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Will SMBs Suffer If HP Dumps PCs?

Who wins and who loses if HP gets rid of its PC division? Here's why most small and midsize businesses probably won't care either way.

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As Yogi Berra would say, it's like deja vu all over again.

In a recent SEC filing, HP said it will "continue to evaluate the potential disposition of assets and businesses that no longer help us meet our objectives." The tech titan's PC division is a reasonable guess to be one such business on the chopping block. We've been down this road before.

The planned spinoff in 2011 of HP's Personal Systems Group didn't come to pass. At the start of 2013, the possibility that HP will dump the PSG division -- which includes the company's portfolio of desktops, laptops, tablets and other devices -- has gotten a second wind, thanks to a single sentence in a financial document. Time flies when you're struggling to please investors.

In spite of the "meh" attitude toward the PC business these days, there's a reason some SMBs might care about the fate of HP's future in that market: Lots of them own HP computers. Along with Dell, the company has historically dominated SMB PC sales in the U.S.

[ For more on HP's possible divesture strategy, see HP's PC, Services Units Under Scrutiny. ]

SMBs are still buying PCs -- 19.9 million of them in the U.S. in 2012, according to Techaisle data. That's down 3.2% from 2011. Not exactly sky-is-falling numbers, but also not the kind of trend that sends Wall Street analysts sprinting through the halls screaming, "Buy!" Tablets are chipping away at traditional desktop and laptop sales, and Windows 8 has not yet spurred a PC sales spike. Techaisle CEO Anurag Agrawal said via email that 16% of U.S.-based SMBs plan to buy PCs in the next six months, which is down from prior years.

"Only 'must-replace' PCs are being replaced by SMBs, or [purchased] in cases where there is addition of employees," Agrawal said.

Agrawal noted that SMBs have typically been brand-loyal when it comes to PC purchases, with senior executives the most likely to experiment with other makes and models based on what they use in their personal life. That loyalty has likely been fueled by the reliance of many SMBs on third-party IT providers, commonly called "the channel."

Those channel partners -- more than the SMBs they cater to -- have the most at stake if HP does ever part with the Personal Systems Group. "If HP sells its PC division, channel partners serving the SMB segment will have the most to lose as PCs are tightly integrated into their solution delivery," Agrawal said.

The winner in this scenario could be Lenovo. Agrawal said it's too tough to predict how things might play out if PSG was spun off from HP, but he noted that Lenovo has been building out its U.S.-based channel presence and has seen steady growth since 2011, when HP indicated plans to spin off its PC unit. (There's some historical tech humor here: Lenovo acquired the PC business of IBM, which has subsequently thrived in software and services.)

During that last go-around I wondered about the trickle-down effects on SMBs if HP got out of the PC game, given the firm's large footprint. While there are no doubt still some potential winners and losers, I'm changing my tune: Most of us don't really care.

"SMBs have now gotten used to the vagaries, indecisiveness and many rumors floating within the IT industry," Agrawal said. "They have begun to insulate themselves from such potentially damaging and crippling aftereffects by investing in technology and vendors with long-term viable solutions -- namely, cloud, virtualization, managed services and mobile platforms that are device- or PC-platform agnostic."

Which, let's face it, is why HP might get out of the PC game at some point.

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User Rank: Strategist
1/15/2013 | 10:15:37 PM
re: Will SMBs Suffer If HP Dumps PCs?
We have used HP for years for desktop PC's, laptops, now ultrabooks, and servers. Tablets are Microsoft, a few iPADS for the board of directors, and a few Samsung TABS for selected IT staff. HP gear has been extremely reliable on all platforms and devices, with almost no fails on hardware. We average less than 6 support calls per year for parts for about 150 devices, usually a hot swap drive or power supply on a server. The only software issue we have had is the HP Protect Tools encryption on laptops. We are now using another encryption solution that has not failed and is easier to install and manage, and has more Administrator options and recovery potential. We will remain an HP customer if they maintain their products and support at the current level. I disagree with the above comment regarding pricing. Dell is the vendor that is overpriced (note posters name is AustinIT...does that sound like Dell or what)? Our most likely option if HP bows out would be Lenovo, not Dell or another manufacturer. Stick with us, HP!
User Rank: Apprentice
1/5/2013 | 4:05:21 PM
re: Will SMBs Suffer If HP Dumps PCs?
I hope HP can keep the Proliant platform going. That's the one place they do thing largely right.

I don't think the cloud is the future. It's over-hyped and simply isn't a real problem solver. How over-hyped? I heard a tech pundit actually say, "The enterprise is waiting for the cloud in the enterprise!" Really? You mean storage? Servers? The network? For SMB's, perhaps there is a cost savings but is the loss of control worth it? I'd say the cloud is another tool at best. There are some things for which it will fit but not others. I do not think it's the future, however, because there are a myriad of liabilities for both sides and those aren't just going away.
User Rank: Apprentice
1/5/2013 | 4:00:57 PM
re: Will SMBs Suffer If HP Dumps PCs?
Server Message Blocks?
User Rank: Apprentice
1/4/2013 | 5:59:40 PM
re: Will SMBs Suffer If HP Dumps PCs?
I gave up on HP a long time ago. Why? Because they gave up on themselves and, by extension, their customers. Their PC products are overpriced, prone to issues (both h/w and s/w but especially with software), and are not well supported when trouble inevitably arrives.

In essence, HP gives the channel no confidence when it comes to staking our business on a long term committment with them. If they bail on the PC business, what does that say about the chances of getting parts, s/w updates, and tech support going forward?

The future bet is on the Cloud. And, companies need to understand that the concept of verticle integration of their devices and services needs to be comprehensive in scope in order to be successful in the long term with this new model. That means devices covering a broad spectrum of applications (phones, tablets, PC's, Server, etc.) from the same company that play well with each other. That's why I think Microsoft has the right strategy. They recognize that a single vendor approach to integration between devices and services is more likely to be successful. As opposed to a person or business trying to piecemeal disparate components together into a cohesive solution. People are simply tired of fighting technology to make it play well together when all they want is something that "just works". Standards not withstanding, vendors just don't play nice with each other.

HP doesn't have all of that and are, in fact, waffling on what they do have instead of coming up with (and communicating) a solid road map to support this new paradigm.
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