Traditional Personal Computer

Traditional Personal Computer(PC) industry has been facing cut throat competition in last few years and the situation has worsened in recent times due to the growing market for substitute products. Profit margins have been declining due to commoditization of PC and is predicted to be like that in future so now major corporations are faced with this dilemma of how to make this business profitable and if not then should they consider selling it off. This is the issue that we attempt to analyze in this paper below.HP(NYSE:HPQ) was founded in 1939 by Bill Hewlett and Dave Packard and has its corporate headquarters in Palo Alto, CA. HP is the world's largest IT company, with revenue totalling $127.2 billion for fiscal 2011. Meg Whitman is the current CEO and President. HP's 2011 Fortune 500 ranking is No. 11.21 HP is broadly divided into three major divisions namely the Imaging and Printing Group(IPG), the Personal Systems Group(PSG) and the Enterprise Systems Group(ESG).The PSG division comprises of the PC business and is our primary focus for this paper. Recently it has been confirmed that the IPG division and the PSG divisions have been merged and the new group will be known as Printing and Personal Systems Group. HP has ranked as the largest PC manufacturer by volume since 2007. It has a strong brand, solid channel partnerships, an efficient supply chain and balanced sales across all regions, with consumers and professionals. But even this optimized operation has not delivered the profit that HP apparently wants. PSG's operating margin of 5% to 6% is the lowest of any HP business unit, although high by the standards of the PC market.