This. IBM had other things to bring to the table so it made sense to get out of the brutally competitive PC business. What else does HP have?
They do have a good enterprise lineup, but that is increasingly under attack from players like Cisco. I think the personal systems group accounts for something like 1/3 of their revenue (I think I saw $41 billion IIRC) and while the margins might be small, they aren't losing money on it to my knowledge and it serves as a pretty solid foundation.
As pm said, HP is probably one of the few companies in the world that could have challenged Apple in terms of design aesthetics and value add and therefore, maybe increased their margins in the PC business. One key difference which may not have been mentioned, however, is that PCs are heavily commoditized and competition is very tough, and that isn't a problem Apple has to face with Macs. If I want a Mac, I have to buy from Apple; if I want to buy a PC, I have dozens of choices and if HP's value add or aesthetics add too much to the cost, most will probably shop elsewhere because at the end of the day, they want a box which runs software. Apple does not face this problem with the Mac.
Senseamp makes a good point as well -- what does HP want to be when it grows up? I was an employee at Compaq when the HP/Compaq merger was announced. Let me tell you, more than a few of us were baffled and if anything, we thought Compaq should be the one calling the shots in the merger because the primary stated reason for the merger (to battle Dell) was something the Compaq side of the house was better equipped to do and in fact, once the merger was completed, the business products which remained (PCs, laptops, Intel servers) were ALL Compaq products. The HP Vectras, Omnibooks, and Netservers were all discontinued very quickly. Basically, the merger combined the two separate corporate customer bases of HP and Compaq and allowed Compaq's products to spread into HP's customer base. All HP brought to the table was the printer/imaging business and the HP Unix business and those servers. Not insignificant at all, but not integral to the main purpose of becoming the world's largest PC maker.
As it turned out, the merger DID accomplish the goals set forth by Fiorina at the time; however, it took many years and was costly from both a financial and human perspective. Years and years later, the overall opinion of the merger did start to shift and people looked more favorably on it despite the issues above. And now, Leo Apotheker wants to throw all of that away. Leo was a bad hire to begin with, and as one article stated, he has completely lost control of HP in less than a year. It may all work out in the end, but I am singularly unimpressed with him.
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