Maybe HP's PC Market Is Soft Because Tablets Are Beating It to a Pulp

Hewlett-Packard does a number of things well. But as CEO Leo Apotheker noted Wednesday during the company’s earnings call, it has “a few isolated areas that need improvement.” Top among them at this point in time, the company’s consumer PC which saw sales fall 12 percent year-over-year. Apotheker blamed the decline on the the economy and “continued softness” in the consumer PC market. But there may be another explanation as well–Apple.

Certainly, there was no sign of consumer market softness in the record revenues Apple reported last month or in its sales numbers, which include 7.33 million iPads. And some analysts have begun to wonder if that might be part of HP’s problem. “HP is pointing to weakness in consumer segment, when the real problem is that its notebooks are being cannibalized* by tablets, where Apple is in a premier position,” Capstone Investments analyst Shebly Seyrafi observed in a note to clients today. “We believe both factors are at play.”

Over at Deutsche Bank, Chris Whitmore said essentially the same thing, but went a step further, equating weak consumer PC demand directly with iPad cannibalization. “We believe iPad cannibalization of consumer PCs is a long-term trend and a meaningful contributor to the revenue shortfall,” he wrote.

If that’s the case, HP best get its webOS TouchPad to market, and soon. Come this time next week the consumer market will be drooling over the next iteration of the iPad.

*Yes, yes, cannibalization is actually eating one of your own and in this case, we’re talking about tablets eating PCs, but that’s the term the analysts are using, so just let it slide.

http://www.facebook.com/profile.php?id=701766821 Dag Wigum

Add to that the surprisingly high estimates for enterprise intererest in the tablet, and the concern should be even higher.
Anonymous

“Tablet market beating it to a pulp”
There is a tablet market? That explains HP’s last quarter’s figures? Oh, must be all the Galaxy Tabs Samsung sold then… As far as I am aware there is only one tablet device that is shipping in quantity.
Anonymous

This alone justifies HP’s purchase of Palm. Even if TouchPad fails, nobody can say they didn’t have to try.

I think Apple’s current lineup is the PC lineup of the decade. Consumers are going to use tablets, period. iPad is the PC they always wanted. And if you need something more, you drop $1000 on a device with a 3 year lifespan and the highest quality software and hardware and support and you go to work. Good riddance to these boat anchor $500 PC’s with their viruses and crippled software.
$340AShareMakesMeAngry>8-#

I guess all the Windows netbook fanbois aren’t buying them in large enough numbers despite swearing to their mothers that a $250 Windows netbook is 10X more useful than a tablet. BTW, what happened to all those clunky Windows netvertibles that were supposed to crush tablet sales? Flip the display one way and it’s a netbook, flip it another way and it’s a touch-screen tablet. Sweet in theory, sucks in practice, huh? Why? Because it’s running a bloated Windows desktop OS that was never designed for touch.
http://www.facebook.com/people/Tony-Mills/1099638671 Tony Mills

The market is soft because we don’t need new systems. XP is still the OS of choice for most people. Everyone uses Office. There really is nothing moving the non-techie off that class of machine.

Example: My neighbor came to me, complaining is PC was down, he lost his hard drive. I was able to salvage his data, and inserted a drive I have left over from an upgrade, had him up in a couple of hours. That was a year and a-half ago, and he still hasn’t bought a new computer.

Apple, on the other hand, has gone from G3 to G4 to G5 to Intel (solo) to Intel dual core. Jaguar, Tiger, Leopard, Snow Leopard and soon, Lion. They have abandoned older tech, now allowing the upgrade, moving their customers along.
They have now introduced a new standard for external connectivity, if you want it, you have to upgrade.

HP, god bless them, I believe is making the move, webOS could give them the same opportunity. They can control the product, get users to move forward.

Tablet sales have little to do with this. You need a PC (Windows or Mac) to run your iPad. If anything, iPad sales should increase user demand for PC’s. It is possible that that demand will be for Apple products vice HP/Dell/etc. as users have that positive experience from the iPad.

Again, this is an opportunity for the HP to put their Slate on the table, and get the same kind of response. I like the Slate, therefore I will buy an HP webOS enabled PC. This slate/PC works so well for me, I need a webOS phone. This gives a soup to nuts warm fuzzy to the HP consumer.

Is this what Google has planned? Your Chrome based PC, connects to your Android based Tablet, talks to your Android Phone? This would be much harder to do, as Google doesn’t control hardware. It really doesn’t save the hardware manufacturers much, as they still will need the infrastructure and service support to manage the OS on their hardware.

Microsoft was well ahead of everyone. Their Windows CE product on HP PDA’s did everything they want Windows 7 tablet to do. It worked well as a touch screen interface. It just wasn’t “Windowy” I guess.

Maybe HP's PC Market Is Soft Because Tablets Are Beating It to a Pulp

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