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.

Kevin Casey, Contributor

January 4, 2013

4 Min Read

9 Bargain IT Tools For SMBs

9 Bargain IT Tools For SMBs

9 Bargain IT Tools For SMBs (click image for larger view and for slideshow)

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.

Cloud computing, virtualization and the mobile explosion create computing demands that today’s servers may not meet. Join Dell executives to get an in-depth look at how next-generation servers meet the evolving demands of enterprise computing, while adapting to the next wave of IT challenges. Register for this Dell-sponsored webcast now.

Read more about:


About the Author(s)

Kevin Casey


Kevin Casey is a writer based in North Carolina who writes about technology for small and mid-size businesses.

Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.

You May Also Like

More Insights