HP to Spin Off PC Business, Report Says

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After the markets close this afternoon, HP is expected to announce two things. One is completion of a rumored $10 billion acquisition of database developer Autonomy Corporation. The second, far more stunning prediction is that HP will announce that it is spinning off its PC business into a new, entirely separate company.

HPThe news comes as a surprise to most, since Hewlett-Packard has led all other companies in terms of global PC shipments for the last several years – both in the notebook and desktop market. Bloomberg noted HP CEO Leo Apotheker as stating that he wanted the company to expand and focus on software and other cloud-based services. These services are less volatile to market forces that can affect PC shipments; cloud functionality is accessed by desktops, notebooks, Macs, PCs, tablets, phones, companies, consumers, etc.

It isn’t news that HP has started to shift some of its considerable bulk into the software and services market, nor are they the only manufacturer to make such a move. Rival Dell, Inc. has been acquiring its own set of infrastructure and services companies as they too see their vaunted market share dwindling.

This move cannot be exclusively blamed on the economy and the global recession that has affected almost every aspect of the electronics industry, either; disruptive forces such as the rise of the tablet computer, led by Apple’s iPad, have had a noticeable negative influence on market growth for more traditional computers. That change has hit companies such as HP and Dell hard, as a not-insignificant portion of their revenue comes at the sale of low-cost, low-margin computers. 

While Dell has had some (very) limited success in bringing smartphones and tablets to the market, HP has stalled. After its acquisition of Palm, the company has brought out two new phones and a tablet, none of which have seen much success or critical reception. Spinning off the PC (and presumably phone, etc.) business might give the new company the agility it needs in order to better compete in the increasingly crowded consumer market.

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