Can HP Survive the Post-PC Revolution?

    December 30, 2012
    Sean Patterson
    Comments are off for this post.

On November 20, 2012, Hewlett-Packard (HP) announced its second quarterly write-down of over $8 billion dollars in a row. That in itself is cause for alarm, but the fact that HP blamed the write-downs on two of its largest recent acquisitions means the company could be flailing to find a foothold in a world where PCs and printers are quickly becoming niche products.

In 2012 the market for tablets and mini tablets exploded as Apple, Amazon, Google, and other manufacturers bet big on the technology. And it’s worked. Global shipments for tablets are expected to rise to 210 million in 2013, beating estimates for PC shipments.

Welcome to the the Post-PC era. Here’s your tablet.

Will the desktop PC ever truly be gone? Give us your predictions in the comments.

HP’s flirtation with mobile technology consisted largely of its acquisition of Palm in 2010. However, the company wasn’t able to compete with Apple, and discontinued all of its webOS products near the end of 2011. HP recently released several hybrid PC/tablet devices based on Microsoft’s Windows 8 operating system, but if Microsoft’s Surface is any indication, those devices aren’t particularly in demand, at least from home consumers.

So, losing the hardware game that had sustained it for decades, HP has turned to its enterprise services for revenue. Unfortunately, value hasn’t been found there either, and HP has announced 29,000 layoffs planned by the end of fiscal year 2014.

In HP’s third quarter 2012 earnings report, the first $8 billion write-down was blamed on Electronic Data Systems (EDS), an IT services company HP bought in 2008 for $13.9 billion. It’s value didn’t hold, and HP shares continued to decline. At the end of 2012, HP stock is trading at around $14, down from highs of around $50 near the beginning of 2011

The company’s fourth quarter 2012 earnings report blamed the majority of the second $8 billion write-down on Autonomy, a British knowledge management service company it acquired in 2011 for $10.2 billion. There was a twist this time, though. HP specifically laid the blame for more than $5 billion of the write-down on former Autonomy CEO Mike Lynch and other former Autonomy executives. HP brazenly accused Autonomy execs of “serious accounting improprieties, misrepresentations, and disclosure failures” prior to the acquisition.

Almost immediately, Lynch fired back at HP, claiming that HP mismanagement was responsible for key people leaving Autonomy after the acquisition. Lynch even created a website and issued an open letter to combat the allegations. In his letter he denies any wrongdoing on Autonomy’s part, saying, “I utterly reject all allegations of impropriety.” He points out that world-class auditing firms, as well as HP’s own accounting people, had access to Autonomy’s books during the due diligence period of the acquisition.

Lynch goes on to accuse HP of operational and financial mismanagement of Autonomy, and leveled some allegations about HP department infighting that made the company appear rather childish. He implored HP to explain, in detail, how $5 billion dollars in accounting fraud could have gone unnoticed.

HP responded to Lynch’s open letter, though it did not detail the numbers in its allegations. Instead, HP insisted that the matter would be resolved by the UK Serious Fraud Office, the U.S. Securities and Exchange Commission, and the U.S. Department of Justice. It then haughtily added that it looks forward to “hearing Dr. Lynch and other former Autonomy employees answer questions under penalty of perjury.” On December 28, 2012, it was confirmed by HP that the U.S. Department of Justice is currently investigating Autonomy’s accounts.

Obviously, someone is lying. Either Lynch and other Autonomy execs are guilty of a nearly unfathomable amount of fraud and deceit, or HP ran Autonomy (and possibly EDS, for that matter) into the ground with shoddy management. Either way, HP overpaid for Autonomy, a move that shows just how desperate the company is to gain traction with its enterprise services.

Who is telling the truth, HP or Mike Lynch? Let us know your thoughts in the comments.

As HP looks to the future, it’s hard to see 2013 being a turnaround year for the company. In addition to Autonomy-related lawsuits which will carry on for years, the company’s restructuring efforts will continue to cut into its quarterly profits. While Apple and Samsung compete to dominate the new frontier of computer hardware, HP will be limping toward a coherent, fully-integrated business structure.

This doesn’t mean the death of HP, though. In its many decades of existence the company has, much like IBM, re-invented itself a few times, and it is likely to survive by doing so again. Exactly what value HP will be bringing to customers in the future isn’t clear, but come 2015 the company should be lean enough for a solid leader take it in almost any direction.

