Hewlett-Packard confirmed today that it will split into two companies: One focused on enterprise services and software, and the other on PCs and printers. But whether it splits or not won't matter.
HP has been struggling for years under the misguided leadership of three CEOs: Carly Fiorina, Mark Hurd, and Léo Apotheker. It's still struggled for the last three years under Meg Whitman, who by all accounts has been making the right moves at HP.
HP has two big problems, neither of which splitting into two will address:
HP's struggles reflect the reality of its market
Why is HP still struggling to tread water despite Whitman's serious efforts?
First, the PC and printer businesses are no-growth, commodity industries, and Microsoft's disastrous Windows 8 effort only increased the shift in attention to tablets, cloud computing, and other more vibrant technologies. PCs are basically terminals for users today, with the creative action concentrated on mobile devices and the Web. And we use printers less and less often in our increasingly digital workflows.
Second, HP's efforts in data center technology and enterprise software have been slow-going, due partly to what insiders have called a completely dysfunctional business that Whitman inherited when she took over. Such cultures take a lot to reform.
In that data center space, HP also faces a bevy of strong competitors in many segments, such as IBM, Unisys, Accenture, EMC, Oracle, SAP, CA, Avanade, Cisco, and Citrix. The traditional IT market is under long-term pressure, squeezing budgets and suppressing demand for the big-ticket projects these companies were built to service.
When InfoWorld evaluated the traditional IT providers earlier this year, few were adapting to the new tech priorities and diffuse customer base. Mobile technology is still largely treated by IT as a risk to contain, as is the cloud -- not as the business growth opportunities they are. Flexible, opportunistic, fast technologies like microservices architecture, Docker containers, and MBaaS remain sciency efforts largely by developers. And the big rethink of analytics -- big data -- is occurring largely in marketing, not HP's traditional IT customer base.
HP's market is changing on several fronts in both of its main businesses, but HP isn't staying ahead of those changes, even if in some areas it is trying to at least keep pace. So it doesn't have anything special to offer in either market.
On the enterprise side, it doesn't have an attention-getter like IBM's Watson or SAP's HANA -- which despite their cachet are struggling to find IT buyers due to their complexity and high prices. Nor does it have a deep business in a segment like mainframes where it can milk the IT cow without worrying about competition.
In PCs, HP produces quality commodity products -- like Lenovo does. In the low-end server area, HP is basically as good as Dell, Lenovo, and everybody else. Some of HP PC-innovation efforts like making PCs greener were nice ideas, but not important enough to move the buyers' needle.
HP is struggling not because it is bad, but because it is typical. And it doesn't seem to have pockets of unique strength to build out from. Like Apple at its nadir, HP may need to truly think different.
None of that changes if HP becomes two companies.
When in doubt, the easy path is to reorg the business
The tech business website Re/code says the split-up deal is about keeping clearer focus at the two companies by separating them. If true, that's an indictment of HP's leadership, which should be able to keep those two separate businesses separate internally. After all, lots of companies successfully manage portfolios of separate products.
There may not be any real synergy between HP's two main divisions, but there's no reason that reporting to the same CEO and board should prevent them from doing whatever they need to do. The separation does nothing to make either smarter, more effective, or more able to do what is best -- especially if both ultimately report to Whitman, as the current plan goes.
As is often the case in business reorganizations, the reorg is as much about deflecting investors' attention to buy time in hopes something good will happen somehow later on. Think of all the mergers, splits, acquisitions, and so on that happen every year. Then think about how almost none mattered just a few years later.
There are legitimate reasons to reorganize, merge, split up, and acquire -- but the rest has to be qualitatively different and better than the status quo ante. This sounds more like rearranging the deck chairs and hoping the passengers don't notice the iceberg looming ahead. At the end of the day, it's still basically the same HP we now have.
Three years ago, pundits and investors noisily urged Whitman to take the fig-leaf way out of HP's troubles and split the company. That approach lets savvy investors get a quick run-up in price as naive investors get fooled that something real happened, which is why it's so often recommended. There could be good reasons to break up HP -- my colleague Bill Snyder listed some 21 months ago -- but so far I'm not seeing them here.
I hope I'm wrong. HP has a storied history in Silicon Valley for good reason, and its core values should find a way to succeed. Maybe Whitman does need to buy time to finish the five-year turnaround she's now halfway through.
Perhaps investor impatience needs to be deflected through such corporate games. Fine. But HP still needs to figure out how to make its two pieces, or at least one of them, compelling in a lasting, real way. We're all still looking for the signs that it knows what that could be.
(InfoWorld has requested interviews with Whitman for a year now to discuss HP's direction. But although HP's PR team has not said no, it also has yet to make it happen.)