Venerable Silicon Valley company HP is splitting into two separate firms—one for printers and computers and one for enterprise solutions
By splitting into two companies, HP hopes it will be more nimble to compete and innovate. (Ken Wolter / Shutterstock.com)
Innovations in mobile computing, 3D printing, and cloud services are what HP hopes to deliver to colleges, universities, and other customers as a result of its decision this week to split into two separate companies.
HP spokesman Jim Christensen said the move ultimately should benefit HP’s higher-ed customers.
“Our customers are at the heart of our business and strategy, and we believe this move better positions us to meet their needs in a rapidly changing market,” he told eCampus News.
The announcement comes as HP tries to execute a five-year turnaround plan that will return the company to profitability. HP has posted revenue declines in 11 of the past 12 quarters.
The breakup would create one company that sells computers and printers and a second that focuses on enterprise technology services, including data storage, servers, and software.
The split will give each company “the independence, focus, financial resources, and flexibility” it needs to innovate in the highly competitive high-tech market, CEO Meg Whitman said in a statement.
The PC and printer business will use the name HP Inc. and will retain the company’s blue and white logo. The services business will be called Hewlett-Packard Enterprise. Whitman will lead the Enterprise business and will serve as non-executive chairman of HP Inc., while current PC and printer chief Dion Weisler will be the CEO of HP Inc.
The separation is not expected to be final until Oct. 31, 2015. Christensen said information about the new points of contact for service and support at each of the two companies would be available as that completion date nears.
Ed-tech consultant Mitch Weisburgh of Academic Business Advisors said he likes the company’s move.
“I think that this could bode really well for the two entities and also for schools and [colleges],” he said. “Printers and PCs are a commodity business. HP Inc. can concentrate on driving down costs and increasing value, which should result in lower-cost devices.”
Weisburgh added: “Technology infrastructure and services is about increasing flexibility. … If Hewlett-Packard Enterprise puts its top brains on the education sector, we could see them helping drive huge infrastructure changes that will streamline schools and provide [them] with platforms to individualize learning and student mastery.”
(Next page: What the split might mean for colleges and universities)
HP’s move echoes IBM’s decision nearly a decade ago to sell off its PC business to Lenovo and focus on software and services.
The move comes as the rise in popularity of mobile devices has taken a big bite out of personal computer sales. That has hurt Silicon Valley pioneer HP, once the world’s biggest seller of PCs.
Since Apple ignited the tablet market with the 2010 release of the iPad, the annual revenue in HP’s personal computer division has plunged by more than 20 percent. That downturn is a key reason why HP’s market value has fallen by about $55 billion, or 40 percent, since the iPad’s release.
HP and other large companies are “struggling to compete against younger upstarts,” says long-time Silicon Valley observer Paul Saffo. “Once upon a time, scale and size were a competitive advantage. Now, they are a problem.”
By splitting into two companies, HP hopes it will be more nimble to compete with these “upstarts.” Whether either HP company can produce bold new products and services remains to be seen.
In its announcement, HP noted that 3D printing offers a ripe area for innovation in a growing market for HP Inc. The announcement said Hewlett-Packard Enterprise would focus on cloud offerings, big data, security, and mobility, among other areas.
Many tech analysts say HP will need to get better at building and selling mobile devices if it wants its new printer and PC company to succeed.
HP has stumbled in previous efforts to sell those devices, such as when it bought smartphone pioneer Palm Inc. in 2010. HP was unable to turn critical acclaim for Palm’s webOS technology into devices customers wanted to buy, and it shut down the business in 2011.
There is reason to believe that could change. At the International Society for Technology in Education (ISTE) conference in Atlanta in June, HP showed its new EliteBook line of devices, running Windows 8.1—including the EliteBook Revolve, a notebook computer that converts to a tablet, and the EliteBook 840, which reportedly features up to 33 hours of battery life thanks to an accessory battery stored under the device.
HP has positioned these devices as more versatile options for schools looking for the convenience of a tablet combined with the productivity of a laptop.
Material from the Associated Press and the Los Angeles Times was used in this report. © 2014, Los Angeles Times; distributed by MCT Information Services.