HP urged to shed hardware business

A UBS analyst has said Hewlett-Packard (HP) should shed its PC and printer business in a report that reopens old and sticky wounds, writes The Channel.

Rumours of a PC business spin-out first surfaced last year, during former CEO Leo Apotheker's reign. By contrast, current big boss Meg Whitman has famously likened any spin-off of the units to breaking up a family.

HP is still the biggest maker of PCs in the world - if you discount tablets - but Steven Milunovich at UBS Investment Research reckons the tech giant should ditch hardware and focus on services: cloud and business.

According to CIO Insight, the questions can be traced back to Carly Fiorina's time as CEO, and her decision to spend $25 billion to buy rival PC maker Compaq Computer. The move was hotly debated within the industry and inside the company, though it did enable HP to take the title of the world s top PC maker from Dell, a position it continues to hold today, though it s being threatened by Lenovo.

However, some questioned in 2002 why HP was spending so much money for a larger share of a commoditising market, an argument that got a boost two years later when IBM got out of the PC business, selling its PC unit to Lenovo.

Now worldwide PC sales are stagnant, thanks to the rise of tablets and smartphones, a trend that has impacted HP and Dell, which itself is trying to transform from a box maker to an IT solutions provider. In addition, HP is seeing sales in its highly profitable printer business slow.

“In terms of marketing, what does the HP brand stand for since being all things to all people means standing for nothing?” asked Milunovich, as reported by Tech Week Europe.

Milunovich's argument echoes one by Forrester Research analyst Peter O'Neill, who said in a 7 August blog post that the perception of a rudderless and mismanaged HP can become reality without a strong marketing effort. Unfortunately, said O'Neill - a former HP marketing executive - that effort is not being seen at HP.