The Wall Street Journal is reporting that CEO Meg Whitman is about to break up Hewlett Packard into separate companies: one to make PCs and printers, the other to sell enterprise hardware and software. Coming on the heels of eBay spinning off its PayPal unit, the deal is said to be announced as soon as today.
This breakup comes as no surprise
People inside and outside the company have been talking about breaking up the company for years, so the plan is hardly a surprise. A similar deal was being “explored” three years ago, but the company changed its mind before going through with it. And it’s not even the first time HP has divorced itself, spinning off Agilent Technologies in 1999. But just splitting up HP doesn’t solve the companies’ problems, so don’t expect the deal making to stop there.
So far, the smart money seems to be saying that once HP becomes H and P (I wish… the two companies are said to be HP Inc. and Hewlett-Packard Enterprise) a lot more will have to change before the company’s current problems—from declining markets to falling sales to the disastrous Autonomous acquisition—can really be addressed. As currently constituted, it’s hard to see how the breakup really changes anything all that much. Both new companies will be led by Whitman, as chairman of HP Inc. and CEO of Hewlett-Packard Enterprise.
Most likely, that means one or both of the new companies will be acquired or merged with one or more other tech leaders. Because each of the new companies will be more tightly focused, deals along the lines of the many already contemplated but ultimately abandoned should be easier to complete on both the PC side and the enterprise side.
Will the HP name and brand survive the breakup?
Whether HP would be the surviving entity in any such secondary deal is an open question at this point.
It would be a big change for the HP brand to leave the enterprise space, where it has long been a major player. But that’s nothing compared the impact of the HP name in the PC and printer marketplace. On the PC side, change has been a constant, as plenty of big names have been forced to abandon that business, most notably IBM, which sold out to Lenovo long ago. But HP has dominated the personal printer market for decades, and while sales of ink and toner are declining, they still provide the bulk of that division’s profits. It would seem that the HP name still carries value in many areas.
Even if HP does break up next year, as seems likely, right now still seems a bit early to start saying goodbye to the company. It will take time for the ultimate fates of both new companies to play out. But it’s probably a good time to start preparing for that ultimate farewell, because once we start down this road, there’s no going back to the days when The HP Way actually meant something.