HP will keep its Laptops and PCs after all

The EliteBook 8460p is a part of HP's current PC lineup.

Hewlett-Packard announced that it will keep its personal systems group and that it will continue to sell PCs and Laptops.

The company says its strategic review indicated that the supply chain and procurement hit was too much. Meanwhile, HP’s PC unit performs well. When Meg Whitman took over as CEO, she promised a quick decision on the PC division. She delivered.

HP’s PC unit is profitable, but according to analysts, that end of the business has imploded. In other words, HP couldn’t sell the PC division so there really is no other viable choice.

Jefferies analyst Peter Misek said in a research note this week:

 In our global travels we have heard time and time again how your PC business has virtually imploded since the spin-off decision. Local managers in Asia, Latin America, and Europe are powerless to fight the competitive message, and customers fear that you are not committed to the business and therefore are going elsewhere (primarily Lenovo and Dell). We suggest either 1) immediately announce a commitment to the PC business (e.g., multi-year onsite warranties, partner with local banks to finance), or 2) have a private equity firm buy a stake in the company.

HP’s decision to keep the PC unit is not in any way a sure fix as PCs are still a low-margin commodity business, they’ll really need to step up their game and deliver some cutting-edge designs, crack the tablet market, and generate consumer buzz.

Whitman said in a statement:

 HP is committed to PSG, and together we are stronger.

Whitman’s review is relative to how PCs fit into the supply chain. Removing the PC business could mean that HP may lose some buying power and may find it more difficult to get good component deals for its servers.

HP said in a statement:

The data-driven evaluation revealed the depth of the integration that has occurred across key operations such as supply chain, IT and procurement. It also detailed the significant extent to which PSG contributes to HP’s solutions portfolio and overall brand value. Finally, it also showed that the cost to recreate these in a standalone company outweighed any benefits of separation.

Todd Bradley, who runs the PC unit, said the company is committed to the PC and intends to improve the business, eliminating uncertainty.

This story originated from ZDNet’s Between the Lines under the headline “HP: We’re keeping the PC unit.” It has been updated several times with additional information from HP and analysts.

No related posts.