HP to exit the PC business - implications for the Jornada?

[Ed Hansberry]

<a href="http://www.interex.org/hotnews/content/pcsnomore.1.17.02.html">http://www.interex.org/hotnews/content/pcsnomore.1.17.02.html</a><br /><br />"Hewlett-Packard CEO Carly Fiorina told USA Today in mid January that the company may have to get out of the PC business if the merger with Compaq Computer Corp. fails to go through."<br /><br />Ok, ok, this is a month old, but I hadn't seen it put so bluntly before. Probably more grandstanding by HP CEO Fiorina trying to get the point across that the HP+Compaq deal must happen. The assumption if the PC's go, so do the PPC's, which would be a huge shame. The Jornada 56x series have really come a long way from the Jornadas before it (remember the 430? :-D ) and with the Pocket PC continuing to climb in market share, it would be bad to lose the number two player.

[JonnoB]

It certainly would be a shame. If the merger succeeds, there is not enough room in one company for both Jornada and iPaq. Latest round has to go to Jornada. If it fails, is Jornada doomed? I would hope not, but I don't get a sense from Carly that she knows what products are woth keeping and which are not.

[Dave Conger]

If HP gets out of the PC business, what does that leave them with? Nothing??

[Robotbeat]

Actually, I don't think that this means that the Jornada will be gone. I just think that the Jornada development and the iPAQ development divisions will merge. Why not? We'll have the Jorpaq. Or the iPor... never mind...

While PC sales are going down, aren't Pocket PC sales going up? I don't think that PPCs and PCs are that intertwined.

[JonnoB]

If HP gets out of the PC business, what does that leave them with? Nothing??


They have the printer and scanner/imaging software. They also are heavy into services. I believe they already spun off the medical systems stuff, but if not - that is a viable business too.

[JonnoB]

We'll have the Jorpaq. Or the iPor... never mind...


Ha ha ha - I had similar thoughts.


While PC sales are going down, aren't Pocket PC sales going up? I don't think that PPCs and PCs are that intertwined.


HP was a leader in several areas and defocused from them. I don't have a high level of confidence in Carly's ability to distinguish PocketPC from PC.

[Dave Conger]

They have the printer and scanner/imaging software. They also are heavy into services. I believe they already spun off the medical systems stuff, but if not - that is a viable business too.


Wow, I feel really dumb! I have both an HP scanner and printer, I don't know why I didn't think of that. Thanks Jonno.

[Daniel]

...iPor...

HA HA HA :lol:

Just short of the i'mPoor! ;)

Maybe we need a poll on what the name of the new ComHPaq device should be called?

JorPAQ
iPor
iNada
iJorPAQnada
PaqNada
iGor

There are so many comedic possibilities with this! Especially when you remember the spanish translation of nada! ;)

daniel

[popko]

My vote's on iJorPAQnada!

[James]

HP was a leader in several areas and defocused from them. I don't have a high level of confidence in Carly's ability to distinguish PocketPC from PC.


Carly couldn't find the on button to a PC if it was the only button on the PC, right on the front, with a big neon sign point to it.

[James]

They have the printer and scanner/imaging software. They also are heavy into services. I believe they already spun off the medical systems stuff, but if not - that is a viable business too.


The calculator division is gone too. Printers and scanners are probably not enough to keep them alive. Their servers SUCK, but they do have some pretty good network stuff that might keep them alive coupled with printers and scanners.

[JonnoB]

The calculator division is gone too.


I for one, actually miss those calculators!

[JMountford]

I was speaking with a couple of Computer Specialist I know; Managers, Cunsultants, whatnot I know. Here is the conclusion we came to. As far as HP and Compaq computers are conserned they are probably both doomed either way. OK if the merger falls through neither company can keep producing computers. They are not making enough profit from their computer lines to stay afloat. If the Merger does go through one company or the other will more than likely stop making computers anyway. They would have to to make the merger profitable. In addition, the merger it's self will still take time to get approved. Once it is approved it will take major restructuring in both companies. Honestly I don't see either company surviving as they are now. In the recent economy compaines are going down left and right. Sprint PCS is the number 4 wireless provider in America. They have only been in business for five years. They did a major come from behind in no time. they have signed up twice as many customers this year as the year before yet they are cutting thousands of jobs. They are closing various service and other locations. They are a mulitbillion dollar company. I am not an analyist or an economist I did not get a degree in college. I am just a very intelligent realist and I am telling you guys if Compaq and HP stay on the tracks they are now we all better hope that at least on of the big three Computer manufacturers starts making PPCs.

[HR]

Two models: iJorPAQnadaPlasticon and iJorPAQnadaMetalicon

Seriously, HP is a very large company; they are in printing, imaging (dominating printers), PCs, laptops, servers, networking, services and software. I believe that PCs are not large part of their revenues.

[kagayaki1]

Sorry Dave, but these guys are right. HP has really tapped into the printer/server hardware and software. While PCs are (were) something they do (did), you never really thought of them as large volume suppliers of PCs to businesses.

And that'swhere the big money is. Contract, contracts, contracts.

It is kind of funny, though. Kind of like another weapon Ms. Fiorina has pulled out on the stockholders. LOL.

[questionlp]

They have the printer and scanner/imaging software. They also are heavy into services. I believe they already spun off the medical systems stuff, but if not - that is a viable business too.


