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Analysts: HP's double-barrelled bombshell to have minimal impact in Australia

Analysts: HP's double-barrelled bombshell to have minimal impact in Australia

The vendor has pulled the plug on WebOS devices and will re-evaluate its PC business but Australia will remain relatively unscathed from the ordeal, according to analysts.

HP's decision to drop all WebOS devices and re-evaluate its PC business will have very little impact in Australia, according to analysts.

The vendor announced it will discontinue investment on WebOS smartphone and tablet devices yesterday. It is also weighing up whether to spin-off, or potentially sell off, its PC business.

The WebOS-based TouchPad was launched in North America in July and was only made available in Australia five days ago. With uncertainty over WebOS’s future, Harvey Norman, the exclusive retailer for the TouchPad, has decided to pull the product.

The news was unexpected given there were plans to integrate WebOS into printers, PCs and other HP products as well.

In terms of HP’s re-evaluation of its PC unit, IDC analyst, Trevor Clarke, found it particularly surprising since the vendor has a long heritage in that space and performance within its Personal Systems Group (PSG) has been strong.

“It has been doing very well and has been bringing out some innovative products for some time,” he said.

The PC industry, according to Clarke, is still strong and is expected to grow even more this year. But he acknowledged it is a fiercely competitive market and margins are becoming increasingly slim.

While the PC industry is still growing, it is not growing fast enough, according to Telsyst analyst, Foad Fadaghi. The fate of PCs is now inextricably linked with tablets as the portable device continues to cannibalise PC marketshare.

“Tablets have really delayed PC purchasing decisions across consumer and business markets,” Fadaghi said. “Rather than upgrading to a new PC, people are holding off and looking at using things like tablets as an in-between measure.”

The affect of tablets on PC sales is expected to become more pronounced in the future as more people opt for mobile devices rather than be tied down to a desk for their computing needs.

“PCs are not going away, but they are increasingly being cannibalised by other devices,” Fadaghi said.

But HP, like many other vendors, had jumped on the tablet bandwagon too late and had since been playing a game of catch-up, he said.

With disappointing TouchPad sales in North America and slugging PC growth, HP may have made a smart long-term decision, according to Fadaghi.

“HP understands higher margin businesses are particularly focused on software and services, not necessarily hardware,” he said. “It might be a good move in the long-run for HP shareholders.

“IBM sold its personal computer business to Lenovo years ago so this is a long running trend and it has just taken HP a little longer to make that realisation.”

So how does all this affect Australia?

According to Fadaghi, it won’t have much impact locally. For starters, HP hasn’t released a smartphone here in years and the TouchPad has been pulled by Harvey Norman.

“Obviously HP has a lot of business out here but I don’t think its exit from the market will have all that much change on the tablet market,” Fadaghi said.

Clarke considered it early days but said it will no doubt impact HP’s reputation in Australia.

“Relationships between channel partners, retailers and HP won’t disappear overnight and obviously they will be working hard to ensure the supply of products going forward,” he said. “But questions about how this will impact them will be raised and that is going to hurt HP PSG going forward.”

End-users will also question whether this will happen again in the future.

“The reality is the PC market is one that is changing rapidly,” Fadaghi said. “Channel partners have to be conscious of that and move with the times in terms of what customers want in a product.”


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Tags hp touchpadmobilitysmartphonesmobile solutionstabletsTelsystPCsHPHarvey NormanwebOSIDC

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