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HP's Metamorphosis: 5 Winners & Losers

Microsoft analyst comment has been added to this story.

PALO ALTO, Calif. ( TheStreet) -- The shock waves from HP's (HPQ - Get Report) massive corporate restructuring are reverberating around Silicon Valley.

By looking to spin off its PC business, ditching its WebOS hardware and shifting its focus firmly away from consumers, HP's bold moves could have a major impact on a host of tech heavyweights.

HP's PC buddies such as Microsoft (MSFT - Get Report) and Intel (INTC) and rivals like Dell (DELL - Get Report), IBM (IBM - Get Report), Cisco (CSCO - Get Report) and Research In Motion (RIMM) will all be watching the company's shape-shift with great interest. For most, this could spell new revenue opportunities.

Microsoft

The bit of good for the Windows purveyor: The decision to ditch WebOS hardware removes a pile of non-Microsoft software-running consumer devices from the market.

The bad: HP's spinoff plans reflect a stagnating PC market, which has always been key to rolling out yet another successful Windows OS refresh cycle. A bad scenario for Microsoft would be if HP's PC unit gets picked up a company that would shift its focus away from Windows. HP, after all, is the largest PC player in the world.

Any number of companies could potentially grab HP's PC operation. Asian giants Acer, Toshiba, Samsung and Lenovo, which bought IBM's computer business in 2005, could be acquirers. Then there's Google -- what if Google decided that it wanted to further stake its claim in the gadget market? Far-fetched though it may be, a Google deal would pose a big challenge to Microsoft.

The weakening PC market also ups the pressure on Microsoft's yet-to-be-launched Windows 8, the mobile device platform that faces two heavily-entrenched market leaders: Apple's iOS and Google's (GOOG) Android.

" Microsoft has already bet the company on Windows 8," said Al Hilwa, a software analyst at IDC. "With Windows 8, Microsoft is trying to pull its PC OS into the mobile world."

And as Hilwa points out, a weakening PC market isn't necessarily new news to Microsoft. "To be honest, this is much more positive than negative for Microsoft ," he said, adding that HP's move away from PCs partly validates Microsoft's partnership with Nokia (NOK) in the growing smartphone space. " HP's decision doesn't tell Microsoft anything about the PC market that they didn't know."

Dell

Dell, of course, is most obvious beneficiary of the HP spinoff. As the No. 2 PC maker, Dell is expected to capitalize on the uncertainty that now surrounds HP's vast computer business and increase its footprint even further.

"We expect HP's Personal Systems Group to lose market share to Dell and others as the decision-making process is expected to take 12-18 months," said Jayson Noland, an analyst at Robert W. Baird, in a note released on Friday.

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DELL $0.00 0.00%
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IBM $173.97 0.17%
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