to happen.

Comments

  • http://eyejot.com/users/davidg davidgeller

    If Microsoft were to buy the business it would alienate all their other customers, just like what Android has done to the likes of HTC, Samsung, etc., etc. If HP can’t make the PC business successful, with decades of hardware and manufacturing expertise, why would anyone think Microsoft with practically zero hardware manufacturing experience (yes, I know, they make mice and keyboards and a money loosing gaming platform) could do better? Microsoft should not buy HP’s PC business. Instead, it should concentrate on core competencies and start working to return value to its shareholders. Exit search. Exit cloud computing. Shed everything except Office, OS and Server (SQL Server). Even consider shedding Dynamics.

    • Guest

      Very good points. I’m with you on everything except the exit cloud computing and shedding Dynamics parts. Cloud computing is already integral to being an enterprise software player and will only become more so. So it’s a business they have to be a leader in. Maybe not at the commodity infrastructure level, but certainly at the platform as a service one. And Dynamics, or at least CRM and ERP, are very big/fast growing business for others and should have been for MS as well. They predicted it would be, but instead they lost focus as usual. The time and money saved by getting rid of the other businesses you mentioned should be used to double down on enterprise software, including CRM and ERP.

    • Guest

      Ballmer has eroded MS’s competitive position so badly that returning value to shareholders isn’t going to be an option without some huge new market breakthrough. Just sustaining a $200B+ valuation will be challenging.

    • tissuebox

      …but what other options in PC OS would other microsoft’s customers have if not windows? and the upcoming windows8 will have their own ecosystem along with devices in mobile, xbox and kinect….if microsoft is able to somehow integrate kinect, mobile and PC together, i would love to see how far their imagination stretches…

  • http://www.joulespersecond.com/ Paul Watts

    Treating the product as an integrated experience has worked for Apple not only for Mac OS X but for iOS as well. Google learned the lesson with Moto, and Microsoft seems to be stepping in that direction with Windows Phone and Nokia. (Microsoft also has experience with this with Xbox, although in that case an integrated hardware/software experience was already the norm.)

    It will be interesting how Windows 8 changes this, and what would happen if Windows 8 were designed with an integrated experience in mind. Would it be something that people love, or would it remain a commodity OS, something that people will just use because it’s there?

    • Guest

      “Would it be something that people love, or would it remain a commodity OS, something that people will just use because it’s there?”

      LOL. Not that you’re biased or anything…

      • http://www.joulespersecond.com/ Paul Watts

        Of course I’m biased. Never suggested otherwise :)

  • http://www.facebook.com/littlebiggy Fred Buddemeyer

    this is what happens when ceos deal in business units instead of products.
    how did Leo not realize the touchpad was a piece of shit? 

    (question originally posted at littlebiggy.org/4647787 )

  • http://www.facebook.com/littlebiggy Fred Buddemeyer

    this is what happens when ceos deal in business units instead of products.
    how did Leo not realize the touchpad was a piece of shit? 

    (question originally posted at littlebiggy.org/4647787 )

  • Guest

    This is a good idea. Microsoft Windows PCs have suffered from all the OEM crap that vendors stuff on board. Were Microsoft to produce a PC and support both the hardware and the software, customers would buy.

    Microsoft’s made bold moves like this before. After PlaysForSure didn’t gain traction in the market, Microsoft made waves by launching Zune, a first-party product that displaced all others. I foresee Microsoft PC Division (MSPCD) having the same prospects for success.

    • Guest

      “Microsoft made waves by launching Zune, a first-party product that displaced all others.”

      All? It didn’t even displace all non-Apple competitors and it didn’t hurt iPod one iota. It was an utter failure.

      • http://eyejot.com/users/davidg davidgeller

        I think that was a joke on his/her part.

  • Rob

    Paraphrased:  “the pc business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs.  There’s also a negative side.”  After 3.5 years of Dell (and another year reselling IBM + HP) I can tell you…these low margin, high turn businesses with outsourced manufacturing and indirect sales are not easy to run.

    I’m also willing to assume that HP royally screwed up their PC unit too (key people gone, bad supplier/retailer agreements in place and no viable path forward into phones/tablets now that webOs is dead).  

    • Guest

      “viable path forward into phones/tablets now that webOs is dead”

      Huh? They now have the same viable path as many others: Android or Windows/WP7.

    • Guest

      “viable path forward into phones/tablets now that webOs is dead”

      Huh? They now have the same viable path as many others: Android or Windows/WP7.

  • Guest

    The WebOS decision isn’t surprising, although they gave up on it faster than I thought they would. But the PSG decision is mind blowing.

    MS buying HP would be a really bad idea. It would alienate other OEMs who would then further embrace Linux, Chrome, etc. Plus MS isn’t great at hardware and especially not at scale.

    I’m trying to decide if this is good or bad news for MS. On the one hand HP dumping the WebOS stuff is good for Redmond. But when the largest PC manufacturer apparently decides the future of PCs is so unattractive that it’s time to dump that business, it’s not good for MS long term.

    Still, I applaud HP’s board for making a gutsy decision. They’re cutting their losses in consumer. It’s low margin and they’ve obviously finally conceded that they can’t beat Apple or try and be mini-Apple. Focusing on the enterprise makes more sense for them.  

    • http://eyejot.com/users/davidg davidgeller

      I think it reflects very negatively on MSFT. Here’s one of the largest PC manufacturers (a customer of Microsoft) abandoning a huge business because of poor profit outlook. The next buyer will get to reshape their agreements with all their vendors, including Microsoft. So, there’s potential for a large number of unit licenses to be renegotiated.

