HP on Monday launched the low-cost Windows alternative to Chromebox - the HP Stream Mini PC - at $180 (approximately Rs. 11,500), complete with a bundled keyboard and mouse.
Alongside, the company has also introduced the Pavilion Mini PCs starting at $319.99 (approximately Rs. 20,000) with the Intel Pentium CPU, and $449.99 (approximately Rs. 28,000) for the Intel Core i3 model.
Both - HP Stream Mini and HP Pavilion Mini - come with Windows 8.1 and will be available via the company's online store in the US from January 14, and through some retailers beginning February 8.
On the lines of Mac Mini and Chromebox, the HP Stream Mini is compact machine with a height of roughly 52.3mm and a weight of approximately 0.72kgs.
The HP Stream Mini packs an Intel Celeron 2957U (1.4GHz, 2 cores, 2 threads), 2GB of DDR3L (1600MHz) RAM and 32GB SSD storage.
The Intel Pentium-powered specifications of the HP Pavilion Mini PC include a 1.7GHz Pentium 3558U CPU, 4GB of RAM, and a 500GB 7200RPM hard drive. The other Pavilion Mini packs a 1.9GHz Core i3-4025U CPU, 8GB of RAM and a 1TB 5400RPM hard drive.
Additionally, HP is offering free 200GB of Microsoft OneDrive storage for two years, and a worth $25 (approximately Rs. 1,800) gift card that can be used at the Windows Store to buy apps, music, and even Xbox One games, says company.
Connectivity options on the HP Stream Mini and HP Pavilion Mini include Ethernet port, four USB 3.0 ports, integrated Wi-Fi 802.11n, Bluetooth 4.0, SD card reader, audio jack, DisplayPort 1.2 and an HDMI 1.4 port.
In the aftermath of the financial crisis, investors bet on companies that seemed too big to fail. Even if a business wasn’t growing at breakneck speed, there was safety in large numbers; the more sales the better, it seemed.
So in 2011, when Hewlett-Packard hastily announced a plan to break in two, investors balked. Separating HP’s personal computers unit from its enterprise products and services seemed a risky bet that could leave both halves vulnerable. That plan was shelved, and the chief executive who proposed the split was summarily dismissed.
But today, stock market investors are betting on companies with tightly focused visions. Too many divisions are seen as a distraction for management. And activist investors are eager to take small stakes in big companies and call for breakups, betting that profit will follow.
So when HP announced on Monday that it would split in two, essentially reviving the 2011 plan, shareholders rejoiced. HP’s stock jumped nearly 5 percent, and virtually no one questioned the decision.
In announcing a plan to break itself apart, HP is following a trail blazed by other technology companies, including eBay and IBM. And in bowing to investors’ appetite for simplicity, HP is signaling that the wave of spinoffs and divestitures shaking up Silicon Valley may just be getting started.
“During the financial crisis shareholders rewarded size, sales and diversity,” said Chris Ventresca, co-head of global mergers and acquisitions at JPMorgan Chase. “Now they don’t feel like they need the safety net of larger scale. Companies are healthier and stronger. That gives boards the confidence to take a harder look at their portfolio.”
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Just last week, eBay announced that it would spin off its PayPal unit into a separate publicly traded company, giving in to the wishes of the activist investor Carl C. Icahn. That move follows eBay’s sale of its Skype Internet phone service a few years ago.
IBM, for its part, routinely sheds big units that no longer fit with its strategy. It recently sold its low-end server business to Lenovo, the Chinese company that acquired IBM’s personal computer business nearly a decade ago. EMC, a big data storage company, is under pressure from activist hedge funds to divest itself of its stake inVMware, a valuable virtualization company. Some analysts even want Microsoft to break into different companies focusing on software, video games and search.
The shift in investor sentiment is already leading to upheavals well beyond the technology industry. A flurry of spinoffs and divestitures has reshaped the media industry in recent years, thanks in part to a seller’s market. Other companies and private equity firms are eager to acquire good businesses, and investors are willing to buy stock in new companies.
“Companies have lots of choices right now,” Mr. Ventresca said. “They can sell because buyers are hungry. And they have the opportunity to do something like an initial public offering because the markets are healthy.”
Time Warner has whittled itself down to the core, creating a streamlined television and movie studio group. In recent years, it has spun off AOL, Time Warner Cable and Time Inc., its magazine businesses.
Rupert Murdoch split News Corporation in two, spinning off its movie and television assets into a new company called 21st Century Fox. Gannett, the publisher of USA Today, announced in August that it was shedding its newspaper assets to focus on its television operations.
Three of the biggest industrial companies are also slimming down. DuPont, under pressure from the activist investor Nelson Peltz, said last year that it would split in two. And while Dow Chemical has resisted calls from another activist investor, Daniel S. Loeb, to split itself in half, it continues to divest itself of smaller business lines.General Electric spun off its retail finance arm in July and sold its appliance business in September.
Consumer goods and pharmaceuticals companies have joined the fray. Procter & Gamble is selling more than half its brands. The drug maker Abbott Laboratories spun off AbbVie in 2013, creating two enormous health care companies.
And still, the cleaving in half of HP is among the most attention-getting splits to date.
The Hewlett-Packard Split
Hewlett-Packard’s decision to split in two would produce two publicly traded companies of approximately the same size.
Approximate annual revenue, in billions*
HEWLETT-PACKARD ENTERPRISE
Specializing in business technology, including computer servers, data storage equipment, software and services.
Enterprise
group
Enterprise
services
Software
TOTAL
$58.4
$28.0
22.8
4.1
3.5
Financial services
HP INC.
