On August 18, we were thinking of titling this article “HP Hires Software Guy, Bags Hardware.” That was the day that HP announced it would discontinue the TouchPad tablet after just 49 days and would “explore strategic alternatives” for its Personal Systems Group (PSG), the division that supplies personal computers. HP’s investors disapproved of the announcement, and the company's shares fell by 27 percent to close at $23.60 later that week (see “HP Restructures After Disappointing Q3: What Does It Mean for IPG?”). The company’s share price remains at that level today. At the time, we jested that company CEO Léo Apotheker should be dubbed “The Apoplecter,” given the apoplectic reactions he sparked in many of the company's stakeholders.
Not only were the company’s shareholders surprised, so too were the substantial number of analysts who commented on the company's plans and strategy. Many pundits concurred that Mr. Apotheker and the HP board wanted to turn the company into IBM—that is, abandon hardware and focus entirely on software and services. HP wouldn't be the first company to try to make that transition. If that were indeed the company’s goal, it would certainly have implications for HP's Imaging and Printing Group (IPG), which is the world's leading vendor of hard copy output devices.