On 1st November, HP announced that it would split into two; HP Inc and HP Enterprise. HP Inc (HPI) will concentrate on printers, peripherals and computers while HP Enterprise (HPE) will handle cloud systems (data storage), technology and software services.
The split was first suggested by Carly Fiolina, the now Republican presidential candidate back in 2002 when she was CEO for HP. This was after the iron lady had bought Compaq, a move which did not please shareholders and was the genesis for her being shown the exit door.
HP is currently the leading world PC maker. While that used to be an enviable position some years back, it no longer is. The PC market has been overtaken by mobile technology like smartphones and tablets. Apple leads the pack today because it considers itself not as a computer company but a mobile devices giant. Google is number two and owes that to the successful Android OS and devices. With struggles, Microsoft is making its transition into a mobile company.
The printer business used to be a very profitable business some years back but is continuously losing to paperless world campaign. We live in an electronic age where printing is less fashionable.
HP has split into two to increase focus and make each division accountable for profits. The technology giant claims that the printer business was being forced to share the losses of the software business at times.
The two entities will not compete for the next three years and will share HP 37,000 patent pool. The current CEO of HP, Meg Whitman will head the Enterprise Division while Australian native HP Executive Dion Weisler will head the PC and Printer Division.
IBM took a similar path a few years ago when the company was sliced into Services and Personal Computing divisions. IBM went further and sold the Personal Computing Division to Lenovo.
Should HP go IBM’s route, HP Inc will soon be up for grabs. The question is, would there by anybody willing to buy a PC company given the dwindling profits in that area? If Google bought it, there would be one reason for it; the patents. Google would stripe it off its patents and offer it to anybody willing to take it for a song.
Many technology commentators believe that HP Enterprise is the bride at the altar. Once again, the problem is the same; there may be nobody coming forward to make an offer.
HP was started by two Stanford University graduates Bill Hewlett and Dave Packard. HP has a special place in the computer technology history. It has inspired many including two more graduate students of the same Stanford University who started Google.
The split is expected to drive away bureaucracy inertia associated with big organizations and help the two HPs to respond to changing market forces.
Let us hope that the split will rejuvenate the computer technology giant.
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