HP announced today its decision to split into two companies: HP Inc., the one that will handle the PC and printer side of business, and HP Enterprise, which will handle the enterprise customers. The move will happen by the end of fiscal 2015, and layoffs ahead of the shift have now risen to a total number of 55,000 instead of the initially-predicted 45,000 layoffs.
Meg Whitman, HP's CEO, has wanted to separate the PC side of HP from the enterprise side since she accepted the position and after former CEO, Leo Apotheker, failed to enter the mobile market in a big way with webOS. However, HP was still the leading PC manufacturer at the time.
Since then, HP has struggled somewhat, losing some PC market share to Lenovo and others. Over the past year or so, though, HP has become more aggressive by adopting Android for its tablets and Chrome OS for some of its notebooks. HP is still an important partner for Microsoft, but it also wants to diversify by using other computing platforms. The new HP Inc., which will be led by Don Weisler as its CEO and President, will also focus on 3D printing and new computer experiences.
“HP Inc. will be extremely well-positioned to leverage its impressive portfolio and strong innovation pipeline across areas such as multi-function printing, notebooks, mobile workstations, tablets and phablets, as well as 3-D printing and new computing experiences," said Meg Whitman, now chairman of HP Inc. and CEO of HP Enterprise, in a company blog post.
HP Enterprise, with Meg Whitman as CEO and Pat Russo as Chairman, will continue to focus on servers (such as the recently-announced ARM-based server cartridges), storage, networking, converged systems, services and software and its OpenStack Helion cloud platform.
HP Enterprise should continue to do relatively well in the near future, but all eyes will be on HP Inc. and its new CEO, Don Weisler. Now that it will have even less money for itself, the new company will have to prove that it can sustain itself as a business. This will require some drastic cost-cutting as a way to make the company much more efficient and focused on what is profitable, but there must also be some big strategic changes.
HP Inc. will need products that are high-growth in order to increase the company's profits at a faster pace. One way to achieve that goal is if the company can figure out how to make 3D printers mainstream and position itself as the leading vendor. HP has been known as a premier printer company for decades, and what better way to evolve its business than into the third dimension? Otherwise, HP Inc. might soon be acquired by some other PC maker, which could also be part of the reason why the two companies are separating – making HP an easier acquisition target.