HP CEO Leo Apotheker made a dramatic announcement on Thursday that it was investigating a spin-off of its PC, tablet, and smart phone division. The move, it said, would allow the company “to put an emphasis on enterprise, commercial and government markets.” With the new emphasis on business-oriented software, HP also announced that it was purchasing the British company Autonomy Corp. for $10.2 billion.

The move is being seen as an admission by HP that it cannot compete against the two smart phone giants, Apple and Google, particularly now that Google has acquired Motorola. Bloomberg News adds that the PC business was never a high priority at HP, despite the firm’s firm standing in that market. The Guardian notes that, “PCs are now like shoes or shirts or lightbulbs or vacuum cleaners or plastic geegaws: they’re commodity items that can be more cheaply made in China.”

Now the question is who will buy HP’s line. Apple has its own manufacturing division, and Google just acquired Motorola, but has not shown any interest in manufacturing PCs. One possibility is Dell, but they may hesitate because of the shrinking PC market in the U.S. and Europe. Another contender could be Lenovo, the Chinese company that bought IBM’s PC business in 2005. China is the largest emerging market for PCs, and this could give the company a chance to dominate that market. Acer, another major Chinese manufacturer, could also benefit from the sale, and pose a serious challenge to Lenovo.

As for HP, the new direction it is taking will put it into completion with both IBM, which long sold off its PC division, and archrival Oracle. Apotheker will now have to prove that HP has what it takes to compete with them.

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