HP split to have ‘limited’ immediate impact

IDC expects business as usual in the short term

Tags: DesktopsHewlett-Packard CompanyMergers and acquisitions
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HP split to have ‘limited’ immediate impact HP Inc. is depicted as a stable business with predictable returns and an organic growth pace. (Getty Images)
By  Tom Paye Published  October 20, 2014

The split of HP's enterprise and PC and printer divisions will have a limited immediate impact on EMEA customers, despite the vendor being the largest IT supplier in the region, according to Chrystelle Labesque, personal computing research manager at IDC EMEA.

However, Labesque did warn that, in the medium term, HP staff may end up being distracted as the logistics of splitting the two companies begin to take their toll.

"We believe that the immediate impact of the announcement from a business strategy perspective in the region and in the countries in EMEA will be limited, as the different HP divisions already operate on compartmentalised paths both regionally and in the country," she said.

"But in the mid-term it would be expected that logistically the two companies will have to be hosted in different office facilities, with separate back-end IT systems. Such practical steps do take time and can distract staff from day-to-day duties."

HP announced earlier this month that it will split its business into two separate companies, with one enterprise-focused business, and one operation covering PCs and printers. HP's enterprise hardware, software and services businesses will be known as Hewlett-Packard Enterprise, while the PC and printing businesses will be called HP Inc.

The company said that the split is a strategic step to provide each new company with the focus, financial resources and flexibility to adapt quickly to market and customer dynamics while generating long-term value for shareholders. The break-up is expected to be completed by 31 October next year.

Operational changes at HP have already been made apparent in the Middle East. The day after the split was announced, the vendor sold its 40% stake in UAE-based Injazat Data Systems for an undisclosed sum to investment partner Mubadala. However, nothing has been said as to whether that move was influenced by the vendor's decision to break up.

According to Giorgio Nebuloni, data centre research manager at IDC, HP Inc. is depicted as a stable business with predictable returns and an organic growth pace. However, IDC expects Hewlett-Packard Enterprise to go through more radical changes as it moves towards the research house's ‘third platform' vision. While this may be a dramatic change, he said that the enterprise side should come out stronger.

"Hewlett-Packard Enterprise will see 'targeted merger and acquisition activity'. In other words, the enterprise side is the one where IDC expects to see more radical changes and bets on in the future," he said.

"Overall, and despite the trends over the past nine months, we believe the underlying assumption is that HP Inc. is poised to face headwinds in the longer term, while the enterprise part can be boosted by significant growth with the correct investments."

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