Hewlett-Packard has provided electronic hardware, software and services to consumers since its inception in 1939. However, HP has,  “struggled to adapt to the new era of mobile and online computing.” This has led, Meg Whiteman (CEO of H.P), to consider dividing the company into two sectors to focus more on faster-growing corporate service markets. In the global market, HP’s market value is $66-billion while competing firms such as Apple are valued at $596-billion and Microsoft  at $380-billion. Lenovo, a Chinese PC maker, also overshadows HP. Therefore, HP has re-evaluated their business model and is currently discussing a split in order to revamp their company before they go bankrupt and/or a larger company buys them out.

If HP does indeed split into a PC and a printer company, what will be the business incentive behind such a move? Paul Cubbon’s Vimeo video entitled, “Intro to Positioning and Value Propositions provides reasoning. Within positioning there are ladders representing sectors of the market. For example, Cubbon discusses how Volvo is on top of the Safety ladder in the mind of automobile consumers. Therefore, it is difficult for a company such as Toyota to match or surpass Volvo’s stature in the mind of consumers. Much like Toyota, HP has found themselves below other thriving companies. Therefore, rather than cutting their losses and accepting themselves as a tier two company, HP is pledging a reformation. By splitting into two companies HP is now able to target a ladder in which they can excel in. If HP does decide to split into two companies, it will be for the purpose of utilizing their resources and exploiting an open sector in order to ultimately claim a top spot on the positioning ladder.

Source Used:

“Silicon Valley Giant Hewlett-Packard To Split In Two: Report.” The Globe And 
Mail 5 Oct. 2014: n. pag. Print.

http://www.theglobeandmail.com/report-on-business/international-business/us-business/silicon-valley-giant-hewlett-packard-to-split-in-two-report/article20938032/