HP’s PC Departure: The Good News and Bad News for Microsoft

Hewlett-Packard, the No. 1 PC vendor, has decided to get out of the PC business. This must be unsettling news indeed for Microsoft, a company that’s just a wee bit invested in personal computers.

HP announced yesterday that it is spinning off its entire PC business and also discontinuing its tablet and smartphone businesses, which amounts to the HP Touchpad tablet and the HP Veer 4G smartphone. Both were running WebOS, the struggling operating system that HP acquired with Palm. And both are getting taken off life support due to anemic sales in a market dominated by Apple’s iPad.

For the folks in Redmond, this is not encouraging. It signals an increasing lack of faith in PCs, the sole platform on which Windows runs. Of course the PC itself is not going to become an endangered species anytime soon. Businesses still need PCs to run the apps that run the business. But when the number one PC maker doubts the future of the medium enough to bail on it, it’s not a good sign. It also intensifies the pressure on Microsoft to deliver a next version of Windows (being called Windows 8) that is flexible and versatile and not limited to PCs.

To Microsoft’s credit, early demos of Windows 8 have revealed a completely different look and feel and the company has stated outright that Windows 8 is being designed for both PCs and tablets.

Windows PC disruptions notwithstanding, having fewer WebOS devices is actually good news for Microsoft because WebOS and Windows 8 would have been tablet competitors. HP said it will still license the limping WebOS to hardware makers, so there could be a showdown at some point between Windows 8 and WebOS on tablets — that is if the iPad and Android tablets don’t stomp them to death first. (Windows 8 does stand a better chance than WebOS of surviving in tablets due to Microsoft’s strong hardware partnerships and marketing muscle).

On the PC end, there are plenty of other vendors (Dell, Acer, Toshiba, Lenovo, Samsung) that will gladly pick up the baton from HP and provide PC hardware for Windows 7 and Windows 8. Number 2 PC maker Dell, in particular, seems to benefit most from HP’s decision step away from PCs.

In a story by Computerworld’s Gregg Keizer, Gartner research director Mark Margevicius said that, “Now Dell will be viewed as the vendor that is safe and solid.”

In a blog post this week, veteran Microsoft watcher and blogger Mary Jo Foley shuns the idea that HP’s PC departure ushers in the “post-PC” era and instead sees this as an opportunity for other PC makers to take more risks and be innovative with laptop design.

I ,for one, remain skeptical about tablets, still seeing them as a luxury device and little more. I’d rather see more sleek and sexy ultra-thin laptops, something that HP did not excel at anyway, as Foley points out in her post.

So while HP’s PC spin-off certainly complicates Microsoft’s plans, it could spur innovation and profits for the remaining PC makers and HP’s tablet kill off will reduce tablet competition for Windows 8 (Do you really think WebOS will catch on as a licensed tablet OS? Puh leeze).

Dell is likely to take over from HP as the new Windows PC king, but which PC vendors and models do you like? The Samsung 900x ultra-thin laptop is the best machine I’ve played with recently. How about you?