Sometimes what people don’t say is as significant as what they do. One of the most urgent problems facing HP CEO Meg Whitman as she works to gain the trust of the financial markets and build a future for the vendor is what to do about its end-user and consumer devices. So far she has allowed this group to drift, and it is floating right into obsolescence. And in the two-and-a-half hour opening Keynote session at Tuesday’s HP Discover 2013 Barcelona, HP PCs and tablets got exactly one sentence, and even the still very successful office printer group got only one paragraph, which seems to signal that the front office neglect will continue.

What the PC/mobile group needs is a major shakeup and possibly a change of leadership, and it needs it now. The other alternative would be to sell it as soon as possible, if HP can find a buyer. Of course the last CEO to try that was fired by HP’s board, and in any case that would all but end HP’s presence in the consumer market and cut off a valuable communications conduit to its business end-users.

Two problems

HP has two problems with its PC group. First, it still treats the consumer and business markets as separate. They are not, and consumer is driving the business end-user market today rather than the other way around. With BYOD, end-users have taken control of their own hardware, and HP needs to completely change its end-user market strategies based on that fact.

The specific problem is that HP treats the mobile market as if it were a clone of the desktop. Its strategy is to sell its tablets to its corporate customers’ through the same IT purchasing groups that buy PCs. But BYOB means that if HP wants a significant piece of the mobile market it needs to sell its tablets to consumers who are in many cases also employees. It needs to design tablets to appeal to consumers at prices that they will find attractive, and it needs to sell them aggressively. And it needs a smartphone. It should either develop one internally or buy an existing manufacturer.

Second, it needs to understand that PCs and laptops are a shrinking market. Quarterly consumer laptop and desktop sales have been shrinking quarter-to-quarter for two years in the face of increasing competition from tablets. In the corporate market everybody I have talked to in the last six months has reported growing strong interest in virtual desktops from clients. Chances are very good that we will see a major trend toward VDI starting early in 2014, as ITOs go into their new budget year.

This trend is driven in large part by BYOD. VDI is the best way for IT to deliver a full range of business services to a large and increasingly diverse population of end-user computing devices while securing sensitive business and customer data back in the data center where it can’t be stolen with an employee’s tablet or laptop. This will be good news for HP’s server and storage groups, as those companies that elect to build VDI in house will need hardware — especially flash storage — to support the new environment. But it is bad news for PC sales because those companies will fund their VDI build-outs in part by moving users to low-end laptops and desktops, in some cases dumb terminals, as the compute and storage move back into the data center. That means that the sale of the most profitable high-end PCs will start declining as VDI is rolled out. This will probably happen first among SMBs, many of which will turn to a combination of desktop-as-a-service and SaaS, which will support a fast conversion. But eventually it will reach big corporate offices as well

Building a strategy

So what does HP need to do? First it has to make up its mind — does it want to stay in the end-user computing market? This is Whitman’s call. If the answer is no, then it should cut spending on R&D on its PCs, laptops, and tablets, treat them as cash cows, look for a buyer, and invest the money in other parts of the company. That is a valid strategy, although HP watcher and SiliconAngle CEO John Furrier argues persuasively that it is not the optimal path. And I agree.

The other strategy is to turn the situation around. To do that HP management has to realize that mobile, not PCs, drive this market and that consumers, not ITO drive mobile. That means that HP needs to create distinctive products and back them with a strong marketing campaign that makes consumers want HP, rather than Samsung, Apple, or Microsoft mobile devices.  It can start by offering discounts on its tablets to employees of its corporate customers.

It needs to realize that one size often does not fit all. Mobile devices are very personal. And it needs to be realistic. Today the mobile markets are dominated by Apple, Samsung, Amazon, and to a lesser extent Microsoft. But these are still immature growth markets. A company with a compelling product, access to consumer sales channels, a strong marketing campaign that distinguishes itself from the competition, and a long-term commitment can still capture a respectable market share. But every day that goes buy while HP drifts in this market is a day lost. It needs to start acting like it wants an end-user device business or others, including Microsoft, will be glad to take it away.

Watch Meg Whitman’s keynote at this years HP Discover.