Strategically, there are also major long-term question marks hanging over HP. In particular, Whitman needs to crank up the innovation engine. One of Silicon Valley's original trailblazers, HP has been criticized for falling behind the likes of Apple (AAPL) over the last decade.
"The longer-term challenge for HP is
HP's attempts to drive innovation should include the critically-acclaimed WebOS mobile operating system, according to Wu. The raft of controversial changes announced by Apotheker in August included ditching hardware based on WebOS, spelling the end for HP's TouchPad tablet.
The Palo Alto, Calif.-based company should, however, rethink its WebOS strategy, says the analyst, echoing concerns that HP is relinquishing one of the most potent weapons in its arsenal."While it may be costly, we believe HP should at least give its WebOS operating system a fairer chance at success before deciding to pull the plug," he explained. "The alternative the company should also seriously consider is to sell WebOS to a leading mobile device maker like Samsung, HTC, or Amazon (AMZN - Get Report), who may make better use of the technology." HP's chairman Ray Lane has already said that the company can make money out of WebOS by licensing it out to third parties, although precise details on the future of the technology have not yet been revealed. Boosting HP's business around high-margin areas such as software and services, is another huge challenge, with HP desperate to emulate the success of arch-rival IBM (IBM - Get Report). The $11 billion purchase of U.K. data analytics software specialist Autonomy will play a part in this effort, although the new CEO must also make sense of Apotheker's somewhat muddled strategy around cloud services and connectivity. Critics of HP's latest move warn that it will be even more difficult for Whitman to boost margins with the PC business in tow. "We don't view this decision
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