updated 01:25 pm EDT, Thu August 18, 2011
HP rumored breaking out Personal Systems Group
A potentially landscape-altering rumor emerged Thursday that HP was about to split off the Personal Systems Group that controls its PC business. Contacts with "direct knowledge" claimed the division could happen just as it was set to announce its spring quarter results in the afternoon. Bloomberg suggested HP was hoping to reduce its dependence on computers, where its emphasis on a low profit margin was being hurt as more buyers were opting for iPads instead.
The company for many has come to define the Windows PC field, often focusing on sub-$600 home PCs and embodying many of the practices meant to cut corners and maintain profit margins, such as outsourcing help to the developing world or using cheaper materials and parts. While the techniques have kept HP out in front for market share, it may have proven costly as it has seen home PC sales shrink rapidly as it ends up leading an industry that would still be smaller but was now also less profitable.
Current CEO Leo Apotheker has argued that HP should go more in the direction of his former employer, SAP, and focus more on services and enterprise-level software. HP's enterprise PC sales have also usually fared better as they haven't been as subject to the race towards lower prices and quality as the home space.
Accordingly, HP is rumored to be buying Autonomy, a UK database search developer, for $10 billion.
The rumor is unconfirmed but, if true, could have major ramifications for the computer industry. HP's PC group would no longer have the financial shelter of the enterprise segment and could struggle in the market if it isn't immediately profitable on its own. The mobile group could also be in jeopardy as a result. Any separate firm would have to rebrand itself and could face difficulty shedding the HP name.