HP split will change NZ PC market

Hewlett-Packard says it will split in two. One part will offer high-end computer equipment and services to large companies. The other will make and sell PCs, printers and other devices.

The move is overdue. HP has struggled to make money in recent years. Putting Apple to one side, the PC business is now a commodity game. Margins are low and almost all the action now takes place in China. It’s some time since HP factories made PCs and it’s debatable how much HP original design is in the hardware carrying the brand.

Uncertain future

No-one knows what will happen to HP’s PC business. HP could follow IBM’s lead and sell the low-end operation to a Chinese hardware maker like Lenovo. That deal worked well for both parties — at least in the short-term.

Another possibility is a standalone HP low-end business could become more like Dell. These days HP is effectively a reseller of Chinese designed and made hardware with a few services thrown in for good measure.

There’s little chance HP will morph into an Apple-like operation chasing the high ground where margins are better. That horse has bolted.

Big in New Zealand

Whatever happens, it will change the shape of the PC industry. And that will affect New Zealand more than most other countries.

That’s because HP dominates PC and printer sales in New Zealand. Earlier this year IDC reported the HP accounts for 37 percent of the PC market. The story is much the same with low-end printer sales.

HP has made some dreadful management decisions in recent years. At the low-end of the market, HP’s 2010 acquisition of Palm was nothing short of a money-wasting disaster.

Things are just as bad at the enterprise end. HP acquired EDS only to run the computer services operation into the ground. Likewise, the 3Com deal didn’t deliver on promises and buying software developer Autonomy ended in tears.