"The tablet effect is real," said HP's CEO, as he killed the TouchPad & orphaned his PCs
You don't have to look very hard to find the Apple (aapl) angle in Hewlett-Packard's (hpq) August surprise: The announcement Thursday that it is pulling the plug on its tablets and smartphones and preparing to abandon the personal computer market altogether.
This is Steve Jobs' post-PC era writ large.
“I’m trying to think of a good analogy," Jobs said as he explained the concept to All Things D's audience last year. "When we were an agrarian nation, all cars were trucks. But as people moved more towards urban centers, people started to get into cars. I think PCs are going to be like trucks. Less people will need them. And this transformation is going to make some people uneasy… because the PC has taken us a long way. They were amazing. But it changes. Vested interests are going to change. And, I think we’ve embarked on that change. Is it the iPad? Who knows? Will it be next year or five years? … We like to talk about the post-PC era, but when it really starts to happen, it’s uncomfortable.”
"Uncomfortable" hardly begins to describe what HP is feeling right now.
<!-- more -->
The company that swallowed Compaq and overtook Dell (dell) to become the world's largest PC vendor saw its margins shrink and its market share contract and decided it didn't want to be in truck-making business anymore.
And, sadly, when it tried to buy its way into the post-PC era by acquiring Palm, it couldn't make that work either. The Pre's slice of the smartphone market is too microscopic to show up in the pie charts, and the TouchPad has had the stink of death about it from the start. Two months after the tablet's ballyhooed debut, thousands of unsold boxes are piling up in Best Buy's warehouses.
“Consumers are changing the use of their PC,” HP CEO Leo Apotheker told analysts Thursday. “The tablet effect is real and sales of the TouchPad are not meeting our expectations… The velocity of change in the personal device marketplace continues to increase as the competitive landscape is growing increasingly more complex especially around the personal computing arena. There’s a clear secular movement in the consumer PC space. The impact of the economy has impacted consumer sales and the tablet effect is real."
It could be, as TechCrunch's MG Siegler suggests, that buying Palm was the bright idea of disgraced former CEO Mark Hurd, and that the TouchPad's bellyflop was the excuse Apotheker, who came from German enterprise software giant SAP (sap), had been looking for to get out of the consumer device business and remake the company in SAP's -- or IBM's (ibm) or Oracle's (orcl) -- image.
But Apotheker was just the hatchet man. In the end, it was Apple that killed the TouchPad and left HP's personal computer division circling the drain.