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HP ditches consumers and opts for a quiet life

Why HP is dumping its personal computing arm

HP has killed off WebOS and the TouchPad tablet, and decided to get out of the personal computing game. Here's why.

There was something inevitable about the failure of the HP TouchPad and its operating system WebOS.

Decent tablet, nice operating system, but too late to the game to get the requisite support from early adopters, and not enough of a unique propisition to interest Joe Public. If your app store measures the number of applications in the hundreds, you're dead on arrival. And, perversely, if you don’t have many apps, it’s difficult to attract app makers.

But still, £800 million wasted buying Palm, a discarded operating system and a mountain of zombie tablets does not a good business deal make. And it's not even the big story here.

That, dear reader, is this: HP is going to stop selling PCs, smartphones and tablets. Even writing it feels odd. The company that was once the world's largest PC maker wants to sell or spin off its Personal Systems Group to concentrate on software, services and business hardware.

The reasons are twofold, and simple. After last year's boardroom shenanigans the new man at the top, Leo Apotheker, wants to trim off some of HP's fat, and focus on the boring, stable and more profitable stuff. He wants a quiet life. There was something rotten at the heart of HP, and Apotheker intends to 'do an IBM', so to speak.

The other reason? Personal computing is hard. Or, at least, turning a profit from selling personal computing products is tough. Margins are decreasing, competition is increasing, and it's getting harder and harder to see what's coming down the track.

So you're all over the consumer laptops market, and the Eee PC comes along and changes everything. You develop, build and sell cheaper and more portable laptops to counter it, and Apple pops up with a tablet PC that takes a massive chunk out of both the PC and smartphone market.

It's a tough, unpredictable game and if you've got HP's scale, history and reputation in the enterprise and SMB world, why would you bother? The previous HP CEO, Carly Fiorina, thought that combining all elements of tech within the company offered protection via a more evenly spread risk. She thought this to such an extent that she was prepared to shell out $25bn to purchase Compaq in 2002.

Apotheker disagrees, and what he says goes. So the less profitable parts of the business are going - which does rather make you wonder what HP was doing launching its mobile products with such fanfare in February. I suppose it takes time to turn an oil tanker, but bigger brains than me were predicting the demise of the HP/Palm hookup from the outset.

But turning it is. So what now for HP? At the same time as laying WebOS to rest, HP announced that it is purchasing a company called Autonomy.

Autonomy provides organisations a variety of portal, enterprise search, content management and analysis tools to organisations. In return, those organisations gave Autonomy around $870 million in 2010 Alongside HP's traditionally robust enterprise services and hardware sales business, Autonomy's products and services could push HP's enterprise revenues past the $4bn mark, which makes slugging it out with Apple and Dell in the consumer technology market look a lot less attractive.

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