HP’s plan to spin off the Personal Systems Group

Carter Lusher, Research Fellow, Ovum

AUSTRALIA: While the divestiture of the Personal Systems Group (PSG) might make strategic sense – after all IBM sold its PC Division in late 2004 with minimal negative impact – in the short run this move could impact HP’s credibility as a predictable strategic IT supplier.

That is because it was only on March 15, 2011 – a scant five months ago – at the HP Analyst Summit that CEO Léo Apotheker re-confirmed the strategic importance of PCs to HP. For enterprise and public sector IT executives, predictability is a critical trait for major technology vendors and HP continues to reinforce the impression that it is unpredictable.

HP’s plan to spin off the PSG will have ripple effects far beyond the products in PSG, some of which can be anticipated while others cannot. Areas that will be impacted include the overall supply chain that also feeds the enterprise server, storage and networking products; partner ecosystem; commitment to countries and regions; enterprise services, and strategic customer relationships.

Ovum recommends that enterprise and public sector IT managers use this period of disruption at HP as an opportunity to drive hard bargains in product and services procurement projects. HP is going to need to every dollar, euro, yen, pound, and yuans to offset the drop in sales that come with uncertainty that naturally follows announcements like the PC division divestiture, Enterprise Services shake up, and major software acquisition of Autonomy.