The medical, test and measurement, and parts of their semiconductor divisions were spun off into Agilent, http://www.agilent.com. It would have been nice if HP had given Agilent the calculator division :cry:

The HP calculators will be missed... the 48SX was my first PDA (since I could store notes and contact information in little files) :wink:

[Ed Hansberry]

I for one, actually miss those calculators!

Uhm... maybe I am missing something - what is that stuff at http://www.hp.com/calculators/ ? I use my nearly 10 year old HP 17B-II daily and would never consider another brand. If you have a link to a news article that tells where HP is getting rid of their calculator division, I'd love to see it - or rather, hate to see it. :cry:

[JMountford]

I think Fiorna or whatever her name is is just trying to put the fear of corporate God in to the share holders, but let's face it HP probably would benefit from cutting out their computer lines. No manufacturing costs for them anymore. They don't sell all that well. I will not buy HP anything. I know many, many other people who will not buy HP. Their computers are especially shotty which is why they must have so much support, so w/o the computers they can get rid of quite a bit of their support force. They would need no more upper management for the computer division.

Of course Wallmart would have to find other computers to sale.b :twisted:

[Foo Fighter]

PC and handheld sales don't really mirror one another. Just as declining PC sales have no impact on digital camera sales.

I'm more interested in what impact this will have on the overall PC market. There will be fewer and fewer choices available to consumers.

Check out this thread I posted at ArsTechnica a few weeks ago:

http://arstechnica.infopop.net/OpenTopic/page?a=tpc&s=50009562&f=48409524&m=2040926253&r=3410930353#3410930353

[fmcpherson]

It sounds like Carley is just parotting what Walter has already stated. I believe that one of Walter Hewlett's counter proposals to the merger is for HP to get out of the PC business anyway and focus on printers and scanners.

So, if Walter wins and the merger doesn't happen, the PC business could be gone. If the merger goes through the new company will sell PCs, but probably not the ones they are currently selling.

[Janak Parekh]

BTW, all, this made the rounds a couple weeks ago. Basically, internally, HP says they're not getting out of the PC biz soon - this is a fear tactic more than anything.

You have to realize that HP has massive vertically-integrated customers, and they can't just abandon the PC biz overnight.

Altho long-term... it would be sad; their corporate PC's, especially the Vectras, are awesome.

--bdj

[Ed Hansberry]

BTW, all, this made the rounds a couple weeks ago.
Hence the "Ok, ok, this is a month old" statement right at the beginning of my post. ;-)

[JMountford]

I think we will see a lot of changes in the PC industry over the next year or two, especially with MS pushing for the changes they want.

[Kilmerr]

This is simply an idle CEO threat from a very odd public war. Either way HP is hit bad. If the PC Biz 'doesn't matter' why is HP trying so hard to snag big long-term corporate accounts? And why is Dell cleaning them dry? I don't buy the concept that the PC Biz is suddenly no longer a money maker. It has gone more commodity and less high margins yes, but good for the consumer and corporates. Sounds like HP is getting smacked and blaming the 'market'. If you can't compete, then leave...

It comes down to this: big mergers with overlapping product lines, both become less than what they were. The real ones cheering this merger on are IBM, Dell and Sun. When your competitors want a merger, you better think twice. I don't see much value in a merger, nor do the shareholders or the public (or the tech press) seemingly.

Either way, HP is less of a company for this. Compaq can come out golden in one direction. HP has no good side and will be a company divided no matter what.

But giving up PC Biz, has little to do with the Pocket PC market, imho...I don't see the Jornada fading.

Christopher Coulter
www.kilmerr.com

[Perry Reed]

I'm an ex-HP guy.

HP makes most of their profits on printing and imaging supplies (ink and toner cartridges, mostly). They make most of their revenue on printers and imaging devices. The problem here is that the printer business (called the "ink holder business" inside HP since the ink is where the real money is), is going the way of the PC business-- into a commodity market. The competition has caught up with HP, or nearly so, and so it matters very little whether you buy an HP, a Xerox, an Epson, or a printer from any number of other printer companies.

As for the PCs, HP still is the #1 home PC maker in the U.S. and are in the top 5 in most home and business markets worldwide. But, as I said, it's a commodity market with very little profits to be made.

Walter Hewlett's argument against the Compaq merger is that HP+Compaq would dilute the profitable print and imaging business while exposing the company further to the not-so-profitable PC business. In my opinion, he's half right. Yes, there would be further exposure on the PC side, but that printer business that he's trying to protect is going to be in the same position as the PC business very shortly.

The big win in the HP/Compaq merger would be the combination of the service organizations. When Compaq purchased Digital (and to a lesser extent Tandem), they bought some great service groups that, when combined with HP's will rival IBM in size and ability. This is the same reason that HP had tried to buy PriceWaterhouseCoopers not too long ago.

The biggest issue in the merger, again in my opinion, is how to combine the server lines. HP already has three of them: Windows/Intel-based NetServers, HP-UX- (and now Linux, too) based 9000 servers, and the old MPE-based 3000 servers (which are being slowly phased out, but still have a huge user base). Add to that the Compaq Intel-based servers, the rest of the Digital servers, including Alpha and Vax, and the Tandem servers, and you have a mess of hardware platforms, CPU platforms, and OS platforms. How HP handles that mess will go a long way to indicate how they'll handle the rest of the merger.

The PC side is actually simpler. You have multiple divisions between HP and Compaq targeting essentially the same markets, so you pick the winners in each market and consolidate or eliminate the redundancies.

One final note-- HP does indeed still make calculators. In fact, I believe that they're made by the same division in Singapore that makes the Jornadas.