HCL halts new investments in computer hardware

HCL Enterprise has been one of the oldest players in Indian IT. The company currently has two subsidiaries—HCL Infosystems and HCL Technologies, both catering to two different business segments. HCL's outsourcing and BPO division comes under HCL Technologies, while the company's PC business is under HCL Infosystems. The company has been a PC manufacturer since the 1990s and at various points in history been referred to the largest PC maker in India. As of now HCL has netbooks and a below-par tablet in the market. Neither products should be bought and in fact shouldn't have been developed in the first place. As it turns out, HCL realizes this and based on their losses incurred last few quarters, the company has decided that they will not be making anymore investments in the PC business.

There has been a huge debate about whether the PC is dying, while the desktop seems to be on its way out at home; enterprises still use desktops. According to Gartner, PC sales in India are expected to increase by 17% in 2012 to 12.5 Million units. However, Gartner considers laptops to be PCs and therein lies an irony. Gartner's report cited a Tamil Nadu government order to distribute several tablet and PCs to school students as a reason for this growth. Funny enough, HCL won this order. The company says they are not exiting the hardware business in the traditional but won't be making any new investments in R&D and manufacturing.

Priyall Mandal writing for the Business Standard says the company will now be focussing on its telecommunication business which was for now limited to distribution of Nokia phones. The company will now expand this to distribute products from brands like Apple, SanDisk, Hitachi etc. An analyst believes HCL's expansion and reduction in computer hardware investments is collateral damage due to Nokia's decline. 67% of HCL Infosystems revenues came from Nokia's distribution and since the Nokia has started losing market and mind share, HCL will be impacted too; this is why the company is expanding its distribution portfolio.