HP’s decision to spin-off Hardware business a mistake?


has been criticized  in the past for hanging on to the PC business and recently been criticized again for  dumping both PC and its Tablet business. Recently made a bold move to discontinue its TouchPad – Web OS based tablet and which many saw a potential competitor to both iOS and Android based tablets.

On the sidelines another key move was also made, to spin off  its not so profitable PC division, many might wonder what is HP doing and why should they leave a very successful hardware brand. But the  2011 Q3 numbers might explain why.

While HP’s services , HP Software, Enterprise services  and Financial services  showed growth in Profit. Its PC division and Imaging (Printer/Scanner) division had negative growth. Even within its PC division the worst hit was in retail consumer clients (-17%) , the commercial division fared much better.  Imaging division had marginal negative growth, will be safe for now.

But does a negative growth justify a ?. Maybe for financial experts and Shareholders that will be a good bet, but will it help HP in the future by giving away its PC division ?.  After buyouts of in the past and recently, HP Board seems very impatient with their hardware business. And after announcements of possibly pitting against Windows and MacOs,  sudden change of heart seems strange. HP appears more like a lost kid in a carnival, than the world’s largest services player.

Management personnel change might have accelerated the decision partly due to Leo Apotheker’s appointment as CEO. But all this makes one wonder, why isn’t a huge organisation with wealth of  Software teams cant innovate on some of its existing platforms .  Losing PC division would mean loss of valuable user feedback , Brand image , multiple channels to attain corporate customers and many more..

Maybe someone is thinking that near term profit and that extra employee bonus is more important than long term gains for a company.

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