PC Market Stalls, HP Cuts 27,000 Jobs

by Jordan Richardson on May 24, 2012

In this era of smartphones and tablets, it’s hardly surprising that the personal computer market has been slowly decaying. Of course, tablets and smartphones are consumer gadgets that can be repurchased to a greater degree of frequency in comparison to the PC, but that hasn’t changed the fortunes of some industry giants.

Hewlett-Packard, the world’s leader in PCs, has announced layoffs of around 27,000 employees. That amounts to roughly eight percent of its workforce, the largest round of layoffs in HP company history.

HP made the announcement when revealing earnings for its second fiscal quarter, noting that the numbers were down from a year earlier.

Dell has also been impacted by the slowdown in the PC market, enjoying a 17 percent dip in share price after their earnings missed analyst expectations.

The task ahead for companies like HP and Dell is one of reinvention in a market that is notoriously fickle. World PCs have slowed as the products have become more ubiquitous, making the tablet/smartphone shift all the more pressing. Decades of growth in the sector meant decades of bounty for the likes of HP and Dell, but the shifting tide has left them unprepared and underperforming on the markets.

Consumers, says Scotiabank analyst Carlos Gomes, are more likely to spend on upgrading smartphones and tablets than they are to spend on upgrading their desktop units. “Tech is facing an accelerating shift from older technologies (servers, PCs, routers) to new technologies (mobile devices, sensors, cloud computing),” Gomes said. “Smartphone shipments overtook PC sales in the final months of 2010 and continue to advance in excess of 50 percent per annum.”

That’s not to say that there’s no growth to be had in the PC industry. Things are simply shifting, with one or two top guns in the sector pushing to the top and the rest sitting around the fluffy middle. According to data from Gartner, Lenovo and ASUS posted the biggest year-over-year shipment growth in the field (28 percent and 21 percent, respectively). HP saw 3.5 percent growth, while Dell saw decline.

For now, the focus is on cost-cutting for HP. This leads us back to the 27,000 layoffs, described by CEO Meg Whitman as necessary to help place the company “on a path to extend our global leadership and deliver the greatest value to customers and shareholders.” HP expects to save around $3.5 billion in the cuts and has slashed most jobs via offers of early retirement.

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Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSSTwitterFacebook, or YouTube.

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