HP, after years of
will-they-won’t-they deliberation, has officially announced that it will
be split into two separate companies: HP Inc, which will focus on PCs
and printers, and Hewlett-Packard Enterprise, which will take over the
servers, storage, and other enterprisey aspects of HP. Current CEO of HP
Meg Whitman will become the CEO of HP Enterprise; HP’s head of printers
and PCs, Dion Weisler, will become HP Inc’s new CEO.Updated: 5,000 employees will be laid off as part of the split, bringing the total number of redundancies to 55,000 under Whitman’s restructuring measures over the last three years. HP still has over 300,000 employees currently.
In theory, this split will give each company the focus, independence, and flexibility to effectively compete in markets that have become a lot more competitive over the last few years — Lenovo has eaten a lot of HP’s bread-and-butter PC business, and the commodification of the server market (mostly thanks to Intel/x86) has weakened HP on that front as well. Funnily enough, printers are still one of HP’s biggest profit centers — but obviously, that isn’t really a growth market.
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| Dion Weisler, the incoming CEO of HP Inc. |
HP’s split comes at a time
when it’s fairly fashionable for larger technology companies to spin-off
or break-up into smaller chunks. The idea is that these smaller
companies have a narrower focus, and can thus react to market/consumer
demands much faster — and, of course, be in a better position to take on
the next startup that threatens to cripple their business entirely.
Just last week, Ebay announced that it would be spinning off PayPal into
a separate company — a move that shareholders were very fond of .
HP has been toying with the idea of breaking up some of its divisions for a few years. Back in 2011,
HP announced that it was interested in spinning off its PC business —
but in the end, then-new-CEO Meg Whitman decided to maintain the status
quo for the time being. Now, some two years after Whitman restructured
the business, HP still isn’t doing very well — and so it’s time to do
something a little more dramatic. Read the full press release
for all of the details — but basically, the company is being split
along consumer/enterprise lines, with printers and PCs going one way,
and every other division/product (servers, networking, software, etc.)
going towards HP Enterprise. The split should be completed by theend of
fiscal year 2015 — October 2015.
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| Some memristors — one of HP’s better inventions over the last decade or so, which will hopefully used by The Machine |
Moving forward, the new HP Inc
will focus on “new computing experiences” and “new markets” like 3D
printing, ultimately working towards “inventing technology that empowers
people to create, interact and inspire like never before.” HP
Enterprise will “accelerate innovation across key next-generation areas
of the portfolio.” Overall, the main thing is that the new companies
will be able to focus their R&D efforts and financial resources on
things that will directly benefit them. Presumably HP Enterprise will
continue to work on The Machine.
It will be interesting to see if HP Inc finally gets into the
smartphone market, after Whitman said way back in 2012 that they really
should get into that market.
Personally, I’m a bit
disappointed that the two new companies aren’t called Hewlett and
Packard — but it probably is the right move to make, business-wise. HP,
along with other big tech giants from the pre-Google days such as Dell,
Microsoft, IBM, are now being faced with the hard truth that the
wellsprings that made them hundreds of billions of dollars will probably
dry up a lot faster than they expected. In the olden days, technology
and consumer demand moved slowly enough that companies could keep up —
but now, it’s becoming increasingly hard for these behemoths to fulfill
that demand before a sprightly little startup arrives on the scene and
quickly lays down roots. The split into HP Inc and HP Enterprise, if
they are managed well, could be a very savvy move.
HP announces split into two companies, but sadly they won’t be called H and P