HP dumps PC and mobile business to focus on software

Hewlett-Packard is set to spin off its computing and mobile business to concentrate on business and cloud computing as it makes a £7bn bid for British software company Autonomy – despite spending millions of dollars on marketing its first tablet device.

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Russell Brand in H-P TouchPad campaign

H-P, the world’s largest PC-maker, says it is evaluating “strategic alternatives” for its personal systems group, which includes its computer, mobile and tablet-making divisions. The company says it is exploring the separation of its PC business into a separate company through a spin off or other transaction to become a pure software vendor.

The company is now set to discontinue its first tablet, the TouchPad, for which it just launched a “muti-million dollar” global marketing campaign to help establish H-P as a “cool” brand.

H-P has confirmed it will also stop making smartphones running on its webOS software.

The announcement comes just a year after the company spent $1.2bn (£727.2m) to acquire mobile device company Palm, to accelerate its entry into the smartphone market.

H-P chief executive Leo Apotheker said yesterday (18 August) he had been analysing market data and trends and concluded that the company would need to invest a significant amount of capital to be successful in the consumer device business and that he believes he can “invest it in better places”.

H-P’s PC unit reported profits of $567m (£343.6m) in the three months to 31 July, although revenue declined 3% year on year.

The Autonomy acquisition will help lead Apotheker’s renewed software focus for H-P. Autonomy, currently the sponsor of Tottenham Hotspur Football Club, builds software that helps businesses search data and apply it to advertising and also houses a growing cloud computing division.

Apotheker says: “We believe the acquisition of Autonomy, combined with the exploration of alternatives for PSG (Personal Systems Group), would allow HP to more effectively compete and better execute its focused strategy.”

H-P was not available for further comment to answer questions about how staff – including several UK marketing executives – may be affected by the radical change in strategy at the time of going to press.

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