In a sudden (but not altogether unexpected) turn of events, Hewlett-Packard has decided to spin off its PC operations into a separate company, and to end support for WebOS devices such as the six-month-old TouchPad tablet.
The decision comes with a lower than expected outlook for the remainder of the fiscal year, as shares and revenue both face a downturn. The ultimate direction for HP seems to be a complete exit from the consumer market, mirroring IBM's paradigm shift.
With the market in general favoring tablets and smartphones over traditional PC and laptop devices, it is perhaps no wonder that HP is seeking strategic alternatives for its Personal Systems Group, and more specifically, a potential full or partial separation of PSG from HP through a spin-off or other transaction.
On the other hand, it is in the tablet and smartphone category that HP has redoubled its most recent efforts. WebOS has been counted among the chief reasons for HP's $1.2 billion acquisition last year of Palm. At the time, HP expressed a commitment to making the acclaimed mobile operating system a cornerstone of its future strategy.
However, the first major WebOS product, HP's TouchPad, has been a particular point of concern, with less-than-stellar reviews and disappointing sales. Best Buy in particular has been reported as selling less than 10 percent of the 270,000 TouchPads in its total inventory, and analysts believe a similar situation exists at stores such as Costco, Wal-Mart, Micro Center and Fry’s. The early and deep discounts -- initially $50, then $100 -- were hoped to stimulate sales, but consumers may decided rather to wait to see if even further discounts will be forthcoming.
The news comes less than a week after HP made headlines for deciding to make the TouchPad discounts permanent, and just days after the company intimated that HP was expanding its WebOS options to include appliances and automobiles.
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