Hewlett Packard Stop Manufacturing PC’s Tablets And Phones To Focus On Software

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Hewlett Packard Stop Manufacturing And Focus On Software

Hewlett Packard has confirmed plans to stop making PCs, tablets and phones in order to refocus on the more profitable software side of their business much like their cousin IBM who bailed out of manufacturing to also follow pretty much the same path.

Sign that traditional PC’s are doomed?

It is a bizarre twist if you think about it, here you have Google going into manufacturing, a wholly software and service based entity, buying patents and potentially looking at manufacturing as a result, you also have Microsoft edging their bets on a new operating system that will be able to work cross platform but is primarily a mobile O/S at its root. Nokia are also stopping the sale of their new N9 in many countries that you would expect them to be on sale in including the US and the UK. And Apple have just become the biggest company in the world proving that software and hardware are where the serious money is.

HP Stop Making PC's
HP Stop Making PC's

Mobile devices are catalyst to changes:

The one constant in all the major news we are hearing in the technology industry currently is it all relates to mobile phones and mobile devices. “to make or not to make” seems to be the in question many brands are asking themselves. This leads me to believe that the traditional PC is dying quicker than many thought and the big boys are cutting their losses now and going into a seemingly safer market to focus their core business as competition in hardware is simply too fierce, plus I suspect the World economy has slowed sales down quite drastically…(I will not be buying a new computer for three years minimum I suspect, but I would like a tablet)….see the pattern.

HP has said that it is considering the sale of its personal systems group, this includes the worlds’ largest personal computer making business, and has also state that it will discontinue its webOS devices used in its current smartphones and tablets which the take over of Palm computers helped to create.

HP buy Autonomy – UK based software company – Shareholders to smile wide!

Hewlett Packard have also offered to buy the UK software company Autonomy leaving Autonomy shareholders looking potentially very happy with an over valuation offer of 64% of close of sale share prices of £15.58 on the 17/08/11, equating to a £25.50 cash bonus per share to Autonomy shareholders, this looks like a very lucrative deal indeed.

Only in March HP stated that WebOS would be key for future devices:

The above announcements are industry shaking shifts from the earlier statements made in a strategic review back in March that webOS would be integrated into all its future hardware manufacturing.

Software more profitable:

With the failure of the $1.2 billion acquisition of Palm and the subsequent decision to ditch the Pre smartphone and TouchPad which used HP’s/Palm’s WebOS to compete with Apple iOS and now Android, the decision by CEO Leo Apotheker to get out of hardware altogether seems like a serious shift but many would say since Leo came in from Germany’s HP rival SAP, he has been steering this refocus to software more aggressively as time goes by.

HP had launched its Pre smartphone as a competitor to the iPhone and devices based on Google’s Android operating system, the trouble was that the market and technology journalists did not take to the devices in anywhere near the kind of uptake that HP hoped for.

Chief executive of YCMNET Advisors, Michael Yoshikami

“HP is recognising what the world has recognised, which is hardware in terms of consumers is not a huge growth business anymore,”

“It’s not where the money is. It’s in keeping with the new CEO’s perspective that they want to be more in services and more business-oriented.”

Though you only need to take a look at Apple who have completely flown in the face of the old Microsoft lovers adage who said, “the money is on software, not hardware” back in the Early 2000’s…is HP right in doing this?…possibly so considering their current hardware failures and the competition in general.

Will Autonomy keep autonomy?

There is a certain amount of sadness in Cambridge, UK as Autonomy was a flagship company that looks like it will get eaten up by HP and while it has been promised that it will be run as a separate company, with Mike Lnych still in charge. Time will tell what this means to the local area where Autonomy grew from.

While there is a promise that Autonomy will be run as a separate business, with Mike Lynch still in charge, this still looks like a sad day for British technology – and for Cambridge in particular.

Break up of HP to interest private equity firms

HP have said that it “will consider a broad range of options that may include, among others, a full or partial separation… from HP through a spin-off or other transaction”.

And should this happen many private equity firms are likely to be very keen to buy up parts of the old Hewlett Packard, to repackage them into other forms.

So we see the rebirth of an old brand….sound familiar?

Anthony Munns