Analysts Say HP’s Decision To Stay Out of Smartphones Is a Good Move

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HP chief Meg Whitman said her company has no plans to enter the smartphone market in the coming year, apparently contradicting something she said earlier, but a decision also seen as a wise move.

HP CEO Meg WhitmanJust one month ago, Whitman appeared on the Fox Business Network and said that HP would need to offer a smartphone. “We have to ultimately offer a smartphone because in many countries of the world that would be your first computing device,” she said at the time.

One month later and she was in full backpedal mode. At HP’s financial analyst day earlier this month (transcript in PDF here), Whitman acknowledged she had made quite a stir with her earlier remarks and elaborated on them.

She said HP doesn’t call its PC business a “PC business,” it’s the Personal Systems Group, and that it should be able to go from the workstation to the desktop to all-in-one to laptops to hybrids to tablets and ultimately, “in my view, to smartphones because in many countries the smartphone is the computing device for individuals.”

Whitman added “I believe if five years from now we don’t have a smartphone or whatever the next generation of that device is, we’re going to be locked out of a huge segment of the population in many, many countries of the world and our franchise will suffer and our financials will suffer.”

After the $1.2 billion debacle of the Palm acquisition, not to mention the ungodly mess she has to clean up at HP, it’s not hard to see why she’d rather not worry about a smartphone right now. Analysts say it’s a smart move.

Analysts Agree

“This is a very smart move on her part,” said Ken Dulaney, research vice president for mobile technology at Gartner. “They have made many mistakes in this area and have never become a force in highly mobile products (like smartphones). With all the other issues HP has this would only be a distraction. It’s unfortunate she wasn’t on board back when they decided to mistakenly buy Palm.”

Charles Payne, president of Wall Street Strategies, said he expects HP to take a big hit on Autonomy, for which it paid $10 billion – which many financial analysts felt was way too much. With that kind and other issues consuming her time, he thinks Whitman should stay out of new markets for now.

“HP is so behind the eight ball it could be a waste of time for them to get into smart phones at the moment. The problem is extraordinarily monumental, even harder than turning a Pez collecting website into an Internet juggernaut. That said, she has to clean and build simultaneously. I think the tablet market is perfect for them and I also think laptops have more life in them on business level,” said Payne.



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