Specializing in personal computers and printers.
Personal systems
Printing
TOTAL
$57.2
$33.7
23.5
HP was founded 75 years ago, when two friends from Stanford University, William Hewlett and David Packard, began making audio equipment in a garage. The company grew to become the largest maker of personal computers in the world, a major supplier of printers and ink and a big provider of servers, software and supplies for other businesses.
When Meg Whitman took over HP in 2011 after the failed tenure of Léo Apotheker, she inherited a troubled company that lacked focus and had lost some of its financial muscle.
“HP was under acute pressure,” said Peter Burris, an analyst atForrester Research. “They had a hugely complex portfolio. The balance sheet had degraded a bit over the last 10 years.”
Ms. Whitman announced job cuts, refocused the business units and cleaned up the balance sheet. Those moves allowed her to revive the idea of a split with a measure of confidence that shareholders would cheer the idea.
“A move like this a few years ago might have looked like a fire sale,” Mr. Burris said. “Now, this move improves its focus, simplifying some of the complexity.”
Ralph V. Whitworth, the activist investor who gained a seat on HP’s board, hailed the split on Monday as a victory for shareholders, a reminder of the degree to which the decision was motivated by financial concerns.
The separation is “a brilliant value-enhancing move at the perfect time in the turnaround,” Mr. Whitworth said. “Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates.”
The separation of HP Inc. (the computer and printers unit) and Hewlett-Packard Enterprise (the business products and services division) does not mean each company will not grow. Both could be in the market for deals after the split is complete, or possibly even before.
HP held talks with EMC earlier this year, and a deal between the companies is still on the table, according to people briefed on the matter. And HP Inc. might be able to acquire smaller personal computer or printer companies, or could be a target itself.
There will be risks for both companies too. HP Inc. and Hewlett-Packard Enterprise will now have to fend for themselves. While both companies will be big, neither will enjoy the same sort of safety in numbers that investors valued during the financial crisis.
“It doesn’t make all the challenges go away,” Mr. Burris said. “Their successes or failures will be much more transparent. They won’t be able to hide their struggles anymore.”
Why is the Chromebook doing so well in the US commercial channel? In a word, schools.
"In [those] channels they appear to be primarily an education product," NPD analyst Stephen Baker, said in response to an email query.
Chromebooks are also gaining outside of education. "They are doing very well at retail [too]. They represent about 5 percent to 7 percent of retail notebook sales (about 25 percent of all under $300 ASP retail notebook sales)," Baker said in an email message.
The NPD report goes on to say that the Chrome OS "has become a legitimate third platform," challenging both Windows and Mac OS X (and iOS).
But the Windows market is the main target because it's the biggest with the most to lose. Why? Chromebooks offer a traditional Windows clamshell design at a very low price -- often below many competing Windows laptops. And they're offered by the very same companies -- HP, Dell, Acer -- that sell Windows laptops.
Don't think Microsoft is just a little bit concerned? Think again. Dell, a major purveyor of Windows laptops, said this week that it had to halt sales of its Chromebook because it couldn't meet demand.
Here's what Dell said to CNET in a statement: "Due to strong demand, the Dell Chromebook 11 is currently not available for order on Dell.com. It continues to be available for our Education customers and can be ordered through their sales representative. We will offer it for sale again on Dell.com as soon as possible."
So, Microsoft is worried. Worried enough to dedicate a Web page to explainingwhy you should opt for an inexpensive Windows laptop over a Chromebook.
To wit:
"A Windows laptop is for...getting things done with Microsoft Office, connecting to workplace networks, using rich tools to edit your photos and videos online and offline, calling your friend in Paris with Skype... organizing your files on your laptop for easy access even when you're offline, playing Halo, working both online and offline, using iTunes and Photoshop, and countless other things you get only with a full-powered PC."
And price, as usual, is very important. Chromebooks start at $199. Microsoft responded to that challenge this week.
Microsoft COO Kevin Turner addressed this issue at the company's Worldwide Partner Conference, showing off Stream, a $199 HP laptop running Windows 8.1 that will be available this holiday season to challenge the Chromebook. Other products will likely follow.
Speaking at a technology conference this week, Hewlett-Packard CEO Meg Whitman said she is surprised by the appeal of the Chromebook.
"Chromebooks have surprised us in the breadth of their field. It is not just education, it is small business," she said, in response to a question at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco on Monday.
"It's a broader appeal than I originally anticipated or we anticipated that it would be...it does appear there is a real life to Chromebook in the small to medium-sized business and even in [corporate] enterprise," she said.
"There are some groups...[who] do not need Windows backward compatibility in their laptop," she said. "So I'm convinced this multi-OS, multi-architecture, multi-form factor strategy is the right one for us and we are going to follow the market...and try to be the leading provider there on the commercial side," she said.Also, related to these comments -- and what could be interpreted as not-so-good news for Microsoft -- she reemphasized HP's strategy to expand beyond Windows.
NPD analyst Stephen Baker agrees about the fragmentation of the market.
"The fragmenting of the market into multiple OSes, processor technologies, brands and channels...is ongoing and the success of Chromebooks is precisely because this fragmentation has opened the space for them to find their niche," he said, in response to an e-mail query.
HP currently sells the Chromebook 11 and Chromebook 14, priced at $279 and $299, respectively.
Both 11- and 13-inch versions will sport a Samsung Exynos 5 Octa chip and the 13-incher will offer, for the first time, a high-resolution 1,920x1,080 display.