How can companies like HP succeed in the future? Let us know in the comments.

  • Fred

    They will get my pc when they pry my cold, dead fingers from around it.

  • http://www.blueseaproperty.com JP lamarche

    If Apple intention is charging to much $$$ to Adobe and Adobe will never move on this… This is the beginning of the end for I-Pad and I-phone.
    Flash applications are the future…

    I-phone and I-pad are cool for now but, on a long run, to small and not friendly user at all… It is just a toy for “non-serious” PC user and toys for kids.
    NO… PC are not in danger.

  • http://www.air-america.com airamericaweb

    HP will make it on branded name… Maybe they will get bought out by Acer like Gateway! Acer has the lowest priced pc hardware and notebooks. Dollar for dollar Acer products can’t be beat.

    Desktop PC as we know it gone? YES
    Why would you buy a desktop PC that consumes allot of energy when you can use a portable unit that can run on a battery with external or virtual device?

    Feel real bad for the Tech’s at HP in Springfield, Mo supporting HP notebooks. If they don’t sell products they loose their job! All desktop support is sent to India and/or the Philippines.

    What the industry needs is a tough mini PC with 4gig standard expandable memory and usb slots for under $200 with a good linux or Windows 8 OS. The key is lots of horse power is a small space that’s service-able and dirt cheap. External devices like hard drive, monitor ect ect is where the investment needs to be.

    Have worked for all manufactures over the years in support. Best used to be Gateway then Dell and last was HP. Acer is all over seas support and IBM/Global services is over priced. Worked for them too. Example: Eckerd Drug before bought out by CVS. Tech $20hr. while they billed Eckerd $100+ per hr. all-la-carte!

    30yrs in this industry and I must say it’s gone to pot!

  • Georgi Gaydadjiev

    If they target the right phase of the food-chain they will. Letting Apple and Samsung fight for the front end, staying out of the “middle” (Cisco, Huawei, etc) brings HP to the back end of the game where real computing systems are still required (a bit different kind but computers with big size boards, power supplies, fans, a lot of communication cables hanging out of them and more “traditional” properties). The trick is to be inventive and distinguish from the rest but HP did show this ability many times before. My guess – they will survive.

  • http://www.rt66.com/~korteng/SmallArms/ Bert Kortegaard

    The PC serves an essential need for a solid market of knowledgeable, productive users. It will die about as fast as old, white republican males, but not much faster. Too bad, illiterates.

    • http://spyimplants.webs.com don muntean

      Very well stated! From screen size to power – the PC [laptop and desktop] is not going to be a relic yet. It comes down to this – most computer users will not trade in a computer for a toy LOL – i’m posting this from my netbook – which is small enough. Recently i was asked to setup a friend’s laptop that shipped with WIN8 – windows 8 is a terrible OS and Microsoft screwed up. I love windows 7 and loath 8. When i couldn’t find a start menu nor a way to set it to classic windows UI i had to find a way to fix it with 3rd party software. Yes, it’s called “software” not “app” LOL. I think that developers ought to reject the Apple program of dumbed-down technology. I agree with you – the smart-toys will become the niche market.

  • http://www.blocktar.com/ TarX

    Fred took the word out of my mouth!
    PC’s have everything you could possibly want
    for business and personal use, screens the
    size of space ships and so much software to
    chose from you could never see the end of it.

    Those other little toys have little to offer
    compared to a pc. They may be all the rage now,
    but I predict that as smart phones get better,
    batteries last longer, these “toys” will be
    pushed into a niche market.

  • http://www.ubytovani-levne.cz Aleš Marek

    No way PC are going to die. Big monitors and ergoncomic keyboards make it the best platform to be working with. I cannot imagine writing a book on tablet. That is ridiculous.
    Ales Marek, Czech R.

  • http://christianityetc.org Bob1

    HP can survive by giving its customers dependable and convenient service. Technology will only take a user so far. There always comes a time when using some technical gadget that help is needed. It is the quality of that help that builds loyalty to the “brand”. Excellent customer service is often hard to find these days, but I think that it is very important for most customers.

