When was the last time you bought a computer?
Judging by the steep decline of computer sales, the answer is probably “not in the last few years.” Unless you’re working on resource-intensive video, photo, or music editing, or you want the best graphics for your virtual reality headset, chances are you haven’t even considered upgrading your old machine.
In fact, you’ve probably upgraded your phone and maybe even bought a tablet since you last purchased a computer. That’s because a large percentage of Americans consumers get most of their content through mobile devices instead of computers. After all, phones and tablets are often cheaper, more portable, and easier to use than even the most user-friendly laptop.
Unfortunately, Hewlett-Packard ($HPQ) tried to capitalize on the mobile craze, but their mobile business never caught on and lost the company a lot of money. They still sell inexpensive Windows tablets, a Windows phone, and a few cheap Android tablets, but their sales aren’t anywhere near the iPhones and the Galaxies of the world. That’s why they’re known as a computer and printer company, and not as a mobile device company.
Yet Lenovo, HP’s competitor, owns Motorola and makes semi-popular Android phones and tablets. Asus and Sony also sell computers and computer parts, but they make Android phones sold throughout the world. Samsung, makers of Windows laptops and desktops, also happen to be the biggest mobile device company in the world. These companies all managed to move into different product spaces, and they did so successfully.
So what is HP doing wrong?
People know HP for their printers and inexpensive computers.
They sell Windows tablets and a Windows phone, but how many people do you know use a Windows phone?
They don’t make Android phones, which are the most popular kinds of phones in the world.
Their competitors all make Android phones, though.
Since PC sales are in a decline, and HP primarily makes PCs, their sales aren’t what they used to be.
They’re still profitable, making billions of dollars in income, but nowhere near the levels of other companies like them.
That’s why they recently announced the pending layoffs of 4,000 people.
HP had laid off tens of thousands of people in the last few years to save money and cut costs, so massive layoffs are nothing new for them.
When a company announces layoffs, their stock often increases because of all they money they’ll be saving.
Less people on staff means less salaries. This stinks, of course, since we are talking about people’s livelihoods. Yet it’s a sad truth about how investors gain or lose faith in a company.
Since HP has no clear idea how they’re going to make money without selling computers, however, investors did not respond positively to the news.
They’re still a computer company without plans to compete on a large scale in the mobile space. What are they going to do?
HP really needs to figure out their future beyond printers and 3D printers. If they announce a viable business plan, investors would likely react positively and their stock would probably go up. Unfortunately, no one has any idea what they’ll be doing in the meantime.
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