With an update on the fate of the Hewlett-Packard Personal Systems Group expected by the end of October, IT solution providers are critical of the decision to make that debate public.
Former HP CEO Leo Apotheker told analysts in August that HP was mulling a sale or spinout of its low-margin, high-revenue PC business that would turn the company’s focus instead on enterprise sales and services. New CEO Meg Whitman then said publicly in early October that she planned to make a decision by the end of the month. What’s more, an Oct. 11 report by The Wall Street Journal suggested that HP may now believe the negatives of spinning out the division outweigh the benefits. After all, this is a division that drove $40.1 billion in revenue last year, generating $2 billion in operating income.
“The damage control has been unbelievable. [HP] should have played this one closer to the chest,” said David Dadian, CEO of PowerSolution.com, an IT solution provider in Ho-Ho-Kus, N.J.
“For some reason, these large corporations don’t understand that small businesses don’t much like change,” said Jay Tipton, CEO of Technology Specialists, an IT services provider and consultant in Fort Wayne, Ind. “Why are you taking something that seems to be working and messing with it?”
But that frustration hasn’t stopped many solution providers from recommending HP PCs and notebooks when appropriate while they ride out the decision. “If they maintain the same quality, then it won’t really affect us,” said Dadian, who was waiting on client approval for at least one HP quote when he spoke with SearchITChannel.com for this story.
PowerSolution.com’s philosophy is that the situation is similar to another company’s high-profile decision to exit the business: IBM’s sale of its PC business to Chinese computer maker Lenovo in 2005. Solution providers said some buyers were initially concerned with the foreign transfer of ownership but were then reassured by the attention to innovation that has continued under the Lenovo brand.
Indeed, Lenovo has had a strong 2011 relative to its primary competition. In the third quarter, Gartner Inc. reported that the vendor became the second largest PC maker worldwide, after HP. Its volume for the quarter was up by 25% year-over-year. That compares with low single-digits for most other vendors.
The idea that HP might spin out the division infuriated many HP partners who HP has encouraged since the days of former HP CEO Mark Hurd to sell end-to-end HP solutions that included client, server, storage, networking and service components.
Still, there is a perception among some customers and solution providers that a standalone HP PC unit might be more nimble in responding to market conditions than it currently can, said Guy Baroan, president of Baroan Technologies, a solution provider in Elmwood Park, N.J.
“What they are doing is promoting the fact that if it is a spinoff, they will make it respond to the market quicker,” Baroan said.
Customers have been somewhat assuaged by HP’s declaration that it will ensure that the new entity will stand by warranties and products with technical support should a spinout or buyout proceed. “If you are looking at bigger deals,” that might have an impact,” he said.
In the final analysis, the future of the products within the HP Personal Systems Group will come down to innovation and quality -- no matter what label winds up on the outside. “If the product is not good, [customers] will stop buying,” Baroan said. “Otherwise, it should not be that big of a deal.”
About the expert
Heather Clancy is an award-winning business journalist in the New York area with more than 20 years’ experience. Her articles have appeared in Entrepreneur, Fortune Small Business, the International Herald Tribune and The New York Times. Clancy was previously editor at Computer Reseller News, a B2B trade publication covering news and trends about the high-tech channel.
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