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HP Considering Quitting Laptop Business Altogether?

In a move reminiscent of what Big Blue did back in 2005 with Lenovo, HP is reportedly looking to exit the ultra competitive laptop market altogether with Samsung being the favourite to take over the business.

The report, which originated from Chinese newspaper Commercial Times, said that Lenovo, which bought the ailing IBM PC business for $1.75 billion, and Foxconn Electronics, one of the biggest OEMs in the world, are also in the run to bag HP's laptop business.

Ironically, shares of Foxconn (as well as Quanta and Inventec) fell because all three supply HP with notebooks and other equipments; such a move would be devastating for the trio since it would spell a period of uncertainty.

A source close to the deal says that Samsung Electronics is likely to win the bid because of its much stronger financial situation, having been recently boosted by a $7.8 billion deal with Apple over components (ed : Conspiracy theory?).

The Korean chaebol is said to be looking forward to ramp up its laptop production to rival the likes of Acer, Toshiba and Lenovo; acquiring HP's laptop business would help it improve its global reach and reduce its dependency on third parties.

Even if laptops currently account for a fifth of HP's total revenues which rose to $32.3 billion for the first quarter of 2011, the Personal Systems Group saw a drop of one per cent overall with notebook sales falling by five per cent; shares of HP fell by more than one per cent since this morning.

HP, whose tag word, is "invent", may be looking to reinvent itself by becoming an IT services company not unlike archrival IBM. This entails moving away from its traditional printers, inks and desktop roots towards something else.

The acquisition of 3Com, Palm and a slew of services, software adn enterprise companies over the past five years shows that the transformation process may have been going on for nearly a decade, ever since it acquired Compaq in September 2001.