Sunday, April 17, 2011

iPad shakes Hardware Industry

The biggest force for change in Silicon Valley's hardware sector last year was a new kind of computer that many people had never imagined before: The smash debut of Apple's (AAPL) iPad tablet sent shock waves across the hardware industry, which accounts for more revenue, profit and employees than any other tech sector.

While revenue and profit rose for the sector as a whole, sales of Apple's new gadget, introduced in January 2010, helped drive up Apple's revenue 63 percent and profit by a stunning 78 percent. As the Cupertino company's stock price rose 53 percent, Apple passed Microsoft to become the world's most valuable tech company, by market capitalization.

The iPad also symbolized a broader revolution: As competitors scrambled to introduce their own tablets, the industry confronted the prospect of a post-PC world, where many consumers and workers are using Internet-connected tablets and smartphones instead of desktop or notebook computers.
"People are thinking twice about using a PC," said George Shiffler, an industry expert at the Gartner research firm.

PCs are still a major business, especially for Hewlett-Packard (HPQ), the world's biggest tech company in sales and the valley's biggest in employees. But HP made a strategic move last year to buy smartphone maker Palm, acquiring a well-regarded software platform that HP hopes will lure buyers to its own tablets and phones as well as printers and PCs.

Palo Alto-based HP also faced challenges in the commercial tech market, where former allies Oracle (ORCL) and Cisco Systems (CSCO) now sell their own servers and computer systems. HP increased its share of server sales around the world, while expanding in new areas such as data storage and computer security.

While its sales and profits increased, HP's market value fell 29 percent last year; the stock plunged after the resignation of CEO Mark Hurd last summer. Under new CEO Léo Apotheker, the stock has started to recover.

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