HP’s decision to split in two spells good news for the
company’s customers, according to analysts, while
reshaping the stagnant PC market.
“They are going to maintain that focus on the HP brand,”
Beau Skonieczny, an analyst at Technology Business
Research, told FoxNews.com. “It’s a positive move."
Brian White, an analyst at Cantor Fitzgerald described
the split as “a bold and smart move” in a note released
on Monday, giving HP both greater focus and flexibility.
The Palo Alto, Calif.-based tech giant announced
Monday that it is dividing into two separate companies.
HP Inc will focus on personal systems, such as PCs and
printing products, while HP Enterprise targets software,
services, and technology infrastructure such as servers
and storage hardware.
The firm’s current logo will be retained by HP Inc.
While the PC market lacks the growth of, say, mobile devices, Skonieczny believes that HP’s split will help it drive some innovation. In its statement, the company touted 3D printing and “new computing experiences” as key elements of HP Inc. There's a fundamental misconception going on with all of these analysts-- equating HP Inc. with nothing but PCs, saying for example that the PC market lacks the growth of say, mobile devices is like noting that cars don't sell as well as trucks, but Toyota could never build a truck since they're the top car manufacturer.
Part of a five-year turnaround plan launched by HP
CEO Meg Whitman, the split aims to make the
separate entities nimble enough to challenge in
fiercely competitive markets. “By transitioning now
from one HP to two new companies, created out of
our successful turnaround efforts, we will be in an
even better position to compete in the market, support
our customers and partners, and deliver maximum
value to our shareholders”, said Whitman.
HP’s multiple tablet offerings, however, still face a tough battle against Apple’s iPad, although the company has made some moves into the wearable space, forging a smartwatch partnership with designer Michael Bastian. A note on the company’s website says that the HP Smartwatch is coming soon. A small bone to throw out here...
Whitman will be CEO of HP Enterprise, while Dion
Weisler, currently executive vice president of the
company’s Printing and Personal Systems Business,
will lead HP Inc. HP expects to complete its split by
the end of October 2015.
There has also been plenty of chatter that the split
makes it easier for HP to sell off parts of its business.
Skonieczny told FoxNews.com that he expects to
see fewer and fewer players in the PC market during
the coming years, citing Samsung’s increasing focus
on mobile and Sony’s sale of its VAIO PC business to
investment firm Japan Industrial Partners earlier this
year. Last month Toshiba announced plans to shift its
PC focus from consumers to businesses.
Tech heavyweights have been adapting to shifting
trends in the PC market for a number of years. IBM,
for example, sold its PC business to Lenovo in 2004.
Tech research firm IDC recently predicted that world-
wide PC shipments are expected to fall by 3.7% in 2014,
an improvement from a previously forecast 6% decline.
IDC’s research noted that PC shipments in emerging
markets remain constrained thanks to competition from
“alternative devices” as well as political and economic
issues. However, more mature regions are expected to
enjoy 5.6% year-over-year growth in PC shipments,
according to IDC, the highest since 2010.
How can these articles be written without reading the data behind them--HP has a 60% to 80% share of dealer channel printers, and 85% of the profits of HP Inc. will come from ink all by itself. The way to think of this is that HP Inc. will now have all of the dealer channel products; HP Enterprise will have the captive sales force. No one has mentioned that. The dealer channel will have wearables, tablets, Google glasses, inference engines on your wrist, smart products for your car. Not a bad place to have a 'sugar daddy' funding the operations like the ink business, even if 'mature.' Worth mentioning? This is a bigger monolithic giant than any single product company on the globe except maybe Boeing's planes, with much better margins.
Chuck House, shown here with son Warren, is co-author with Raymond Price, of THE HP PHENOMENON: INNOVATION and BUSINESS TRANSFORMATION (2009, Stanford University Press). He is Exec Director of InnovaScapes Institute, which published his memoir of HP Colorado Springs, PERMISSION DENIED, in 2013. House, Chancellor Emeritus of Cogswell Polytechnical College, was also executive director of Media X, Stanford University's research program on innovation, media and technology. Previously director of Intel Corporation’s Virtual Collaboratory, EVP R/D at Dialogic, President of Spectron Microsystems, SVP at Veritas Software and Informix Software after 29 years at Hewlett-Packard in a wide variety of roles. An IEEE Fellow for Logic Analysis technology, he also was President of ACM, the world’s largest Computer Science society, and is an ACM Fellow. He holds HPs only Medal of Defiance, awarded by David Packard for "extraordinary contempt and defiance beyond the normal call of engineering duty". Other awards include Engineer of the Year, Smithsonian Wizard of Computing, Top 50 inventions of 20th century, CNN top 25 inventions of past 25 years, Intrapreneuring Honor Roll