Visit our other websites:    On CE    eSP    Mobile Channels    ECI news    rAVe Europe    Digital Signage News EMEA    iChannels

HP Splits in Two

E-mail Print PDF

HP confirms that, in further attempts to turn its fortunes around, it is splitting its personal computing and printer business from corporate hardware and services operations.

HP buildingThe move effectively creates two independent companies-- HP Inc, the PC and printing company, and Hewlett-Packard Enterprise, which covers servers, storage, networking, converged systems, services, software and cloud operations. HP CEO Meg Whitman will lead Hewlett-Packard Enterprise, while executive VP Dion Weisler is named HP Inc EO and President.

“The decision to separate into two market-leading companies underscores our commitment to the turnaround plan," Whitman says. "It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders."

Perhaps tellingly Hewlett-Packard Enterprise is the company getting the spotlight in the official announcement.

If the news is giving you a sensation of déjà vu, that's because this is not the first time HP considered a split from the PC business. After all, back in 2011 then CEO Léo Apotheker announced the Great Garage Sale, a plan to move HP away from the PC making business to the higher value enterprise solutions market by selling off the so-called Personal Systems Group (PSG).

Meg WhitmanAs we all know, Apotheker's plan was not brought to fruition though, as displeased shareholders ousted him after all of 11 months on the job. Replacing him was ex-eBay boss Meg Whitman, who declared HP was to keep the PSG after all, before merging it with the more profitable printer operation to create the imaginatively named Printing and Personal Systems Group.

"A separation would not create incremental shareholder return or customer value...PSG is core to HP's portfolio, and it makes strategic, financial, and operational sense for HP to retain it," Whitman said back then. "Specifically, PSG benefits from HP's global reach, scale, and innovation. It contributes significantly to HP's supply chain efficiencies,component pricing, distribution channels, and solutions portfolio."

However HP's fortunes have slid further during the past two years-- it even lost the crown of top global PC maker to Lenovo according to IDC, while analysts describe the HP services offering as mixed, even as the company stabs at the cloud and other such segments. As such HP says the split is actually part of a 5-year turnaround plan… even if the split sounds like mere paper over the cracks (even if it is the kind of paper that appeases Wall Street), rather than tackling the fact that HP's leadership failed to reinvent the company as an IT provider for the 21st century.

One also has to point out breakoffs and spinoffs are something of the "in" thing within the tech industry, spurred by a belief that leaner companies with a tighter focus perform better. Most recently Whitman's own eBay spun off its PayPal unit, apparently in retaliation to the entry of the likes of Apple in the payments business.

Go HP to Separate in Two Industry-Leading Public Companies