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Could Compaq re-emerge to fly the tablet flag for HP

Tablets, it seems are going to be bigger than anyone thought at first. Bigger than PCs? Possibly

By PETER WHITE

Published: 25 August, 2011

READ MORE: Financial | Laptop | Netbook | Tablet

Continued ...

There is an expression used in investment circles, "it's all in the price," meaning that investors have already taking into account new events, even if they haven't yet happened, and have used that to either increase or decrease the price of a stock.

So now we know that it is early days for Apple and tablets, but the presumed growth that iSuppli is talking about is "all in the price." PCs are harder and harder to make money at and that also is in HP's price, despite it being the largest PC maker in the world apart, perhaps, from Dell.

So the market for the most established device that everyone relies on, is worth less than a market that almost no-one relies on, but everyone has ownership lust for.

It is against this backdrop and the three or four years leading up to it, that the two conflicting statements came from HP one week apart, with the CEO saying that the company was getting out of PCs, out of Tablets, and out of phones and that WebOS was dead, followed by the divisional head Todd Bradley, who runs HP's personal systems group saying that the company is looking at "strategic" alternatives to its almost $40 billion a year PC group and that WebOS is not actually dead, just the tablet that HP has just launched on it is dead. Oh yes, and the phones and stuff.

Bradley went on to say that, "Over the six years I have led this group, we have grown to become the largest, most profitable PC company in the world with over $41 billion in revenues. For the last seven consecutive quarters we have sequentially year-over-year had profit improvement. What I am passionate about is driving us to be the best PC company in the world and continue to understand the innovation that's important to both consumers and enterprises. I'm so proud to lead such a phenomenal group of people."

That does not sounds like a failing or even ailing company? In a world where a $40 billion thriving business, one of the largest of its type in the world, is seen as a liability, this is all about corporate agility. Some companies have got it, others' don't. It's clear that if Apple had remained as the manufacturer of disk based iPods, by now its day would have come and gone. But it had the sense to move on to phones. And now its phones are coming under pressure from well-designed touch phones, it has had the sense to open up a new front - tablets.

So in 10 or 15 years, if by then tablets become a discount based bun-fight, it's fair to assume that Apple will have elegantly moved on. HP has not moved on but it has fought its corner in PCs - that's not the same approach at all.

Instead, as an organization HP is most comfortable where its weight and size make money - in services, now the same size as PCs in revenue terms, but more profitable. It's IT services group is second only to IBM's and it follows in the footsteps of IBM's having been built almost a decade later, based on following a company that was in most of its other businesses, typically large server farms for top enterprise clients. Smart IT skilled bodies are the heart and soul of IT services. You cannot have too many cooks if they are all being paid for on a fee plus margin basis.

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