Once Microsoft's closest partner, HP is increasingly at odds with the erstwhile software giant. And while recent announcements about new HP Android devices and Chromebooks aren't alone proof of the new rift between the two companies, they are indeed the latest in a long list of slights that may forever change the dynamic of the PC industry.
This is a big story, and I don't want to get too far into the weeds of historical miasma, but the short version goes like this: In the past, when Microsoft said jump, HP asked "how high?" It was the firm that jumped in, feet-first, every time that Microsoft needed a hardware partner to back its latest waste of time project. Pocket PC. Media Center PC. Vista (remember the "Athens" PC?). Whatever it was that Microsoft needed, HP was there.
In this deal with the devil, HP got exactly what it wanted: It became the biggest PC maker in the world, and it retained that title for several years. And then it wasn't the biggest PC maker in the world. And the financial troubles started adding up. And now HP has had enough.
HP's strategy for turning its business around is largely outside the scope of this discussion, but let's consider the relevant part of it: For fiscal year 2014, HP is entering what it calls its "recovery and expansion" period, which includes a "new product and service focus" that hit on "the new style of IT." Make no mistake: That's all about heterogeneous devices in the workplace, not just PCs, or what HP calls thinking "beyond the box." HP's consumer PC business is "declining," CEO Meg Whitman says, and needs to be transitioned to a new, growing business: Tablets and convertibles.
Many of them will not be running Windows.
When Microsoft announced itsPCs last year, analysts wondered whether the move would anger its PC maker partners and perhaps forever destroy the relationships Microsoft had built with these companies. Indeed, some PC makers—like Acer, whose CEO is a vocal critic of and a tireless complainer—spoke out against Surface, though others—like Lenovo, which is now tellingly the world's biggest PC maker—said all was well.
HP's Whitman—no wall flower herself—this week spoke out against Surface, finally, and explained how
"We are seeing profound changes in the competitive landscape," she said as part of the firm's Securities Analyst Meeting in a discussion about HP's turnaround progress. "Our competitors are expanding across the IT stack with integrated products and solutions. We have emerging competitors that are disrupting markets with new technologies and new business models. And current, long-term HP partners like Intel and Microsoft are increasingly becoming outright competitors."
Outright competitors. Not competitors and partners. Just ... outright competitors.
"HP's traditional highly profitable markets face significant disruption," she said. "Wintel devices are being aggressively displaced by ARM-based mobile devices running competing operating systems. Tablets are growing while the traditional PC business is declining ... The number of personal computing devices worldwide is exploding."
To this end, HP is turning to these alternative systems running competing operating systems. And while the firm has announced a slew of new designs in recent months, two really stick out in my mind.
The first is the HP Chromebook 11. The firm earlier this year announced plans to ship at least one Chromebook model this year, but this week's announcement about a second, low-cost Chromebook model, the HP Chromebook 11, is perhaps a bigger deal. Why? Because it costs just $279. It's a netbook in Chrome OS clothing, but it features an 11.6-inch screen—a full inch bigger than that of a Surface, though it lacks multi-touch—and looks very high quality.
The second is an intriguing device called the HP SlateBook x2. This hybrid PC (or "convertible tablet" or "detachable" to use other terms) looks a lot like various Windows 8-based hybrid PCs, including some that HP is or will soon ship. But it has one distinct difference: The SlateBook x2 runs Android, not Windows 8.x. It is what HP" calls an Android Detachable.
The SlateBook x2 features a 10.1-inch 1080p display and is at its heart a tablet. But it clips onto an included keyboard base and becomes, in essence, a PC. A PC running Android, not Windows.
HP is serious about expanding its options. And it is doing so at the expense of Microsoft and Windows. The firm will of course push forward with Windows 8.1-based PCs and devices as well, and to be fair many of these designs are quite interesting as well. But in keeping with the heterogeneous nature of the personal computing market—Android + Chrome OS + Mac + iOS + Windows—HP is pushing beyond Windows in a major way. This is even bigger than its short-lived dalliance with Web OS. It is a fundamental shift, as Whitman says. An inevitability.
Microsoft may have had no choice when it came to Surface. It no doubt saw the shifting market dynamics and realized it, too, needed to change since everything was changing. But in competing with its bigger partner, Microsoft has also uncorked the genie, probably for good. And it will be interesting to see what this company—and others like it, including Lenovo—will do to hasten the decline of Windows by so thoroughly embracing alternatives.
Make no mistake, this is outright war. War against Microsoft. Against Windows. And against the PC.