Hewlett-Packard has split up into two separate companies, dividing itself into firms aimed at two different markets, just as it advised last year. One, HP Inc, will be a consumer-focused company offering PCs, printers, and other devices for home use, while the other half will become Hewlett-Packard Enterprise (HPE) will deal with business customers, with the change aiming to make the two companies smaller and more nimble, and in theory more competitive.
On the HPE side of the split, Meg Whitman will be taking command, with the business expected to have a considerable revenue. Speaking to Recode, Whitman claimed it will have approximately $55 billion in annual revenue, with half stemming from infrastructure and hardware sales, with the remainder consisting of IT outsourcing and software services. HPE will also have a warchest of around $5.5 billion, which it could use to shore up its business with the departure of the consumer side.
HP Inc will be under the control of Dion Weisler, previously the executive vice president of printing and personal systems, though Whitman will still have some say over the consumer side, as the chairman. The consumer side is roughly the same in terms of size, though the underperforming consumer PC market will make things difficult for the consumer side to keep up with its enterprise equivalent.
Without the consumer division weighing it down, enterprise is likely to enjoy improvements in terms of growth over the next few years, though it does face some considerable competition that will test its flexibility. Last month, Dell agreed to acquire EMC in a deal valued at $67 billion, a transaction expected to close on the second or third quarter of Dell’s fiscal year, ending February 2017. At the time, it was claimed the partnership will give Dell “unmatched scale, strength, and flexibility,” which HPE will have to overcome.
Whitman is still feeling positive, believing the split is a better option than to simply get larger. “Two of our biggest competitors will be involved in a very distracting multi-year merger transaction. We have an opportunity to gain share from them, and I like our chances.”
