Tech firm HP split into two companies in new strategy

A pedestrian stands next to a signage of HP at Zhangjiang Hi-Tech Park in Pudong, Shanghai, China. The US tech giant has been split into two companies in a new strategy. PHOTO | COURTESY  

In Summary

• The computer colossus is being divided into HP Enterprise, focusing on software and business services, and HP Inc, which will keep the personal computer and printer operations.
• The controversial deal was engineered by then CEO Carly Fiorina — now running for the Republican nomination for president.

By AFP
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SAN FRANCISCO, Sunday

Seventy-seven years after Bill Hewlett and Dave Packard began tinkering in a Palo Alto garage, the firm that became the foundation for Silicon Valley is breaking up.

Hewlett-Packard on Sunday officially split into two entities, opening a new chapter for the US technology legend.

The computer colossus is being divided into HP Enterprise, focusing on software and business services, and HP Inc, which will keep the personal computer and printer operations.

The aim is to develop a sharper focus both for the enterprise unit and the PC-printer division that made it a household name but has become fiercely competitive and less lucrative in recent years.

The new structure splits off the computer arm that became for a time the world’s biggest PC maker following the HP 2002 acquisition of Compaq.

NEW APPROACH

The controversial deal was engineered by then CEO Carly Fiorina — now running for the Republican nomination for president.

Tom Bittman, analyst at the research firm Gartner, said the current tech landscape calls for this approach.

“The market right now needs to move in this kind of direction, more focused, and more nimble, than in Carly Fiorina era, when competing with IBM, not Amazon, was critical,” Bittman told AFP.

It remains to be seen whether the breakup will revitalise a company that has been in a defensive, restructuring mode for several years as it lost ground to rivals such as Chinese PC maker Lenovo, and as tech sector leadership was taken over by mobile-focused Apple and Google.

“A split in itself is not a good or bad thing, it’s what they do with it,” Bittman said.

The new HP Enterprise will be led by company CEO Meg Whitman and the PC business by Australian native HP executive Dion Weisler.
LANDMARK

Both firms begin trading independently starting today (Monday) on Wall Street.

HP has long had a special place in the hearts and minds of Silicon Valley. Founded by two Stanford University graduates, the company has been a major benefactor to the school seen a source of many innovative startups, including Google.

The garage where the company began has been designated a California historic landmark.

HP also led a number of workplace innovations including flexible schedules and the open-space office.