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HP Split and Indian Impact

Oct 15, 2014 | Technology | Vineet Kumar

Recent announcement of HP to be split into two publicly traded entities: Hewlett- Packard Enterprise (business-oriented entity) and HP Inc. (personal computer systems and printers) can be assessed in lined with the shifting trend of focus from commoditized hardware to services and software solutions. It has been decided that Meg Whitman will serve as the chief executive officer (CEO) of Hewlett- Packard Enterprise whereas Dion Weisler will be appointed as HP Inc.’s CEO. Earlier, in 2005, IBM sold it PC business to Lenovo and both have been benefitted from the deal.

Although the split provides a general opportunistic perspective of focused growth for both commodity business (printers & PCs) and enterprise business, it is imperative to assess and compare the scenario in India and global level. Globally, HP’s annual revenue generation from printing and personal systems group accounts for about 50% of the sales whereas in India, the respective share stands at 55-60% of the total revenue generation from HP, India. For PC shipments, Lenovo Group Ltd holds maximum share of about 19.1 %, followed by HP with a share of 17.7%. However, in India, HP is the leading player of PC shipment with 29.5% share of the entire Indian PC market, followed by Dell with a share of 19.1%. Having mentioned this, it should be noted that the Governmental support, especially in Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh has been crucial in the entire PC shipments.  Moreover, the split businesses have already been functioning separately with entirely different competitive landscape. Particularly, for commodity business, the competition is highly intense with Lenovo gaining momentum in terms of scalability. On one side, HP will not only be able to improve its already established commodity business but will also be able to expand enterprise businesses in demand, such as, analytics, cloud computing, etc.

Thus, the past success and shifting trend from hardware to software suggests that the split will have positive impact on both commodity and enterprise businesses.