Reports are beginning to surface that HP is planning to split their PC and Printer Business Unit from their Enterprise and Services BU. The idea, which was initially proposed in 2011 following CEO Leo Apotheker’s resignation, was brushed off under the guidance of Meg Whitman; however, following the company’s loss of position as the leading PC manufacturer to Lenovo in 2012, the idea has been rumoured to have re-surfaced. For the company, the thin margins of the PC business have been balanced by HP’s healthy Printer business “where ink consumables offer a big profit centre for the company still and HP’s brand equity is strong”. That being said, the consumer products splitting away from the enterprise product division may allow future opportunities for both parties. Whereas the HP printer and pc business can help keep each other afloat, the Enterprise can re-start merger talks with storage giant EMC that were previously stalled due to the PC and Printer business units being thought of as an operational liability holding the two back from becoming a combined Enterprise powerhouse tag-team. The split of the company can also allow the two divisions to “focus on their core product offerings and go-to-market strategies that are decidedly different between consumer products and the enterprise.” Although the split will significantly lower the current negotiating power of the combined HP, the split will allow the two parts to commit to 1. HP with respect to PCs and Printers, and 2. the needs of the Enterprise group. By splitting, the two parts of HP may be able to rise again to lead in their individual markets.

HP

I believe HP’s actions are a good example of the big decisions that CEOs must make in finding ways to maximize profits and rise in terms of competition. The company, which fell behind Lenovo in 2012 was only being held back by keeping the Enterprise and the PC and Printer businesses connected. As stated by the article, the Enterprise had an opportunity to merge with EMC but was unable to as EMC found that the PC and Printer section of the business would be an “operational liability“. That being said, by allowing the two businesses to separate, more opportunities may be available for both companies.

Article: http://www.forbes.com/sites/davealtavilla/2014/10/05/divide-and-conquer-hp-set-to-split-pc-and-printers-business-from-enterprise-products/