HP, the world's largest PC vendor, this week said it would look at "strategic alternatives" such as the sale or spin-off of the PSG unit, which deals in PCs and mobile devices. Slow PC sales and their razor-thin margins are seen as a drag on HP as it emphasizes more profitable business areas such as enterprise software, services and hardware.

PSG is valued at around US$8 billion, said Shaw Wu, a financial analyst at Sterne Agee. The unit brought in $9.5 billion in revenue during the third quarter of fiscal 2011, a decline of 3 percent compared to the same quarter last year. HP's total revenue for the quarter was $31.2 billion.

HP's first order of business is discontinuing sales of webOS devices such as Pre and Veer smartphones and the TouchPad tablet, which have failed in the marketplace. Rather than wait out development of webOS software and related hardware, HP decided to cut its losses and move on to more profitable opportunities. Meanwhile, PC sales have buckled under the pressure of successful tablets such as Apple's iPad, signalling a major shift from traditional computing models, said HP's CEO, Leo Apotheker.

HP is emulating IBM, which sold its PC business to Lenovo in 2005 to focus on the higher-margin software and services business. Dell would remain the only major U.S. PC maker if HP's PC business is sold to a company outside the U.S. HP was the world's top PC maker with a 17.6 percent market share during the second quarter of this year, followed by Dell, which had a 12.5 percent market share. HP shipped 14.8 million PCs during the quarter, growing slightly from the year-ago quarter.

HP may have a difficult time finding a buyer for PSG as the PC market is a different place now from when IBM sold its business to Lenovo in 2005, said Cassandra Mooshian, an analyst at Technology Business Research.