H-P’s decision to dump its PC and smartphone business is actually not a surprise when you look at the company’s recent history, but what the move does show is just how much a stranglehold Apple has on the hardware market.
While a dramatic move, the signs were already there that H-P was planning a massive overhaul.
Chief executive Leo Apotheker was drafted in last year to turnaround the company from SAP – a business management software solutions company – and so the clues began to unravel.
The new CEO then hired his former SAP workmate, Martin Homlish, to “unify” H-P’s business and consumer divisions. *Strokes chin*.
The shift towards business services was becoming more apparent month on month. Not least because we’ve long known that PCs are no longer the big business they were in the 90s. Sales of PCs declined by nearly one fifth in the second quarter of 2011, as consumers shift to laptops, notebooks and tablets, according to Gartner.
IBM, once one of the biggest consumer PC makers at the time, seemed to see the trend away from consumer technology early and stopped making home computers in the early noughties. It continues thrive and posted $99.87bn (£60.5bn) in revenue in 2010.
H-P has a 18% market share of the global PC market, according to Gartner, but margins at its Personal Systems Group – which also houses its mobile phones and tablet devices – were dropping at an alarming enough rate for the need to take serious action. Margins are considerably higher in software and services than they are in producing high end hardware.
A year ago, H-P made a massive bet on its webOS operating system software for its smartphones and tablets. It didn’t pay off. H-P failed to make a dent on the smartphone market in terms of share…barely even a scuff.
Yesterday (18 August) mobile operators were keen to distance themselves away from its latest smartphone, Pre 3, and now H-P is even going to dump its first ever tablet, the TouchPad – despite enlisting the help of Russell Brand, boxer Manny Pacquaio and Glee star Lea Michele for a multi-million dollar marketing campaign to launch it. Money down the drain.
H-Ps dramatic decision to spin off its Personal Systems Group is yet another scary indication as to just how dominant Apple is in the marketplace.
The TouchPad had some amazing features that had the potential to blow Apple out of the water: Beats with Dr Dre speakers, multi-tasking, the ability to adapt to what room in the house it was in and many more.
But despite its high spec, it was never going to compete with the sheer marketing muscle behind the iPad (No, even Pacquiao couldn’t win that fight) and the simple fact that Apple was there first. WebOS had HTML5, but it was severely lacking on the apps front compared to iOS.
It seems there isn’t space in the smartphone or tablet market for a newcomer at this time, while PCs are fast becoming relics. There’s plenty of space for hardware developments, but Apple and Android’s ecosystem foundations are too sturdy to crumble.
Apple, which of course produces computers and laptops, as well as phones and tablets, has killed off the competition before they can even enter the development stage, by continuously being one step ahead.
It is the only company selling a significant number of tablets (It sold more than £3.6bn worth in the most recent quarter) and despite Android’s recent successes, it still holds a worthy smartphone market share.
The success of Apple has managed to see off the world’s largest PC maker, if recent trends are anything to go by, I doubt even the formation of “Googlorola” will give any imminent cause for concern either.