Dan's Take

Can a Hewlett-Packard Divided Against Itself Stand?

The success -- or failure -- of the move will depend in large measure on HP leadership.

• By Dan Kusnetzky
• 10/06/2014

HP just announced it's splitting itself into two public companies: Hewlett-Packard Enterprise, to "define the next generation of technology infrastructure, software and services for the New Style of IT," and HP Inc., to be "the leading personal systems and printing company delivering innovations that will empower people to create, interact and inspire like never before."

That reads well, but the jury is out on whether this move will have the desired effect of a leaner, meaner and more profitable set of companies.

Forces in Conflict
If you step back from the marketing speak for a moment, it's clear the same forces caused IBM to divest itself of its PC business in 2004 and its x86 server business now. In both cases, by the way, Lenovo acquired IBM assets and continues to be an IBM partner. The challenge that IBM faced, and HP is just now addressing, is that different, often conflicting, forces drive these two businesses. One force is speed: A company has to be fast, innovative and ride the waves of the industry. The other force is quality: A company has to innovate, but do it carefully and deliberately, lest customers rebel and purchase products and services from others.

The PC, smart device and printer business is driven by extremely rapid change. Rather than having the luxury of time to carefully design, implement and test products and having those products live in the market for 18 to 24 months, products in these categories must be developed rapidly. Even more challenging is that these products have a very short life before competitors leapfrog over them, putting them in danger of being replaced by something new.

Customers are willing to accept disruptive change in this end of the business. A replacement product only needs to be faster, smaller and less costly to be considered a winning product. If the form factor, UI and technical specifications are vastly different than previous generations of a product, quite a few customers will purchase it anyway.

This, of course, is not true of all products. Microsoft learned through its own difficult experiences with Windows 8 that changing things too much and too fast might not be acceptable, and will result in product failure. Microsoft is still trying to recover from trying to force support for both PCs and tablets into a single OS. HP is hoping that pulling out its PC, smart device and printer group away from the enterprise systems, software and services business will make it possible for the company to create winning products quickly.

Following the 'Golden Rules'
The "Golden Rules of IT" make the enterprise server, software and services business quite different. (Read more about what the Golden Rules are and how they're applied.) In short, they state that change has to be moderate and predictable. It has to come in a way that doesn't break decades of software, procedures and end-user training.

HP is hoping that separating its slower-moving enterprise systems, software and services group from the faster-moving PC, smart device and printer group will make it possible for the company to create evolutionary products that will be quickly accepted by its customers.

Dan's Take: A Murky Future
As I've pointed out before, HP has always been known for careful and deliberate development and support. Sometimes this meant the company started development in a new area far before others thought it was important. Unfortunately, the company's careful and deliberate development methodologies sometimes produced excellent, full-featured products that were considered very late to market. This gave the impression that HP followed the industry rather than being a leader. I've called this "Industry Followship" rather than "Industry Leadership."

These habits don't die quickly. It's not at all clear that the folks who will be part of HP Inc., the PC, smart device and printer company, will be able to abandon years of habit and embrace a rapid development model that might produce imperfect products quickly.

The folks who find themselves part of Hewlett-Packard Enterprise -- the systems, software and services company -- still face the challenge of responding more quickly to market forces without violating the Golden Rules of IT and finding themselves and their products ignored by the industry.

Will splitting up the company win in the end? Unfortunately, the answer isn't clear. We're all going to be forced to wait it out and see what the leadership of these two companies are going to do.