Hewlett-Packard's bewildering strategy shift

If Google can turn itself into a potential cell phone manufacturer, it seems anything's possible in the innovation business. Nevertheless investors and analysts alike are scratching their heads over Hewlett-Packard's recent strategic move.

The white flag

HP in substance waved the white flag and ceded the rapidly-evolving personal computing business to Apple when it announced Thursday it might jettison its consumer hardware division and scrap its poorly-selling mobile product line in order to focus on business services.

Investors at first gave the deal a big, fat thumbs-down, sending the tech giant's stock price down 20 percent Friday morning. Nevertheless analysts are divided over the strategic move, which at first drew comparisons with IBM's decision to dump its consumer hardware business a decade ago. Since at that time Big Blue has made huge strides focusing on enterprise data, services and cloud computing. So the services business is a sweet spot right now, yet other analysts see HP's move as just the latest gyration in a series of confusing, ill-fated moves for the venerable tech company.

Management scandals and the departure of CEO Mark Hurd last year near overshadowed the company's $1.2 billion acquisition of Palm last spring. Now, the reversal of its significant hardware investments looks like capitulation. Though its WebOS garnered critical praise, the devices running it had no market traction, and HP faced a future of playing catch-up not only to Apple however to a newly-aggressive Google.

But analysts who take a longer view say HP's change of direction could work out. Leo Apotheker, the company's new CEO, has a background in the software-as-a-service business, and HP already has a footprint in this field.

It's too early to tell if the hardware side of the business will be taken private or absorbed by a competitor, however most analysts think HP is going to keep its WebOS platform and license it to other phone and tablet manufacturers who are leery of Google's move into the hardware space in short are seeking an alternative to Google's Android operating system for mobile devices.

If Android stumbles, other operating systems are available, and HP's WebOS is seen as a contender in that market, notes Roger L. Kay, president of Endpoint Technologies Associates.

The company left the tablet marketplace to Apple

So though the company left the tablet marketplace to Apple, it would do so then to take a page from Steve Jobs' playbook of iron-fisted control when it comes to disseminating information.