NEWS FOCUS: HP execs hint at spin off of PC business

NEWS FOCUS: HP execs hint at spin off of PC business

HP vows to continue to remain aggressive in the PC market and maintain its top position while competitors see opportunities to grab some share

Specific details relating to the fate of HP’s PC business still remain unclear at this stage, but it appears HP executives are leaning towards spinning off the unit rather than selling it.

HP’s board recently indicated its intentions to make changes to the Personal Systems Group (PSG) unit – either spinning it off, or selling it.

HP PSG vice-president South Pacific, Janice Cox, told ARN the situation was currently being reviewed, but the likely outcome is that it would be spun off into its own entity.

“We can be more nimble and agile in the market place and we can see it will allow more flexibility in not only the direction that it goes in, but also the development of products,” Cox said.

“HP has done this in the past very successfully with the company Agilent in 1999. Some of our competitors have spun off all different parts of their business over the years, so we anticipate that will be really great outcome for our business because we can then focus on purely the transactional product and we stay at the forefront of innovation.”

Despite the uncertainty, the vendor reiterated to the channel that it will be supported no matter what transpires.

“We are 100 per cent committed to our resellers as we have been for the last 25 years. They’ve always been a key part of what we do and that will continue,” she said.

Cox had received positive feedback from HP’s large resellers about its business intentions and reiterated it is still business as usual with PSG, and it will continue to be aggressive in the market. HP currently holds the largest share of the PC market in Australia and globally.

“We pulled in all the key HP partners together on the day following the announcement and they’re giving me feedback saying it makes sense what we’re doing and having a spin off would be a positive thing,” she said.

“We will continue to make PSG, not only the number one PC vendor in the world, but across A/NZ. No one gives up market share easily and it certainly won’t be me.

“We’re still winning significant pieces of business in the market, not only in the commercial space but also in enterprise and government too.”

IDC PC analyst, Amy Cheah, said concerns were rising on the long term future of the PC market given negative statements touting the "death of PCs" and major players selling off their PC arm.

But HP’s announcements were more likely to dampen vendor confidence in the sustainability and profitability of the PC business rather than consumer confidence, Cheah said.

However, the uncertainty around the HP PSG unit’s future creates a huge opportunity for competing vendors to capture new market share.

“They may look to tie up relationships with disgruntled HP channel partners and employees, undercut HP's pricing to capture consumers' wallet share and key retailer partnerships,” Cheah said.

She anticipates consumer-centric vendors such as Apple, Acer and Toshiba will likely take advantage of consumers' weakened confidence in the HP brand and persuade them to switch brand allegiance. In the commercial space where sustainable partnerships are valued, Dell and Lenovo will likely benefit as clients turn to these vendors for the assurance of long term support and services.

Cheah advised resellers it maybe wise for partners and retailers to evaluate alternative vendors to mitigate impending risks to their business.

“There will be channel partners that will stand by HP's established brand name and take an optimistic stance with the hope for a more agile business with PSG in the future,” she said.

“If PSG do come through this process with a sizeable market share, some independence and a new owner may invigorate the brand and spur exciting new product development that allows the business to move away from a transactional volume business with low profit margins.”

Competitors show commitment to channel and PC market

Competing vendors such as Dell, Lenovo and Acer, have all been reiterating their support for the channel in light of HP’s PC business intentions.

Dell’s global channel vice-president, Greg Davis, signalled Dell was interested in talking to partners about its offerings.

“The phone is ringing and there are more knocks on the door now then there has ever been from new partners lately that are concerned about the stability of their other partners,” Davis said. “So we see that as an opportunity to share the Dell value proposition, reiterate what we’ve been doing and invite those partners to take a look at Dell. We’ve been doing this anyway for the last three years, but certainly there’s more opportunity now.”

Davis said the company had been gaining more ground in the channel across all countries and stated in its second quarter, its channel business grew 24 per cent.

“Our growth through channel partners is far out pacing the market in general – whether it’s in the US, Canada, Western Europe or A/NZ our growth has been very positive,” he said.

“Last year, we delivered globally about 75,000 training courses to channel partner reps and technical people, and this year through to August, I’m on pace to be about 140,000. I’m challenging the team to double the number of training courses we deliver year-on-year.

“It has helped us to get some momentum and partners have seen the value in the market on how we’re doing training, understanding Dell solutions and overall messaging on benefits associated with being a premier partner.”

Davis reiterated Dell’s investment in its PC business and channel partners. The vendor maintains about 82,000 partner relationships globally.

“Our PC business is stronger than ever and we continue to invest there as a company,” he said. “We’re also continuing to grow, invest and do the right things for the channel partners. While others maybe a bit concerned about their strategy or about the PC market, we aren’t at all.”

Lenovo Australia managing director, Alan Munro, said the company itself was on a growth curve and didn’t intend to slow down.

“We’re number three with 12 per cent share, just behind Dell. We’re on a growth curve and don’t see that slowing down,” Munro said. “We’ve been reaching out to our customers and partners and really making sure they know we’re here for the long haul, we’re investing.”

Munro plans to invest more into the channel business this year through hiring more staff to help support channel sales.

“We’ve got a lot of people in our channel business and it’s something we’re doubling down on and continuing to invest in even further,” he said.

“Our commitment to them is that we’re here and we’re a channel organisation that is consistent worldwide. Channel partners need to decide where they’re going to invest and who they think the winners are going to be in the future.”

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