HP PC Spin-Off Puts Pressure on Microsoft to Nail Windows 8

Hewlett-Packard's sale or spin-off of its PC business will put pressure on Microsoft to "hit the ball out of the park" with Windows 8, an analyst said today.

Computerworld — Hewlett-Packard's sale or spin-off of its PC business will put pressure on Microsoft (MSFT) to "hit the ball out of the park" with Windows 8, an analyst said today.

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For the short term, then, Microsoft is unlikely to notice any difference in Windows sales.

However, like Miller, Margevicius saw the move as a signal of a troubling trend.

HP will retain the webOS operating system it acquired last year from Palm, but it will halt development and production of any tablets based on webOS.

HP's webOS-based TouchPad went on sale only a month ago, and several former Palm executives, including former Palm CEO Jon Rubinstein, currently have high positions in HP's Personal Systems Group.

"HP tried to put the defibulator on its PC business with the TouchPad, but it's not yielding the kind of results it wanted," said Margevicius. "The patient isn't dead, but it's moved into assisted living."

Ironically, Miller saw the withdrawal of HP from the tablet hardware business as a win for Microsoft.

HP made it clear that it was betting on its own webOS, rather than Windows 8, for its tablets. By exiting the market, it means that there's "one less partner" to convince that Windows 8 is the right OS for tablets.

"For Windows 8 to succeed [on tablets] Microsoft needs a partner that's passionate, and one that will work with Microsoft to make a great tablet," said Miller.

Both Miller and Margevicius attributed the decision by HP to dump the PC side of its business to the small, fragile margins on Windows-based personal computers.

"This is MBA 101," said Margevicius. "This part of their business may be attractive from a legacy perspective, but it's the part of [HP's] business that generates the least amount of revenue. And HP is run by someone with no strong ties to hardware. [Leo] Apotheker has three things in mind: software, services and support, and not particularly in that order. All those businesses are far more profitable than PCs."

HP hired Apotheker, a former CEO of German software and support giant SAP, as its president and chief executive in September 2010.

Margevicius said that Dell, the world's No. 2 PC seller, will likely reap the most benefit from HP's ridding itself of its PC group. "Dell will be viewed as the vendor that is safe and solid," he said.