In the space of a few months, HP has shocked the world by publically considering ditching its PC business, and then shocked it again by doing a total U-turn and keeping a firm hold of it. Paul Hunter Head of PSG UK and Ireland tells Andrew Wooden the thinking behind the announcements, and what it means for the firm’s UK partners.
So the PC business is staying in house, not being spun off or anything. In the UK, will it operate in largely the same way?
It is operating in largely the same way, but the couple of months of reflection has meant that there are some things we want to do as a consequence of being a part of HP. We want to take greater advantage of the scale that HP has to offer.
Will you need to do anything to reassure UK dealers or distributors that may have begun looking elsewhere following the initial announcement about withdrawal?
I think one of the over-riding aspects of the past couple of months has been the strengths of our relationships with dealers and distributors. Yesterday I was with one of our largest disties and the relationship is very solid. That has remained true throughout the last two month’s. Our relationships are really strong, and that’s one of the reasons there has been less impact on the business than there could have been.
Can you give us any insight into the reasons behind the first announcement of a spin off, and then the decision to retain it instead?
With regards to the announcement to spin off, the reasons were the PC business was diluting the operating profit of HP overall. Historically, you look at the prior quarters and we operate a PC business which is pretty successful in income terms when compared to our competitors, but that dilutes the overall operating income percentage for HP. If you take that out then obviously that percentage rises.
I think the characteristic that wasn’t fully taken into consideration was the other benefits that the PC portfolio brings to the wider HP business, and vice versa. I think this is broadly reflected in the latest decision by Meg (Whitman, the chief executive), in that we bring a lot of value to HP clients, and we bring a lot of value to the other businesses and services organisations in terms of scale and coverage and business relationships.
If you talk about the partner and distributor relationships, the PC business is a big component of why HP’s relationships overall with the partner community are so healthy, and once you take that out, then the effect is diluted. I think the right decisions have been made.
I think the divisions are all capable to some extent of existing independently, and being successful independently, but collectively they are far more powerful. So if you take one of those components out, it reduces the strength of the whole portfolio.
And WebOS is still going to be a continuing business for HP?
It’s certainly an asset that we’re continuing to invest in. The people that develop WebOS software continue to be in place, so we are continuing to invest in it and it has a significant value. It has value to the people that have bought TouchPads today, and it has value to other potential customers in the future.
Are you going to resurrect the touchpad and mobile phone hardware businesses?
So you’ll be looking to get WebOS on other manufacturers tablets and smartphones?
The current position is that the corporation is considering what the strategic choices are for that as an asset, and I think there’ll be multiple considerations for that.