HP Announcement Makes Dell Last Major Player for Business PCs
Hewlett-Packard’s announcement last week that it plans to sell or exit the personal computer business was overshadowed by the news that the company’s TouchPad tablet computer and all WebOS devices would be shuttered as well in the world of consumer electronics. But for most AEC firms that use HP hardware, tablets are the least of their worries. HP has long been the leading builder of PCs – 64 million Microsoft Windows PCs sold in 2010 — in the nation, but the company’s decision to stop producing and selling desktops and laptops does not come as a surprise simply because there is not a lot of money in selling computers anymore. As the cost of computing technology has continually gone down for consumers, margins have grown ever tighter for companies such as HP.
Like IBM executives in 2004 before him, HP CEO Leo Apotheker has reasoned that selling computing and web services holds a brighter future for HP than selling hardware. While Apotheker cited the competition with the iPad and other consumer difficulties as reasons for HP’s decision, where it will most be affected is in the business world where Apple lags far behind HP and the company that will profit most from HP’s exit from the workstation business, Dell. If HP is unable to sell its PC business to another manufacturer other manufacturers will step up to fill that 64-million-computer void and most of those business consumers will likely go straight to Dell and Lenovo, the inheritor of IBM’s ThinkPad PC business.
Over the last few years Dell and CEO Michael Dell have made several acquisitions to expand the company’s enterprise offerings, including a $3.9 billion deal for services firm Perot Systems Corp. in 2009 and a $960 million purchase of Compellent Technologies in 2010. In the AEC space, Dell’s workstation line has competed well with HP’s while still using essentially the same Intel Processors, Windows OS and graphics and video cards from ATI and NVIDIA. While consumer devices such as the iPad will continue to dominate the consumer market, enterprise decision makers are still not likely to purchase them for their employees simply because of IT security issues alone. The enterprise market, where Dell has fared MUCH better than the consumer one, will be Dell’s for the taking once HP’s exit is completed.