The Split is Official, But Will Two HPs Be Better Than One?
by Robert Palmer | 11/5/15
On November 2, shortly after its official separation from Hewlett-Packard Company, Hewlett Packard Enterprise (HPE) issued one of its first press releases. The company noted its debut by describing itself as “an enterprise technology leader with $53 billion in annual revenue, the most comprehensive product portfolio in the industry and a unique vision for the future of technology and its benefits for enterprise customers.”
As part of its coming out party, HPE President and Chief Executive Officer Meg Whitman, along with other representatives, partners, and customers, convened to ring the opening bell at the New York Stock Exchange, where the company will begin to trade under the ticker “HPE.”
Now that it is separated from PCs and printers, HPE will focus on corporate servers, data storage, networking, software, and IT infrastructure tools and services. HPE says it will leverage its heritage of innovation and solutions to help businesses optimize IT infrastructure and build a secure, cloud-enabled and mobile-ready environment for the future.
HPE has identified four key areas that it says will be fundamental to enabling business transformation and future growth:
- Transforming to a hybrid IT infrastructure
- Empowering a data-driven organization
- Protecting the digital enterprise
- Enabling workplace productivity
“The winners in today’s market will be those who apply the power of technology to fuel the power of ideas, and the new Hewlett Packard Enterprise is built to accelerate this journey for customers,” said Whitman, in prepared remarks. “Hewlett Packard Enterprise has the vision, financial resources and flexibility to help customers win while generating growth and long-term value for our shareholders.”
For more on the Hewlett Packard Enterprise split, see the press release here.
Our Take
For many, the official split marks a significant milestone — the end of an era for HP and indeed for the entire technology sector. From its humble beginnings in a Palo Alto garage in 1934, HP evolved to become one of the world’s leading technology companies, with a brand that has as much power and global recognition as any other. Whether you are a fan or not, it is hard to deny the prominent role that HP has played in delivering technology to the masses.
The strategy behind the move is pretty straightforward. HP had become too big, mired in a corporate culture and organizational structure that left it unable to respond quickly enough to the rapidly evolving needs of its customers. From a huge behemoth running two vastly different businesses, HP is now separated into two distinct and more nimble companies — at least as nimble as a company with $50 billion in revenue might be — each with the ability to focus and align resources more effectively to attack strategic objectives.
There is no doubt that the old HP was struggling. A turnaround strategy fostered numerous layoffs and significant restructuring, but did little to address the primary challenge of achieving growth. Some suggest that growth will be just as hard to come by even after the split. HPE faces significant competitive pressure in the cloud computing space. Meanwhile, traditional hardware and data center implementations are in decline. Both companies have announced additional job cuts, but HP Enterprise is planning much larger numbers in terms of structural changes and workforce reduction.
There are similar questions when it comes to the future of HP Inc. Leading up to the split, most of the noise coming from HP Inc. has centered on its plans in the 3D printing market. Some market analysts have gone so far as to suggest that HP Inc. is staking its future on 3D printing — an astounding statement considering we are talking about a company with $50 billion in annual revenues that has yet to sell a single 3D printer.
The 3D printing market could eventually become a growth engine for HP Inc., but it will need to strengthen and grow its core printing business to achieve sustainability. Given that overall pages are in decline, growth will only come through technology innovation that would allow the firm to capture new customers and pages. No doubt a tough row to hoe, but HP has identified various opportunities, including the shift from offset to digital, office inkjet, and deeper penetration in the A3 office segment as prime targets.
There has been much discussion as to how the split might impact HP’s future. There are likely as many unanswered questions now as there were prior to the official separation. Going forward, however, there will no longer be a need for speculation. Talk is cheap — and it will be up to both companies to execute on respective strategies.
Robert Palmer is chief analyst and a managing partner for BPO Media, which publishes The Imaging Channel and Workflow magazines. As a market analyst and industry consultant, Palmer has more than 25 years experience in the imaging industry covering technology and business sectors for prominent market research firms such as Lyra Research and InfoTrends. Palmer is a popular speaker and he presents regularly at industry conferences and trade events in the U.S., Europe, and Japan. He is also active in a variety of imaging industry forums and currently serves on the board of directors for the Managed Print Services Association (MPSA). Contact him at robert@bpomedia.com.
