Why HP Won't Sell Its PC Unit

Wall Street Journal CIO Network HP CEO Meg Whitman

HP CEO Meg Whitman says shes not selling off chunks of the company—particularly not its PC business.

During today's earnings conference call, Wall Street analysts asked Whitman about its fate. (Her predecessor, Léo Apotheker, had unveiled plans in 2011 to sell or spin out the PC unit—plans HP later abandoned.)

Whitman replied, "We have no plans to break up the company."

The speculation stems from HP's own 10-K annual report SEC filings to which it added this statement: "We also continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives."

That sentence set off a speculation that HP would spinning out or selling off its PC business. But HP isn't going to do that for three reasons.

• HP wants to play in the whole computer market—from "the data center to the device," Whitman said.

• It sees PCs as a way to sell more of its other wares, like security software.

• A large PC business helps HP keeps costs down for other products because of what Whitman calls device "convergence."

PCs and servers increasingly use similar, if not the same, components. Servers are being built on chips designed to run smartphones and tablets.

In fact, HP is betting heavily that a new server, codenamed Project Moonshot, that's built on an Intel Atom chip originally designed for mobile devices, will be a big hit.

Moonshot is part of a bigger trend to build powerful servers that use less energy and take up less space than traditional ones. (Companies like Calxeda pioneered the concept.)

HP has already recieved its first big order for Moonshot servers from a customer in Japan, Whitman said. She expects Moonshot to become a major hit for HP in 2014.