HP re-thinking its hardware business, which would include its digital signage efforts

August 18, 2011 by Dave Haynes

On the heels of a planned or unplanned leak, HP has issued a press release this afternoon confirming it is looking at buying a big UK software firm and largely getting out of the hardware business – repositioning the giant firm more along the lines of IBM and Oracle.

HP today commented on the recent announcement by Autonomy Corporation plc (LSE: AU.L). HP confirms that it is in discussions with Autonomy regarding a possible offer for the company.

HP also reported that it plans to announce that its board of directors has authorized the exploration of strategic alternatives for its Personal Systems Group (PSG). HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction.

In addition, HP reported that it plans to announce that it will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. HP will continue to explore options to optimize the value of webOS software going forward.

HP today announced preliminary results for the third fiscal quarter 2011, with revenue of $31.2 billion compared with $30.7 billion one year ago.

The Personal Systems Group is the massive business group that includes a little operating unit focused on moving hardware – boxes and re-badged screens – for the digital signage market. Working out of retail solutions and focused on that sector, HP did a deal later last year for a simplified “QuickStart” packaged that bundled HP players with a lite version of Scala’s software.

So if the PC group is spun off into its own entity – you may recall Lenovo Thinkpad lappies used to be IBM Thinkpads – where does that leave what can safely be assumed was a teeny piece of business for HP? Does the NewCo stay in the digital signage game?

Probably not.  HP is a monstrously big company, and getting one business unit working with another would have already  been a looooong journey. The stuff that was probably most intriguing in HP’s product portfolio- the TouchPads and WebOS software – don’t even have a future, at the moment. The TouchSmart all in one gear that HP has in the market could conceivably be great for interactive retail, but they’d have to be re-engineered to deal with shopper abuse.

In a spun-off entity, the focus would have to be on big money hardware with decent margins, or high volume consumer stuff. You have to wonder if there would be much enthusiasm for plain old x86 PCs and panels no end of companies also sell. That’s particularly true as the signage business gets more and more “app’d” and some of the big scale, simple output networks just run (not yet, but soon enough) on the same sort of low-cost processors in smart phones.

That said, HP has a big Point Of Sale business and digital signage definitely dovetails there.

I doubt guys like Bob Rosenberry – who heads the digital signage effort – has much if any idea yet where things are going.

The history of really big companies in this niche industry has not been great … at least so far. The smartest (and now biggest) – that would be Apple, by the way – has never done more than dip a little toe in the pond.


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