HP continues to lose industry relevance as the mobile revolution gains momentum

By Quantum Capital Fund

Since the beginning of the mobile revolution, which is the global movement that has seen the public favor smartphones and tablets over PC’s as the internet access device of choice, many industry analysts have been outspoken about the grim prospects of the PC saying that the writing is on the wall.

However the industry is almost two years into the revolution and there have been no significant casualties. Some manufacturers, like HP, have even managed to increase their share trading despite the falling sales of PC’s. But if one looks deeper into the results released by HP, there are tell tale signs that the company is preparing itself for inevitable change which will either be its saving grace or the end of the company.

When a company is facing bankruptcy there are a few processes it goes through in order to fight its onset.

The first is cost saving measures which are achieved by embarking on a major staff reduction programme. A report by British news agency BBC shows that HP’s shares traded 12% higher in afterhours trading on May 22 2013 because of the positive outlook associated with the company’s cost cutting drive where it will be cutting 27 000 jobs by May 2014.

The second cost saving measure is the sale of non-core assets. The company needs to sit down and conduct thorough market research as to which divisions are proving profitable and which are not. The BBC report points out that the company’s enterprise service division and printing divisions are helping to improve profit margins while the company has all but written off the Autonomy purchase after the major accounting scandal which was played out last year.

Although the company is showing signs that it is struggling to come to terms with the changing nature of the industry, it is not dead in the water and shouldn’t be written off just yet. Top level management need to re-establish their vision for the company around the current trends which are proving to be profitable.

HP needs to release a mobile device before year end as it has waited too long to cash in on the most profitable aspect of the mobile revolution. Reports show that the company is partnering with Google to release a string of Android devices which are cross over’s between a laptop and a tablet.

The company needs to look at increasing capacity in cloud computing as major industry players such as Adobe and Microsoft have said that this is the future of the industry. Offering a product or service on a subscription basis means that the company is guaranteed a regular revenue stream as well as greater control over its products.