      • Guest

        MS is under sanctions to keep pricing consistent across OEMs by volume. So I don’t think you’ll see a big price decrease due to this decision alone. You might see an across the board one due to the cannibalization of PCs by iPad, but not because HP sells to someone like Samsung.

  • Smarter Than Steve Balmer

    Microsoft should scrap horrible Windows Phone OS, purchase WebOS from HP at fire sale price, then brand as Microsoft WebOS for smartphones, tablets, netbooks, and lite desktops. Totally saves Microsoft and also gets a WebOS that HP paid $2 Billion for last year and since vastly improved! Microsoft WebOS is the answer to take on iOS and Android! 

    • Whomestoopid

      If you were smarter than Steve, who incidentally entered Harvard on an academic scholarship, surely you’d at least be able to spell his name correctly, no?

    • Brad_smith1356

      Jackass, have you tried the Current Windows Phone Os system?  It is solid and this is phase 1 of microsoft’s 3 phase approache based by rebuilding capabiliities.  Wait until you see what Windows Manago will release, and customers will get that by DOWNLOAD, and not require a brand to fricking Phone, like others…  MS is in this for the low cost model with full integration and changing the game.  Also, don’t be surprised if you see Hot Spot functionality in this. 

    • Brad_smith1356

      Jackass, have you tried the Current Windows Phone Os system?  It is solid and this is phase 1 of microsoft’s 3 phase approache based by rebuilding capabiliities.  Wait until you see what Windows Manago will release, and customers will get that by DOWNLOAD, and not require a brand to fricking Phone, like others…  MS is in this for the low cost model with full integration and changing the game.  Also, don’t be surprised if you see Hot Spot functionality in this. 

  • Guest

    Terrible idea, Todd. HP is about 20% of PC sales. And OEM sales are about 80% of MS’s sales. So MS buys HP and watches 65% of their business eventually move to competitors as other OEMs abandon them? Effectively do what they just made fun of Google for doing in mobile by acquiring MMI?They’re better off maintaining their model and hoping that HP’s PC business passes into stronger hands – like IBM’s did before it.

    But there are some serious lessons for them here. The days of the PC as a “growth” business are over. They were already over pre-Pad, but the latter is and will continue to have an enormous negative impact on PC sales. Without PC growth, MS as currently structured can’t continue to grow, at least on the profit side and very possibly on the revenue one as well. The writing has been on the wall there for years, but the company has buried its head in the sand.

    Fellow sand divers and laggards CSCO and now HP are finally making the painful decisions they’ve been putting off for years about how best to position themselves for higher growth and success in the future. MS, which has destroyed more shareholder value than both combined, is still unsuccessfully trying to be all things to all people. The consumer electronics business is effectively lost to Apple and what they don’t get Google will, at least on the OS side. If MS doesn’t refocus on the enterprise quickly, it risks losing that business as well to a reinvigorated IBM and still potent Oracle. Which would leave it with nothing.

    Hopefully the courage of HP’s board will put pressure on MS’s to finally wake up and start making dramatic changes before its too late. Starting with firing Ballmer.

     
     

    • Guest

      I think you’re conflating economic trends with technological and usage ones. The PC market is not growing because we are still in the middle of a global economic crisis. People buying iPads tend to be in the small segment of users who are wealthier than most of the rest of the world. Of course there will be product growth within that segment, but the segment itself is limited. I believe everyone claiming that the PC has suddenly died will be eating their words once the economy recovers.

      • Guest

        Tablet sales last quarter were > 16M units. That’s not a small segment of rich people.  It’s a secular shift with broad support. And it’s one MS itself predicted back in the early 2K’s when they first championed the form factor:

        “The tablet takes cutting-edge PC technology and makes it available whenever you want it…It’s a PC that is virtually without limits — and within five years I predict it will be the most popular form of PC sold in America.”

        Bill Gates

        • Guest

          Only Bill never anticipated they’d be sporting primarily apple logos and most of the rest robots ;-)

          • Mergathal

            If only Bill had not put Balldropper Balmer in charge, MS would have had a tablet out already that was better than the female hygeine product and the robot. Balmer is the biggest reason MS is going downhill.

          • Mergathal

            If only Bill had not put Balldropper Balmer in charge, MS would have had a tablet out already that was better than the female hygeine product and the robot. Balmer is the biggest reason MS is going downhill.

  • Ray Burt

    Dumb. Dumb. Dumb.  

  • Ray Burt

    Dumb. Dumb. Dumb.  

  • Guest

    If I’m the Dell, Acer, or Lenovo enterprise account rep, I know exactly where I’m going tomorrow: to every HP account.

    This is the most ignorant move I’ve ever seen. They should have found a buyer and then announced their plans. Now customers will be leaving in droves, employees in PSG will be kiting their resumes, and the business – which apparently had been shopped around Asia for months without success – will be even less attractive to a potential buyer.

    We may have found a tech CEO even more useless than Ballmer.

  • Guest

    If I’m the Dell, Acer, or Lenovo enterprise account rep, I know exactly where I’m going tomorrow: to every HP account.

    This is the most ignorant move I’ve ever seen. They should have found a buyer and then announced their plans. Now customers will be leaving in droves, employees in PSG will be kiting their resumes, and the business – which apparently had been shopped around Asia for months without success – will be even less attractive to a potential buyer.

    We may have found a tech CEO even more useless than Ballmer.

  • BillGates

    [delivered in a high pitched nasaly whine] “That the f’n stupidest idea I’ve ever heard”

    (sorry, couldn’t resist)

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