HP ditches webOS and PCs for the cloud

HP is set for a major overhaul of its business to refocus on cloud solutions and software, with a number of announcements affecting its Personal Systems Group (PSG).

Just weeks after the launch of its flagship tablet device – the HP TouchPad – and a number of new mobile phones, HP has confirmed it is shutting down all operations for webOS devices and “exploring strategic alternatives” for the webOS software – the major factor in its purchase of Palm in April last year.

A statement from the company merely read: “The devices have not met internal milestones and financial targets.”

But what has sent more shockwaves across the industry is the announcement it is looking into ditching its entire PC business.

In a statement accompanying HP’s third quarter results, the company confirmed its board of directors had given the go ahead for an “evaluation of strategic alternatives” for the PSG, including separating the PC business from the firm in either a spin-off or full blown sale. All this, despite HP holding the number one spot in market share for PCs and making $41 billion from the products in 2010.

Leo Apotheker, chief executive of HP, claimed the move signalled a “sharpening” of the firm’s strategy and financial focus, with cloud computing having a major part to play in its new direction.

“In March we outlined a strategy for HP, built on cloud, solutions and software to address the changing requirements of our customers, shaped heavily by secular market trends that are redefining how technology is consumed and deployed,” he said.

“Since then, we have observed the acceleration of these market trends, which has led us to evaluate additional steps to transform HP to meet emerging opportunities.”

As a part of the move, HP also announced its $11.7 billion (£7 billion) acquisition of Autonomy, the UK’s largest software firm, which specialises in enterprise information management.

“Autonomy has an attractive business model, including a strong cloud based solution set, which is aligned with HP’s efforts to improve our portfolio mix,” added Apotheker.

“We believe this bold action will squarely position HP in software and information to create the next-generation information platform and thereby create significant value for our shareholders.”

Founder and CEO of Autonomy, Dr Mike Lynch called it “a momentous day in Autonomy’s history.” His company will continue to operate independently from its sites in Cambridge in the UK and San Francisco in the US, and he will remain in charge, reporting directly to Apotheker.

Along with HP’s new focus came new leadership, as it continued its raft of announcements with the confirmation of a new head of enterprise services.

John Visentin was the lead on enterprise services in the Americas but will now take over as the global boss immediately from Tom Iannotti, who had announced he was retiring earlier in 2011.

Net revenues for HP rose by just one per cent in the third quarter to reach $31.2 billion.