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For HP, Innovation Remains Key Post-Split

06 October 2014

The announcement that Hewlett-Packard will be separated into two publically traded companies opens up an opportunity for each entity to get back on track with product roadmaps but it will take more than just this to survive in the long term, according to IHS Technology.

The split is part of HP’s five-year turnaround plan in order to get the company back on its feet after years of losses and seeing it lose its No. 1 PC vendor status to China-based Lenovo. HP will be split into one company comprising its enterprise business know as Hewlett-Packard Enterprise while the PC and printing business will be known simply as HP Inc. The separation of the computer giant is expected to be completed by the end of HP’s fiscal 2015.

While the split, in theory, should give the Palo Alto-based company the opportunity to execute its product roadmaps in a more concise fashion, more changes will be needed if both companies want to survive for the long haul, IHS said.

“To survive, it can’t just be business as usual,” said Craig Stice, senior principal analyst for Compute, Servers & Storage at IHS. “[HP] must continue to innovate, be a market leader and be forward looking. HP has always had the capability to do this but as with any large company, sometimes their biggest challenge is to not get in their own way.”

By splitting into two companies and still maintaining its brand power, it should allow each business to become more focused, adjust strategy and become more competitive in each market, Stice said. Time will tell if this produces these kind of results but the opportunity is there, he added.

“The struggles that a company of HP’s size and diversification in multiple technology sectors is its ability to react swiftly to the changing markets within each sector,” he said. On the PC side, HP is successful in the commercial PC market, but still needs to focus on rejuvenating the consumer PC markets. On the enterprise business, while significant progress has been made to become an all-inclusive provider of hardware, software, networking and services, in order to react to rapid changes in this space, Hewlett-Packard Enterprise will need to do some heavy investment, Stice said.

Meg Whitman, president and CEO of HP, and Cathie Lesjak, CFO of HP, will hold these positions within Hewlett-Packard Enterprise with Whitman serving on the Board of Directors and Pat Russo moving from lead independent director of HP to chairman of Hewlett-Packard Enterprise. Dion Weisler, executive VP of HP’s Printing and Personal Systems business, will become HP Inc.’s president and CEO. Whitman will serve as HP Inc.’s non-executive chairman.

Whitman distancing herself from the PC business doesn’t mean that HP is conceding that its PC and printing business will underperform, just that maybe the future of cloud/enterprise space is much broader, IHS believes.

“The PC market has struggled over the last couple of years, but there is certainly still opportunity with PCs to grow, whether that be via the PC market as a whole growing, or through market share gains in a stabilizing PC market,” Stice said.

Either way, HP Inc. will still need to refocus its strategy and roadmaps in order to maintain success, he added.

Related links:

IHS Compute, Servers & Storage

News articles:

Applied Micro Rolls 64-bit Embedded ARM-based CPUs

Intel Unveils Ultra-Thin Processor at IFA

HP’s Earnings up Slightly Thanks to PC Sales

Avnet to Distribute HP’s Data Center Products in Mexico

AMD Launches 'Kaveri' Mobile APUs

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