A scant two months after launching its first mobile devices, HP is conceding defeat in the mobility world — and looking to exit the PC business, to boot. These are moves that are essentially taking the Silicon Valley stalwart out of, well, silicon. But a clue to its future lies in its planned acquisition of British software firm Autonomy Corp.
HP is discontinuing production of the TouchPad tablet and its smartphones, both based on the webOS platform it acquired via the$1.2 billion takeover of venerable Palm Inc. last year. HP's TouchPad has struggled, capturing only about 10 percent of new tablet sales, according to research firm Robert W. Baird & Co. It’s suffered from obvious competition from iPad and the Android army that includes the Samsung Galaxy Tab and Motorola Xoom, but relying on the proprietary OS has meant that it has garnered little developer support — an issue in a market where apps are the key to revenue. It’s also lacked carrier support — an agreement with Sprint Corp. to build a version that contains WiMAX 4G was killed just a few days ago, leaving many to wonder about the TouchPad’s future. Now, we know.
Meanwhile, HP’s PC business is the world's largest – but as PCs as a form factor continue to decline as a percentage of the overall computing hardware market, HP's board of directors had "authorized the exploration of strategic alternatives" for the unit that could include "a full or partial separation … from HP through a spin-off or other transaction." The PC segment grew only 3 percent for HP in the last reported quarter, and it’s becoming an increasingly low-margin, commoditized business.
So where is HP to go? Software, mostly for businesses, as well as back-office offerings for communications operators. To the former goal, it is eyeing Cambridge, England-based Autonomy, which makes software that allows firms to search, organize and retrieve email, documents and other media. Analysts say the deal could cost HP as much as $10 billion, making it the latest in a string of blockbuster acquisitions for HP that started with the takeover of rival PC maker Compaq in 2002 for $25 billion. It could be worth it: Autonomy counts BP, Ford Motors and the United States Defense Department among its customers.
HP has been intimating that it would focus more on software going forward, and delivering services via the cloud.
