HP’s move echoes IBM’s decision nearly a decade ago to sell off its PC business to Lenovo and focus on software and services.
The move comes as the rise in popularity of mobile devices has taken a big bite out of personal computer sales. That has hurt Silicon Valley pioneer HP, once the world’s biggest seller of PCs.
Since Apple ignited the tablet market with the 2010 release of the iPad, the annual revenue in HP’s personal computer division has plunged by more than 20 percent. That downturn is a key reason why HP’s market value has fallen by about $55 billion, or 40 percent, since the iPad’s release.
HP and other large companies are “struggling to compete against younger upstarts,” says long-time Silicon Valley observer Paul Saffo. “Once upon a time, scale and size were a competitive advantage. Now, they are a problem.”
By splitting into two companies, HP hopes it will be more nimble to compete with these “upstarts.” Whether either HP company can produce bold new products and services remains to be seen.
In its announcement, HP noted that 3D printing offers a ripe area for innovation in a growing market for HP Inc. The announcement said Hewlett-Packard Enterprise would focus on cloud offerings, big data, security, and mobility, among other areas.
Many tech analysts say HP will need to get better at building and selling mobile devices if it wants its new printer and PC company to succeed.
HP has stumbled in previous efforts to sell those devices, such as when it bought smartphone pioneer Palm Inc. in 2010. HP was unable to turn critical acclaim for Palm’s webOS technology into devices customers wanted to buy, and it shut down the business in 2011.
There is reason to believe that could change. At the International Society for Technology in Education (ISTE) conference in Atlanta in June, HP showed its new EliteBook line of devices, running Windows 8.1—including the EliteBook Revolve, a notebook computer that converts to a tablet, and the EliteBook 840, which reportedly features up to 33 hours of battery life thanks to an accessory battery stored under the device.
HP has positioned these devices as more versatile options for schools looking for the convenience of a tablet combined with the productivity of a laptop.
Material from the Associated Press and the Los Angeles Times was used in this report. © 2014, Los Angeles Times; distributed by MCT Information Services.