Analyst: Windows 8 may not be enough to save HP

HP is in trouble, and the company can't rely on Windows 8 -- whether installed on desktop, notebook, tablets, ultrabooks, or convertibles -- to help dig itself out of the deep hole the company is in.

As HP prepares itself for a tough 2013 , the company cannot count on Windows 8 to help smooth the way. 

This warning comes from Sterne Agee analyst Shaw Wu, who has downgraded the company from a buy to neutral rating amid fears that the things could be worse for the electronics and services giant.

"After spending more thought post its analyst day where the company surprisingly lowered its FY13 outlook more than expected," writes Wu. "We have lower confidence in its turnaround strategy". He predicts "further downside surprises" to HP's core PCs, printers, services, and enterprise hardware businesses. 

While many PC OEMs are hoping that Windows 8 -- due to hit PCs around the world on October 26 -- will help to boost flagging PC sales, Wu believes that it is far too premature to start celebrating. First, Wu points out that the PC business as a whole is facing encroachment from lower-cost mobile devices such as smartphones and tablets. HP specifically will face stiff competition from the likes of Asus, Acer, and soon-to-be market leader Lenovo.

Another obstacle facing HP specifically -- but also PC OEMs in general -- is confusion over which of the new Windows 8 inspired form factors will sell. The influx of Windows 8-powered tablets, ultrabooks, and convertibles suggest OEMs confidence in the new platform, but these are entirely unproven.

HP has already showcased a number of Windows 8 PCs, including four new 'All-in-One' systems ranging in price from $1,299 for the HP Spectre One, to $499 for the Pavilion 20.

Then there's pressure from Apple's iPad, which has already been out for several years, sold millions of units, and is already widely used in enterprise environments. It is unclear whether Apple's 70 percent dominance of the current tablet market leaves an opening for Windows 8.

Concerns have been raised by Raluca Budiu, a user experience specialist with Nielsen Norman Group, that the new Windows 8 user interface -- previous called Metro but now renamed Modern UI by Microsoft -- is "confusing" and imposes "a cognitive burden" on users . This claim alone should act as a warning to anyone thinking of putting Windows 8 in the hands of thousands of users in an environment where you expect people to get real work done. Training costs could eclipse the costs of deploying Windows 8, and offset any savings that the new operating system might offer.

Image source: HP.

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