HP has announced a move to the high-end market, away from hand-held consumer electronics such as webOS smart-phones and tablets, and toward servers and other large-scale projects. HP is also considering separating its Personal Systems Group (PSG) – which includes personal computers. In today’s tech-savvy marketplace, what does the Hewlett-Packard Development Company stand to gain by abandoning the personal electronics or computing markets?
HP has long been a household name when it comes to personal computers (PC) but competition is fierce in today’s marketplace. A business in the consumer-driven high-tech marketplace must be focused and agile, but HP is huge. Perhaps the potential move to split the PSG from the main company will facilitate the company’s ability to turn on a dime, and compete with the other big movers-and-shakers in the personal computing industry.
As with the PC market, there is fierce competition for tablet and smartphone customers. Particularly now, as consumers may be tightening their belts and trimming the fat from household budgets, luxury items such as the latest edition tablet are likely to drop lower on a consumer’s priority list. HP’s decision to abandon the smartphone and tablet market is simply the result of economic practicality. In a down economy, the lowest-end products will continue to sell, since they’re cheap and people have less money. The highest-end products will also continue to sell, since there will always be rich people. Middle-market items, such as HP’s Palm Pre 2 and the HP Slate, however, tend to get squeezed out.
HP’s Plans for High-End Markets
Another interesting aspect of the economy today is the fact that businesses have money, but they’re not hiring. Instead, they’re either holding on to the cash, or are investing in infrastructure to improve operations. In addition, government continues to grow at unprecedented levels. The combination of these two factors makes HP’s decision to focus on high-end enterprise, commercial and government markets a no-brainer.