HP: A new Slate in PC market

4/5/2012 8:58:01 AM
HP: A new Slate in PC market

Company remains in consumer PC market and launches the new tablet just months after it dumps TouchPad

HP has decided to retain its PC division just months after announcing it was looking for “strategic alternatives” for the consumer side of its computer business. Having previously called time on its TouchPad, the company has also launched a new tablet.

Meg Whitman, HP’s president and CEO, said it is right for customers and partners, right for shareholders, and right for employees” that its personal systems group (PSG) stays with the company.

“Keeping pgs within HP is right. HP objectively evaluated the strategic, financial and operational impact of spinning off p5g. HP is committed to PSG, and together we are stronger,” she said.

Former CEO Leo Apotheker revealed that HP was discontinuing the touch pad and exploring the possible spin-off or sale of PSG in august, however, following a strategic review under Whitman, who was appointed as Apotheker’s successor in September, HP decided to keep the group. PSG is considered to be a key component of its efforts to create long-term relationships with consumers, including businesses.

Tony Prophet, senior vice-president of operations at PSG, said spinning off the unit would have cost HP $1.5bn. “As the analysis unfolded, it became clear the costs were more significant than any benefit,” he said.

A wise decision?

The original decision to sell or spin off the division was also criticised by analysts, who said the PC business contributed to the company’s bottom line arid added purchasing power for enterprise hardware partners, such customers wanted the company to retain the PC unit so they could purchase hardware, software and services from one entity.

Meanwhile, HP was losing business to competitors such as dell, which were preying on the uncertainty around its business unit to gain new customers.

However, other analysts said the PC business had to be the first domino to fall if HP was to improve its profit margins. With PC shipments dropping and the company lacking a clear mobile strategy, it would make sense for HP to refocus its attention on high-margin enterprise businesses - much like IBM did when it sold its PC unit to Lenovo in 2005.

Slate 2

HP has also unveiled another tablet PC, the Slate 2, which has an 8.9in capacitive touchscreen. Unlike the fallen TouchPad, the Slate 2 runs Windows 7 home premium rather than the webOS mobile platform and is aimed at businesses rather than consumers.

The device, an update to the Slate 500 released in 2010, runs an Intel Atom Z670 processor. There’s 32GB of storage built in, and Wi-Fi connectivity as standard. Much like traditional desktop and laptop PCs, the Slate 2 can run custom applications written for x86 processors and the Windows OS.

HP said the Slate 2 can be used to access corporate documents or take notes through stylus input, with an optional external keyboard, the device can also double up as a PC.

The Slate 2 was available only in the US at press time, where it costs $699. It’s expected to be made available worldwide in the near future, but UK pricing has yet to be revealed.

HP says it will continue to produce the Slate 2 Windows 7 tablet for enterprise customers, and will also develop a tablet running Windows 8.

“We are certainly going to be there with Windows 8,” Whitman said.

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