HP last merged its printer and PC groups in 2005: It was one of Carly Fiorina's last actions as CEO, and one that Mark Hurd reversed soon after he replaced her. Hurd's successor, Léo Apotheker, wanted even more distance between the two groups: He wanted to spin off HP's PC business as a separate company.
Fiorina put Viyomesh Joshi, currently head of IPG, in charge of both groups but HP said Wednesday that Joshi will now retire. "Seeing VJ step down is a loss for HP. He was one of the more dynamic execs within HP and they will miss his enthusiasm and energy," said Gartner's Fabbi.
Whitman's plan puts the PC group's Bradley in the dominant role. Since Bradley took control of the PC group in 2005, sales there have increased about 30 percent, to $39.6 billion. Meanwhile, sales in the printing group have been declining, to $25.8 billion last year, a billion dollars less than in fiscal year 2005. Last year performance at both groups fell, although printing fared less badly than PC sales: Revenue was flat at IPG in 2011 after 1.5 percent growth in 2010, while PC group revenue fell 0.9 percent in 2011 after growing 4.8 percent in 2010.
HP almost gives away low-end printers, and the profitable line of the business is ink, toner and paper, said Gottheil. Indeed, printing supplies remains one of the most profitable areas of HP's business, with IPG's operating margin at 15.4 percent, compared to an operating margin of 5.9 percent at the PC group. However, IPG's margins have been declining since 2009, while under Bradley the PC group's margins are rising.
Tying printers closer to PCs could help boost sales of printer peripheral and supplies, said Gottheil. HP's printer business also supplies large-scale printers to replace traditional printing presses, and that part of the business will likely continue to have its own sales force, he said.
(Additional reporting by Agam Shah in New York.)