  • http://www.promisedlandbaits.com Jensen

    Absolutely no chance PC’s are going anywhere. Tablets are mere fun toys to most. They can assist in ones work but can not replace the PC.

  • http://www.herrickconstruction.net Greg

    I can see the PC going away? I use an estimating software and a Cadd program on my home PC. I also use an HP plotter and HP all in one printer. Yes, I still use the fax. I also use snail mail USPS. Lets not forget about emails. Sending out over 200 emails a month in order to drum up more work is important for my business. Yes, I can sub the work out but why when I can do it myself. In short, the PC will not go away because someone still needs to do the real work.

  • http://Www.pabproductions.com Peek-a-boo Productiobs

    Tablets have plenty of limitations and there is a place for PCs. Professionally speaking the pc or mac computers are a must. Tablets and alike are great for just “users” and are user friendly quick reference entertainment units. There something for all! :)

  • http://twofriendstravels.us John Halonen

    When it happened once with EDS, you can question as to who is causing the problem, but twice there is no question as to whom is the major problem and concern.
    Look for HP to head for the hills, and be a player no longer. With management like this there can only be failure. Too bad they had to self destruct two viable entities along the way.

  • jg

    Not until we have a true virtual world where you can change your entire reality around you and just think and a keyboard and mouse will appear anywhere you want whenever you want right at the perfect ergonomic height and position. Then the sky is your desktop and you double poke the upper left area with your hand and your icons unfolds across the sky and all your hard drive space is in the clouds.

    I can maybe see the PC going away at this point.

  • Arlene

    The only way I can see them surviving is if they pull out of India and provide better customer service. I just bought their desktop and I have to say when I call for help I can hardly understand the person helping me! I’m also told different things by different people so can’t trust who is correct.

    I will never purchase another HP again. I also bought a microns and since I can’t get their pc’s any longer, I didn’t know who to go to.

    • Arlene

      I agree with one of the posters that they will get my PC when they pry it out of my cold hands! I have a tablet but I need my desktop (as a web designer)

  • http://spyimplants.webs.com don muntean

    Of course HP’s real problem is crappy OVERPRICED products…

  • http://www.captaincyberzone.com Cap’n Cyberzone

    Apparently, there are people who still can’t “see the forest for the trees”.
    I wouldn’t worry so much about HP as I would about the World economic health, especially the U.S.
    Will the U.S.survive the insane spending spree it has found itself addicted to? $16+ Trillion in debt and quickly heading to well over $20 Trillion within the next four years with interest payments currently approaching 50% of its’ GDP.
    Computer products and the companies that produce them are going to have a hard time competing with the basics of life (food, water, shelter … ammunition).

  • Frank

    Maybe it will depend on insurance premiums in the future, heavy eye strain requiring glasses and medication for sore eyes and headaches, or maybe just the cost of operations from sever neck stretching, seems people tend to hold these devices in their laps with their head pointed way down and neck stretched way out of proportion.

  • http://www.enviroequipment.com Enviro Equipment Inc.

    In order to survive the near future, tech companies have to do what we did in our industry (i.e. environmental equipment) and that is be willing to change and adapt to the times. This means understanding that no matter how successful the way you’ve been doing business has been, there will always be a day when it is will no longer be so successful and instead of fighting this change, embrace it and move on.

  • Gerardo

    We should, of course, not let the desktop PC die. We should make it faster, stronger, and better. We should also improve Internet. We should probably bring back to life the cathode ray tube monitors and TV’s. It seems that the new flat monitors do not reach the same quality of color. It is just a perception. I do not if measuring instruments may tell us that the quality of flat monitors equals already crt monitors. The only good thing about flat monitors is that they are light weight. On the other hand the only good Operating System that we have for a PC is Windows XP SP3. Wondows 7 is more beautiful but less comfortable to work with. Prices are still too high all around. electronics and software should become cheaper. Unfortunately here may be in the future lay offs. So we should improve agriculture and livestock, and build better, but cheaper houses. We need to feed a big population and give them shelter.

  • Joe

    IMO, PC’s will continue to survive, but sales will decline. You won’t have 3-4 full-sized PC’s in the house anymore. Many will be/are being replaced by tablets and smartphones.

    In the end, who cares? HP’s products are horrible. Their PC’s aren’t very good and they are too expensive.

