HP: it's all about the software, stupid


Not too long ago, executives at HP briefings boasted that the company was the world's largest IT business. Now they seem less sure.

HP has been eclipsed, in terms of market value and customer loyalty by Apple, who is now worth more than half a trillion dollars. HP is worth just short of $44 billion. IBM's earnings per share stand at $13.41; HP's at just $2.86. The comparisons do not make for comfortable reading, for HP executives or its investors.

HP dumped Palm when all the smart money was going mobile.

Once again, the computers to printers group is to restructure. We have been here before. In March, HP CEO Meg Whitman said the company would merge its PC and printing (IPG) divisions.

This came after HP, under its previous CEO Leo Apotheker, said it would sell off or shut down its personal computer business. Before that, the firm bought, and then shut down Palm, just as the world was starting to wake up to the potential of tablets, and smartphones.

IT professionals with longer memories will recall how HP set out to become a powerhouse in personal computing, when it bought rival Compaq.

The problem for HP back then was, and is still, that PCs do not make that much money. HP's PC division reportedly makes margins of around six per cent, against more than 15 per cent in printing.

These margins are far below those of Apple, which can and does charge a premium for its hardware. It is not for nothing that Apple's chief designer, Jonathan Ive, is now a Knight of the Realm.