HP: Potential Winners, Losers And Buyers for HP PC Business

Winners and Losers

The lineup includes…

Potential Winners

1. Apple: By killing WebOS tablets, HP is telling rival hardware makers that it’s incredibly difficult to compete with Steve Jobs and Apple in the mobile consumer market and tablet market.

2. Dell and Lenovo: HP says it could take 12 to 18 months for the company to explore strategic options for the HP PC business. All that uncertainty will surely make it easier for Dell and Lenovo — and their channel partners — to sell against HP’s PC business.

3. Hewlett-Packard: Yes, HP. Focusing on enterprise and commercial software, solutions and cloud computing all sounds great. But can CEO Leo Apotheker ensure his vision is executed in a timely manner? For starters, Apotheker has to weed out — or silence — HP executives who continue to leak big HP strategic changes to the media before HP can proactively announce the moves.

4. Best Buy: The retail giant allegedly ordered about 270,000 HP TouchPad tablets and allegedly sold only about 25,000 of them, according to The Wall Street Journal. Best Buy allegedly wanted HP to take all of those unsold devices back. Perhaps now that HP has killed the TouchPad, Best Buy can ship everything back to Palo Alto…

5. IBM: Current CEO Sam Palmisano and former CEO Lou Gerstner are looking pretty smart. Focusing IBM on (A) services first (B) software second and (B) enterprise hardware third has treated IBM well for roughly 15 years. HP wants to emulate that strategy, but IBM can continue to claim that it invented the model and perfected the model for more than a decade.

6. Software Companies: HP is on the hunt to acquire innovative software companies. Can you say “price premium?”

Potential Losers

1. HP SMB Resellers: The VAR Guy doesn’t want to cause a panic here. There are plenty of HP products for resellers to promote to SMB customers and commercial customers — storage, networking, ProLiant servers.

But here’s the challenge: Uncertainty is never a good thing. HP has to address its lame-duck PC division quickly. HP’s SMB channel partners can’t afford to answer customer questions about HP’s up-for-sale PC business over the next 18 months. The faster HP sells that PC business (or clarifies ownership), the faster HP’s SMB partners can focus purely on growth opportunities rather than speculative PC questions.

2. Carly Fiorina: The former HP CEO fought hard for HP to acquire Compaq back in 2001. By trying to sell off its PC business, HP is signaling that the $25 billion buyout of Compaq was a colossal waste of time and money.

3. Leo Apotheker: Yes, he could be a big winner. But he could also wind up being a big loser amid all those moves. Earlier this year, Apotheker said PCs were strategic to HP. Plus, he said WebOS would be a critical operating system that links all of HP’s devices — PCs, tablets, smartphones — to cloud computing. Now, that entire vision is dead. What happens if Apotheker changes his vision again in six months? Wall Street won’t give his a second chance to get this right. In fact, Wall Street already seems to be souring on Apotheker’s leadership, according to  Forbes.

4. Microsoft: Uncertainty around HP’s PC business can’t be a good thing for Windows licenses and joint developments between HP and Microsoft. Over the past 20 years, HP and Compaq bet early and often on Microsoft’s next-generation Windows moves. Will Microsoft enjoy a similarly close relationship with the company that buys HP’s PC business? It’s impossible to say.

5. HP’s Printer Business: Don’t Printers and PCs go hand in hand?

HP’s PC Business: Potential Bidders, Potential Buyers

1. Private Equity: But can a private equity firm actually step in, cut costs in the PC operation and actually lift profits? Are there costs to be cut?

2. Lenovo: Sure, Lenovo is growing fast and has a lot of cash. But would Lenovo really want to buy a $40 billion PC business from HP? And does Lenovo’s longstanding relationship with IBM prevent Lenovo from buying HP’s PC business? Hmmm…

3. Dell: The company has already stated that it’s heading to higher ground with storage, networking and services. With that statement in mind, The VAR Guy doubts Dell would want to buy HP’s PC business. But… perhaps Dell should consider such a move just to get a handle on HP’s customer list for upsell opportunities elsewhere.

4. Microsoft: A few media sites suggest Microsoft may want to (A) completely purchase HP’s PC business or (B) somehow invest in the business, similar to how Microsoft is working so closely with Nokia on smart phones. But The VAR Guy greatly doubts Microsoft will get involved in the bidding process for HP’s PC business.

Unlike the smart phone market, Microsoft has deep, multi-billion-dollar relationships in the PC market. If Microsoft purchased or invested in HP’s PC business, the move would surely strain relationships with Dell, Lenovo and other PC makers.

Bottom Line

Uncertainty in the IT market is never a good thing. HP needs to finalize its plans for the PC business fast. CEO Leo Apotheker says the process could take 12 to 18 months. Sorry, that’s not good enough. Move fast, HP. Or watch your rivals chip away at your PC business before you have a chance to get maximum value for it.