In case you hadn't heard by now, we're in the midst of a computing revolution here. What you call it, though, depends on whom you ask.
Apple (NASDAQ:AAPL) will tell you that the "post-PC" revolution is in full swing, thanks in no small part to the iPad. Microsoft (NASDAQ:MSFT) would retort that its rival from Cupertino has it all wrong; instead we're entering a "PC-plus" world where we teach good old PCs new touch-optimized tricks. Let's throw another PC player's opinion into the mix: Where does Hewlett-Packard (NYSE:HPQ) stand in this debate?
I'm with Mr. Softy
Not surprisingly, HP empathizes here with the software giant. In a recent interview with PC World, head of printing and personal systems group Todd Bradley says all the post-PC talk in recent times is "just wrong." He sees a lot of potential in touch, saying HP built many touch-optimized devices in the past, adding, " HP has a long tradition of innovating in touch interfaces, and it’s great to have Microsoft agree and support us."
That's almost a subtle admission that the reason tablet PCs failed a decade ago was because Microsoft didn't properly optimize Windows for touch interfaces. Adding a handful of touch-input tools does not a touch-optimized operating system make.
When asked about the potential competitive threat that Microsoft's own Surface tablet represents, Bradley simply said he was "confident" with HP's products, reiterating a stock line about the important of Microsoft's partnership and pointing out how large the tablet market is. A greater number of choices is better for consumers, after all.
That's a little more civil than some of Microsoft's other hardware OEM partners. For example, Acer CEO J.T. Wang has already publicly expressed how he really feels : "We have said [to Microsoft] think it over. Think twice. It will create a huge negative impact for the ecosystem and other brands may take a negative reaction. It is not something you are good at so please think twice."
I wouldn't be surprised if Bradley felt the same behind closed doors.
HP has clearly dropped the ball when it comes to smartphones and tablets up until now. Badly. Countering this idea, Bradley points out that HP's new ENVY x2, one of the company's first Windows 8 devices, will be a hybrid convertible that serves as a tablet and laptop. That doesn't address HP's past mistakes, but at least it's trying to get up to speed.
The first batch of its tablets will use x86 chips from Intel (NASDAQ:INTC), but it also has ARM-based (NASDAQ:ARMH)designs in the pipeline. HP will be targeting the enterprise with its tablets, since the x86 variants will have support for a broader ecosystem of legacy apps, while ARM-based tablets are mostly starting from app scratch.
The HP of the future
There are two big themes that Bradley sees playing out in the near future. The first is device and service management tied to the rise of mobile devices. The second is keeping these devices secure for the enterprise. Bradley sounds as if he's admitting defeat on the actual device front, particularly interesting because he leads HP's device business.
His segment remains one of HP's most important core businesses, at 29% of sales last quarter. The services segment narrowly squeezed ahead as HP's biggest revenue source, but the core PC business still pulls a lot of weight.
That also shows you how much HP has to lose if it's unable to gain traction on the hardware front as tablets cannibalize PCs. Its other legacy business, printing, is also stagnating, falling a modest 3% over the last year. Instead of acknowledging that the usage of print mediums is on the decline in just about every corner of society, Bradley says HP is focusing on web-enabled print services, including printing from smartphones.
What's the worst that could happen?
HP has a lot to lose if Apple's Post-PC world becomes a reality and it doesn't participate on the hardware side. The company will continue to have a place in the value chain through its enterprise servers, storage, and networking business as well as its services segment, but if HP's upcoming smartphone and tablets fail to take off, investors have a lot of pain in store.