HP PC spin-off U-turn: expert reaction

by | 28 October 2011

So HP is keeping its multi-billion dollar PC division after all. CBR rounds up some of the reaction

New HP CEO Meg Whitman has decided to keep HP's PC business after all; overturning a decision made to former boss Leo Apotheker to dump it to focus on software and services.

What has the industry made of the decision? CBR looks at the reaction:

Meg Whitman, HP CEO
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.

Carter Lusher, chief analyst, Ovum
We applaud HP CEO Meg Whitman, appointed to that position on September 22, for acting swiftly and decisively to eliminate the uncertainty surrounding HP's intentions for the Personal Systems Group (PSG). The announcement by now former-CEO Leo Apotheker that PSG was undergoing a strategic review and could be sold or spun off was an unmitigated disaster.

Apotheker's August announcement about PSG was a critical blow to his credibility after announcing in a much hyped analyst event only five months earlier how important PSG's products were to HP. In addition, Apotheker said that the decision would not be completed until well into 2012.

Everything around the PSG strategic review decision sent shock waves of uncertainty through the enterprise and public sector 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 into doubt its stability.

Whitman is demonstrating early that she is not hesitant about reversing Apotheker's decisions and that she will act swiftly. These are two characteristics that IT executives welcome as it shows that Whitman might be able to stabilise HP and return it to its previous status as a strategic supplier to IT.

Paul Hunter, Head of HP PSG UK and Ireland
The decision to keep the Personal Systems Group within the whole of HP is a welcome one.

While I was very confident of our ability to thrive and grow should the business be spun out into a separate company - or even sold - I am pleased we will remain closely integrated

We have undergone a robust, and at times very public, audit of the company which can only make us fitter and stronger. After a deep data driven analysis, we have decided that HP and the Personal Systems Group (PSG) are stronger together. Our strength comes from being together.

Looking at the results over the related period for the PSG business, we have performed well. Market share has remained remarkably resilient. We are in a strong position and are striving to increase the gap on our competition.

This is not to ignore some of the challenges that we have faced over the past few months, which is why myself and my management team are committed to further improving the UK business.

Mark Moskowitz, JP Morgan
We think the decision is a solid step forward for HP. The announcement to keep the business is a sign of sound strategic decision-making returning with new leadership.

Mark Fabbi, Gartner
The fact that Meg pushed this decision very quickly is absolutely cleaning up the mistakes of the past.

Frank Gillett, Forrester
HP made the right decision today to keep the Personal Systems Group. Beyond the reasons cited, supply chain and sales synergy and expense of spinning out, it's also crucial for HP to remain in the market for personal devices, which is entering a period of radical transformaiton and opportunity.

The innovations spawned first by RIM with the Blackberry, followed by the transformative effects of Apple's iPhone and iPad are beginning to ripple into the PC market. Apple's MacBook Air and Lion operating system, combined with Microsoft's Metro interface for Windows 8 herald the beginning of a transformation of personal computing devices. By keeping PSG, HP has the opportunity to innovate and differentiate in PC market that will move away from commodity patterns.

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