HP's Earnings And The Post-PC Era

A reporter just asked me what I thought HP's earnings meant in the context of the post-PC era and I thought I'd share my response:

HP’s drop in PC shipments is not unique in the industry—Acer and other companies have also reported a drop in their recent quarters. And let me say this loud and clear: Tablet cannibalization is only a minor contributor to soft PC sales. The bigger factor is the Windows release cycle—so many consumers bought new PCs when Windows 7 came out, and without a new version of Windows this year, there isn’t the same catalyst to buy. Forrester’s data shows that 34% of US online consumers report having bought a PC in the past 12 months, and an additional 25% bought one 12-24 months ago. Tablet owners are actually more likely than US online consumers in general to have recently bought a PC: 44% in the past 12 months and 28% in the 12 months before that.

The TouchPad is an important symbolic product for HP. Shareholders, analysts, and the media are all looking for HP to prove its viability to consumers in the post-PC era. What’s more, they want to see evidence of the Palm acquisition pay off, which will be judged in part by TouchPad sales. For HP, the TouchPad is a risk/reward play: It’s a major investment in a non-Windows device. Success sets HP up to be a 1:1 competitor with Apple—the only PC hardware manufacturer to also own its own operating system (RIM does as well, but it doesn't make PCs). Failure will be embarrassing but not crippling: HP is still the world’s largest PC manufacturer, and the TouchPad will have little or no impact on that.

Consumers considering buying a tablet see HP in a positive light--37% of US consumers considering buying a tablet say they'd consider one from HP, versus only 18% that say the same about Motorola. (We asked about lots of other brands, too, as you can see in this report.)

HP's Personal Systems Group has already adapted in many ways to the post-PC era, as I describe in my recent report. Two examples: 1) ePrinting supports consumers’ multi-device lifestyle in the post-PC era. 2) HP’s CoolSense technology uses an accelerometer to sense movement in its laptops, and it adjusts the temperature settings of the PC accordingly—so if you have it on your lap, it’s more comfortable to use, but if it’s on a desk, it’s optimized for that setting, which supports consumers’ intimate (close to the body) use of technology in a post-PC world.

HP must keep innovating to stay on top in the post-PC era, but the TouchPad is only one part of that strategy.