Sunday, October 5, 2014

Thoughts about the 'split' news

If true (and the Wall Street Journal seldom prints a story, even on its electronic page on Sunday, that is as far wrong as the Chicago Tribute story that Governor Dewey beat Truman in November 1948), this should be very good news for a whole lot of folk.

First in terms of valuation for a PC/Printer spinout, it couldn't happen at a better time--PCs had a bit of an upsurge last quarter for HP, first in nine quarters; and the printer business is sustaining despite all the naysayers.  Second, the Printer Group has a host of new products ready for launch, including the heavily-hyped 3D printers, but more importantly, some true industrial-grade machines, and their Instant Ink program is finally getting some legs.

Sidenote: since I wrote about my 'new' HP 8600 printer last December in this blog, it has logged something like 24 reams of paper, with relatively minor ink purchases.  More impressively, HP bestowed upon me an HP Envy, or HP5530, with the Instant Ink service.  The idea here is that your printer is connected to the network, and HP continuously monitors the ink levels, and mails you new ink before you need it--at something akin to 40% off list price.  But it is the convenience factor that wins (now, if installation had been easy, I'd have written about it sooner--they still have a lot to learn).

Second, in terms of focus, this changes everything.  The last workshop I ran for HP (August), we went through eleven tables (of fourteen) before anyone mentioned the peripherals as an important business side for HP.  I stopped the meeting, asking about profits and revenues--wondering why this came up 'so late' in the session.  After all, ink alone is 9% of revenues, but 42% of profits.  Someone ought to be worried about its sustainability.  Now someone will whose in a position to do something.

Third, it will help the corporate focus side.  The dealer channel, and the consumer side, are tough customers, very often fickle beyond all reason, and able to vote yeah or nay quickly (ask HP about TouchPad and the Palm Pre), ask Motorola about the Razr phone, ask Nokia about phones period.  Corporate buyers have a different lens, different priorities.  HP has long known this business, very significantly different than the other.  Again, no contention for who sells what, how to advertise.

Heard from several HPites in the first hour of this story breaking.  They're excited, some of the same ones who were dismayed when a similar story surfaced two years ago, and of course, a similar story was Leo Apothekar's undoing.

So, the next 24 hours might be more interesting than the last 24.

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