Today, one of the original Silicon Valley companies will split in half, creating two lower valued companies that can mean two things: a possible acquisition, or total demise. This company is the computer giant Hewlett Packard, known as HP. The executives at HP are dividing the company in two, keeping the Hewlett Packard name in both enterprises. HP Enterprise will sell servers, software, storage, networking, and associated services, while HP Inc. will sell printers and computers.
This shows the significance of the split in different sectors of the tech market. PCs and Printers are gradually decreasing in their innovation, because there are newer companies in the role of creating these. However, HP’s software, networking, and other services are still demanded, because of the wide usage of the windows platform around the world. HP is trying to compete with Amazon, Google, and Microsoft in the providing of cloud services, but they plan to rent storage from other companies, rather than building their own cloud storage platforms from scratch.
Splitting HP into two sectors signifies the fact that HP is trying to cut its losses as the downfall of the modern PC sets into place. As more and more new manufacturers come into the market, the low valuation of the new HP Inc. will might make it a viable option for acquisition by larger companies, while HP Enterprises could continue to operate the Hewlett Packard Brand. This is very good brand management, but is a huge gamble in terms of the survival and growth of HP as a whole.
This is smart on the part of the new HP executive team, including the ex-Ebay boss Meg Whitman, because it limits the total demise of the Hewlett Packard brand name in the event of an acquisition or a failure, because in business terms, the sectors are separate entities, but still bear the HP name.
This also comes after Dell’s recent decision to buy EMC, a leading provider of cloud computing and storage services, a deal worth $67 Billion. Companies that were leaders in the age of the advent of the PC, especially during the 1990s and early 2000s are preparing to perhaps enter the new age of technology, even though they seem a bit behind.
Do you think HP is too late to the party per se, since most people who use cloud computing rely on other systems?
Is this a Hail Mary attempt at saving a dying brand, because everyone knows that there is not much profit in selling PCs and Printers?