The flawless execution of the HP split into two new companies
The flawless execution of the HP split into two new companies in 9 months (HP Inc. and Hewlett Packard Enterprise)
When two Stanford University graduates – Bill Hewlett and Dave Packard – founded Hewlett-Packard in a garage in 1939, none of them knew that 76 years latter that very place will be designated a California historic landmark, much less that they just put in place the ‘corner stone’ for a future technology giant which will be the source and will set the trend for many innovative Silicon Valley start-ups.
So, what exactly happened to this giant, that caused it to split into two companies? Did it fall victim to the shifts in the computer industry, to external pressures or internal scandals maybe, or all of them?
Hewlett-Packard was known as one of the biggest printer operators and later on, following the acquisition of Compaq in 2002 its PC – Printer division made HP a household name. But times are changing and the rise of smart phones, cloud computing and giant competitors like Amazon, along with the failure of Intel’s Itanium processor, did not make survival and thieving for HP easier. Adding to this pressure from investors, internal problems involving directors and top executives, the ‘revolving doors’ for CEO’s (three within 13 month…) and botched acquisitions like the EDS purchase and the Autonomy’s debacle, HP’s board finally gave in and decided on the split.
The division created two companies – Hewlet-Packard Inc which will focus on selling personal computers and printers, and Hewlett-Packard Enterprise will focus on selling software and tech services along with commercial computer systems. Still, the challenges will remain for both the spin-offs. As more and more organizations and individuals use cloud storage for their files and mobile devices, there is a continuing decline in demand for PC’s and printers. In the commercial field, the acquisition of servers, hardware and commercial computer system is slowly replaced by online software and virtual and cloud storage and computing. If HP Enterprise will be able to make the right partnerships and acquisitions, only the future can tell if this split was effective in bringing back growth to this historical giant.