    HP has been mis-managed for years. Remember, they bought Compaq? Who? HP is a black hole. Companies enter, never to be seen again. VG-Anylan, anyone?

    I still use Palm phones (so yes, I’m very biased) and I will give up my palm phone when someone comes out with a device that works better – for me. Not likely to happen in my lifetime. And I even have a HP webOS tablet that I like better than my ipad or android tablet. But that will become a doorstop soon.

    I work in Computer Security and downloaded Arcsight to become familiar with the product as my company is being acquired by an Arcsight shop. Try to get any info on Arcsight. I signed up on their enterprise security site, only to be declined membership because I’m not a current customer. WHAT?!?!?! That’s not even a bad business model, it’s just plain stupid.

    How many CEO’s has HP gone through in the last 10 years?

    And no, I’ve never worked for HP or owned any stock. Nor would I.

    Good luck to HP. Were I an employee, I would take the opportunity to find another gig before the hammer came down.

  • http://www.proudtobekiwi.co.nz Digmen1

    Of course PC’s will not die.
    Serious business use them for work and business accounting and graphics design etc.

    But many private people may just buy a tablet or notebook or smart phone instead.

    So I suppose what the decline in sales of the PC will mean is less hardware (motherboard and chip) development or at a slower pace.

    As for Windows I’d like them to make Windows 9 work by my voice. File Open filename etc.

    As a desktop user, I’m not going to reach for my screen everytime I want to do something.

  • MiAGon

    I agree with everyone who stated that PCs are not going anywhere soon. While tablet sales are on the rise to the consumer market I cannot see an enterprise environment (corporate America) running a business strictly from tablets. There will always be a place for PCs, whether a desktop or high-end laptop. My wife and I operate businesses that will not make it past a week without a PC. The applications we rely on cannot run on a tablet platform, no matter how hard you try. The bottom line? Tablets will branch off to a specific market where PCs may have been too much for them to begin with… that is all, really. The PC will still thrive. As far as tablets go? In my household, they are merely a novelty and my 2 1/2 year old son is the one using it.

  • mloxton

    I haven’t used a desktop PC at work in 15 years and see no likelihood of ever needing one.
    What I can’t do on mobile or notebook, I can use a big fat server remotely or in the cloud.

    If I need number-crunching that can’t be done with a notebook, then I simply run it on a server from the laptop – no need for a desktop.

  • zondac

    As an ipad and PCM user, the tablet is really just a toy that I can bring to various meetings. My PC is a workhorse that has made me hundreds of thousands of dollars. The only replacement will be a faster computer, not a freakin tablet.

  • http://spss-free-download.blogspot.com Amir hamja

    There will always be a place for PCs, whether a desktop or high-end laptop.

  • http://www.absolutewebworks.com/ Jesse

    It is clear that those who make a living with their computer will not give it up any time soon. I have been using my HP laptop for over 5 years without a single serious crash that required reformatting the unit. The nubs on the F and J keys are shiny and wore out. It has been an incredible dependable workhorse.

    In terms of value and reliability I am not sure what manufacture I should buy my next laptop from now that I know the state of affairs for HP.

  • Greg

    I’m more concerned with all this talk i’m hearing on the usual forums about a new beast called ‘Google Gibbon’. More crackdowns for affiliate website’s?

    Cheers, G.

  • http://www.inline-computers.co.uk Mat White

    I think the PC is a work horse and will stay around as a niche product; it has proven to be versatile for business and play. For tablets /smartphones and the like they are just consumer end (consumption) devices and I think companies are soon going to start struggling to get people to keep rebuying essentially similar things I.e. iPad2, iPad3.

  • insanelyapple

    Patterson, there is no such thing as Post-PC. Stop spreading Microsoft’s marketing bullshit.

  • http://www.portablechangingroom.com Jeremy Ryan

    I believe HP will stick around but will probably adapt over time to better opportunities. The consumer PC is becoming a smaller portion of their business, they seem to rely more on enterprise sales.

    The desktop will most likely always be a better product and value for heavy work while a tablet is a good compliment to it. I think it was a mistake for HP to leave the tablet market and it’s good that they are back in it for the computing division.

    Their future growth in printers will not be on the printers that we all know, but most likely in 3D printing technology.