As I sat through various sessions at the recent Dell World event in Austin, TX, I could not help but think about the new Dell vs the new HP.
In a recent Techpinions article, I wrote about how Dell, as a private company, was making major strides in growing and becoming a profitable company again. However, in one conversation I had with a very high level executive, he pointed out that, when they were a public company, at least a quarter of his time was spent dealing with Wall Street and the legal matters and pressure brought by shareholders and that this took away from him spending as much time as possible on products and services and meeting the needs of their customers. He said while he still has to work to keep his division profitable, the majority of his time is now focused on products and their customers and pointed out this is why their overall sales grew close to 20% in the last quarter.
Dell also has the advantage of all of the various divisions working together in harmony and supporting each other. Michael Dell told me two thirds of their enterprise business comes through their PC division and he has allocated a specific amount of money towards R&D with an eye on creating innovative products. This is the new Dell.
Now contrast this with the new HP. The new HP, which includes the PC and printing division, is still part of HP and very much a public company. I asked Michael Dell what he thought of the HP split and he said this was done strictly for the shareholders. That is not news. All one has to do is look at the structure of this deal and its impact — a decrease in HP employees and the goal of splitting lower profitable businesses from the HP Enterprise company. You can see Wall Street written all over this restructuring.
But by staying a public company, they still have all of the pressures of Wall Street and, more specifically, have to lead the company on the whims of their shareholders, at what I consider the expense of their customers. Since the PC and printing division is now separate, with their own P & L, how will this group work with the enterprise group in an integrated way while still being very separate. This is an important question HP has not addressed as of this writing.
Also, the PC business and printer business are very different. I know this well. When Carly Florina was CEO at HP, she put the PC business under the printing business and made the head of the printing business, Vyomesh Joshi or VJ as he was known, head of both groups. VJ knew printers but his grasp of the PC business was challenged. I was asked to help with the PC marketing strategy for his team and at the time Ms Fiorina tried to tie the two together and create the equivalent of bundled PC/printer deals that pretty much failed. Each product has a different purpose and while they can work together in certain settings, each stands alone when it comes to focus and functionality. Bringing printers and PCs together again I believe will prove a real challenge for the leadership of this new HP division.
By the way, this will be the third time they have combined two groups under one head. In March of 2012, HP put the PC and printer group under Todd Bradley and that experiment did not go well either.
I have concerns about how successful this new HP will be, especially the PC and printing division. They have Lenovo taking aim at their market share and even Apple is eating into some of HP’s enterprise business. In fact, I am certain the Apple/IBM partnership will make competing, especially with HP, a major focus in the new year. At the low end they have new PC players that are about to come out of the Shenzen ecosystem and tie local content to competing tablets and PCs by the end of 2015, potentially eat even more into HP’s international business. Add to that the fact they have constant pressure to perform for Wall Street and the shareholders and I see an HP being challenged more than at any time in their history.