Is two better than one? Not for HP

Is two better than one? Not for HP
Credit: Reuters/Stephen Lam

The HP split is final, and both halves of the company struggle with the same problem: standing out in a me-too IT market

As of Nov. 1, HP's deal to split into two separate companies, consumer and enterprise, will finally be complete. Now instead of one giant, troubled company, it'll be two smaller, troubled companies, neither of which can overcome HP's legacy big-box IT roots.

Granted, HP has tried, but it hasn't scored. While it has plenty of fine offerings, it has yet to signal if the company has found a viable way forward.

If either side of HP stands a chance of surviving and thriving, it's Hewlett-Packard Enterprise. For starters, its portfolio of products commands decent profit margins and has enjoyed a slight rise in sales. Also, it's an incumbent with plenty of existing enterprise presence. But it still lacks a single, overriding offering that few can do without.

Technically intriguing products like the company's Moonshot line of hyperscale servers (or Sprout -- more about that later) have a little of HP's old-school hardware magic. But they're also self-selecting. Moonshot in particular appeals, at most, to barely 10 percent of the server market. HP's Helion distribution of OpenStack is solid, and the company has earned good marks for standing behind the product, but few beyond existing HP customers are interested. (Forget about public cloud, too -- HP wisely pulled the plug on its ill-advised experiment after swimming upstream with it for years and getting nowhere.)

The items HPE seems most willing to sink its teeth into -- more and bigger converged infrastructure projects, a newly announced open source network operating system -- have the same "oh, we do that too" flavor. And when big ideas are dreamed up, there's little sign the company knows how to execute them. The Machine, HP's purported attempt at creating a new computing architecture, has since turned out to be precisely the vaporware everyone suspected.

What about HP, Inc., the consumer side and a business neither Lenovo nor Dell wanted? It could scarcely have picked a worse era to enter the consumer-computing market, with PC sales either stagnant or tobogganing downhill depending on which sales figures you consult. Supercheap Windows PCs -- the company has a few, like the $229 HP Stream notebook -- have set off a race to the bottom rather than revitalize the PC industry.

PC makers have managed to hang on by offering costly but unique products aimed at specific segments of the buying public. Gamers, creative professionals, or high-end hobbyists might spend $1,300 or more on a PC and think it's a good idea, but it's hard to say whether there's enough of them to sustain an outfit even of HP, Inc.'s reduced size.

The sad thing is that Sprout, HP's recent release, is quite clever; it's a PC with a mixture of touchscreen, drawing tablet, and 3D scanner. But there's little hope it will attain business-transforming success. It's the sort of product that better complements a hundred-folks-in-a-warehouse startup, not even a company the sized of a slimmed-down HP.

Under it all, HP's problems didn't stem from it being one company that needed to be split into two, and splitting it into two companies won't solve them. InfoWorld's Galen Gruman previously argued that HP is struggling "not because it is bad, but because it is typical," and carving up the company won't magically give each half a newfound focus.

Splitting up a company makes sense if parts of the corporation have opposing goals. Example: Yum Brands decided to spin off its China business into a separately held outfit because its Chinese business model stands in contrast to its domestic operations. HP wasn't suffering from the same internal dichotomy; HP's challenges were and are existential.

Whether one company or two, HP faces the same problem of creeping commodification that other legacy IT giants have addressed. Maybe one of its new halves can once again become a company that doesn't simply make things, but instead remakes them. So far, it has offered no hints it can go where it hasn't already gone before.

[An earlier version of this article incorrectly identified Hewlett-Packard Enterprise, or HPE for short, as "HP Enterprise."]

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