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Should you buy an HP PC after the plan to split?

Agam Shah | Oct. 7, 2014
The plans to split PC/printing and hardware operations could have long-term implications.

--Buying computers just got a lot harder for enterprises:

HP's enterprise customers won't have a one-stop shop for server, software and PC purchases after the breakup. The ability to buy hardware and software from a single entity was one reason HP decided to retain PC operations in 2011. Enterprise customers will have to look at different sales organizations for PC and server requirements, and negotiate different customer-service contracts and service-level agreements. But the enterprise and PC/printer organizations will still continue to work hand-in-hand to meet customer needs, said Charles King, principal analyst at Pund-IT

--Expect other PC makers to take advantage of the situation:

Dell and Lenovo will lure HP PC buyers -- particularly in the enterprise -- into their camps by raising doubt about HP's future as the transition takes place. That's a win for the customer, who can take advantage of discounts or other promotions offered to switch over. HP will try to diffuse the situation and retain customers with counteroffers of its own. A similar practice exists in servers, where HP and Dell went after customers of IBM's x86 server business, which was ultimately acquired by Lenovo in a transaction completed last week.

Dell -- which went private last year -- has already fired the first salvo, with a statement saying: "HP's decision to break apart its business is complex, distracting and appears to benefit HP and its shareholders more than its customers, which is ultimately the wrong priority."

--Uncertainty around printers

Analysts said HP's printer business is losing the financial clout it had, and faces an uncertain future. HP Inc. will continue to offer printers and ink to consumers, but enterprise customers with managed printing services may be stuck in the middle with hardware belonging to the PC organization and some management and security software to the enterprise organization.

Technalysis analyst Bob O'Donnell said it will be interesting to see how enterprise customers respond to the proposed split, and how HP will manage that operation. But for HP, printer sales were largely tied to the services and software it sold, so the breakup is perhaps not a good idea, O'Donnell said.

"It's a lot more for the shareholders than for the customers. After seeing these businesses evolve, there's an increasing need for hardware and services together," O'Donnell said.

HP's printing business faces an uncertain future, NPD's Baker said.

"There's more challenges on the printing side than on the PC side. Usage has gone down, volume has slowed. There's more risk," Baker said.


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