How HP plans to leverage its separation into two entities?

(In Picture: Neelam Dhawan, Country MD, HP India)

At # 5 in the DQ Top 20 Rankings, HP believes that bifurcating into two entities will provide each new company with independence and flexibility, at the same time generating longterm value for shareholders

The biggest event for HP globally in 2014 was the company splitting into two separate entities—HP Enterprise and HP Inc. HP Enterprise takes on to next-gen tech, infrastructure, software, and services—basically the ‘new style of IT’ that HP has been evangelizing for the last couple of years. Meanwhile, HP Inc will take on to hardware and peripherals portfolio consisting of personal systems and printing. But is this separation really going to help HP? When we stack it with arch rivals like IBM, which had shed almost all of its low margin hardware baggage, morphing into a software and services company, HP still is an amalgamation of software and hardware and whole lot of inorganic assets which it picked in the last decade or so. Given the complexities, assets and liabilities in its portfolio, how is HP going to seamlessly synergize all these? And how will it be able to create a complex interplay of devices, software and services, and yet expand profitability and margins?

HP’s EVP and CFO Cathie Lesjak reflecting on the separation said, “The strategy remains the same. The tactic of splitting the company is one that is right for this time, given the market forces that we’re experiencing.”

The key question: Will HP be able to capitalize on these market forces? It strongly believes that the separation will accelerate the progress it has made over the last three years and will enable it to continue to deliver on its commitment to delivering solutions to customers and increasing value for employees, shareholders, and the community.

HP without a doubt is a behemoth and has a huge IT arsenal. In many ways, it’s the sum of parts with each division in itself a company with massive top line and P&Ls. But with the company breaking into two, the immediate question that came on was how is HP going to manage client engagements, relationship with channels, and synergies between these two entities and the cross-sell between the two?

For one, on the partner front, HP says its ‘Partner Navigator Program’, has been designed to help HP part ners go through its separation into two companies, while additional programs, including the Partner One Alliance, are designed to help partners drive positive business outcomes for their customers. These programs are also expected to help the distributors and the reseller network to maintain business continuity through the separation.

While much has been written about the challenges HP will face going forward, let’s here stick to HP India and take a due diligence on its FY15 performance in this part of the world.

Overall, HP in India has been successful in FY15 across portfolios—hardware including PCs, laptops, printers, servers, storage and networking to software including cloud, big data, security and mobility and finally, services.

While HP’s worldwide server revenue grew 10% in CYQ1, 2015, and enabled HP to secure the top spot with 24% market share, HP also maintained its leadership in server shipments with 20% share. In tandem, HP’s server momentum in India too saw good traction.

Storage and networking did see good uptick in India. For instance, India is a key market for HP storage,with growth rates higher than worldwide and the Asia Pacific-Japan region overall. The largest segment in the Indian storage market is the midrange. HP 3PAR StoreServ Storage and HP StoreOnce Backup saw very impressive traction.

Meanwhile, HP says that it has achieved comprehensive leadership in both PCs and printing in FY15, with good play in both consumer as well as enterprise segment with the innovative products.

So as we look ahead, FY16 will be a defining year for the company globally and despite the challenges galore, its huge portfolio offers it immense opportunities in the emerging markets.

HP in the coming year is also expected to aggressively tap into the smart city opportunity. To this end, the HP Future Cities team will be working closely with the government to provide big data, cloud, mobility, and security solutions.