The HP TouchPad, which was sold off by Harvey Norman at a fifth of the original price this week. Picture: Supplied Source: Supplied
WHAT does it mean when the world's biggest personal computer maker stops making PCs?
"One of the underlying tones here is that we are entering a post-PC era"
It means we're now officially in the era of the iPad.
Late last week, computer giant Hewlett-Packard revealed a dramatic plan to pull out of the consumer electronics business.
No more personal computers. No more smartphones. No more tablets.
That's why the HP TouchPad, which had only just launched locally, was sold off by Harvey Norman for a fifth of its regular price on Monday.
But why would the PC market leader decide to stop making PCs? Experts say it's because there is less and less money left in the business.
"The PC business is getting much more challenging," Garnter principal analyst Tracy Tsai told news.com.au.
"The media tablet, like the iPad, has already had a level of impact on PC usage. Consumers are now considering adopting an alternative computing device ? maybe a smartphone or a media tablet."
Ms Tsai said HP were still making money on PCs ? of which they shipped almost 15 million during the second quarter of 2011 ? but not as much as they made from other areas.
"Their profit margin (on PCs) is about 5.9 per cent, which is not bad compared to the other PC vendors in the industry," she said.
"However it's much lower, probably only half, of that of other divisions like software, service and those kind of enterprise divisions."
Accordingly, HP's decision was to exit the consumer market completely and focus on selling software and hardware to businesses.
That move will involve HP selling its PC division and moving to purchase business software maker Autonomy for as much as $US10 billion.
HP (17.6%)
Dell (12.5%)
Lenovo (12.1%)
Acer (11.0%)
ASUS (5.2%)
Market share by shipments, Q2 2011, Gartner
Telsyte research director Foad Fadaghi said it was possible HP's leaders knew they couldn't compete with Apple in the consumer market.
"Right now the company that is setting the benchmark in terms of hardware and profitability is Apple, and they've done that by not following the norm, if you like. They've reinvented the categories," he told news.com.au.
"If you look at Apple, you have something like 40 per cent margins on their hardware, while PC businesses may be down to single digits in some instances.
"I think that HP is taking a good, hard look at itself and realising that maybe some of those things it needs to do to effectively compete with the likes of Apple, it's just not going to be able to do under its current structure."
However the competition between HP and Apple isn't just about brands. It's also a shift away from one kind of computer to another.
"I think one of the underlying tones here is that we are entering a post-PC era," Mr Fadaghi said.
"It doesn't mean PCs are going to go away completely. PCs are still going to be used and so forth, but there is a realisation that consumers are choosing to do their computing differently to how they did it a few years ago.
"They're first tending towards a smartphone or a tablet, and then they're going to a PC.
"Increasingly, over time, more of those things they do on PCs will happen on other devices."
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