HP splitting the Company in Two: One part for computers/One for Printers

[foto_man]

http://www.theguardian.com/business/2014/oct/06/hewlett-packard-split-into-two

As there are a lot of Z series printer users here, I thought I'd get a reaction.

What do you guys think? Will this be better now that the printer business will be it's own and not part of a huge company?

Anyone who has tried to navigate the HP website or customer service knows what a mess it is.

Hopefully, they (the printer side of HP) can now fully concentrate on their products (which I personally, really really like) and their customer service.

Do you guys think it will be better for us HP printer users or worse?

[chez]

From a product perspective, the HP line of large format printers are wonderful. I've been using 2 for the last 5 years without any issues producing excellent results.

From a service perspective, HP really dropped the ball big time. Their software is buggy and I always cringe when upgrading as I've been burned with a system not able to print for over a week after an upgrade to the software.

I'm hoping the printer business unit continues to produce great printers and being split from the rest of HP, hopefully they create a much more personal service department which actually helps when someone needs it.

I can only see good things from this.

[Ernst Dinkla]

More worried about the transition period than the companies being separated. With rumors like this that period started yesterday and given the uncertainty that it will actually happen that transition period can take a long time. Today may give the answer. Hope they have a better hand in splitting up the company than they had in buying other companies.

--
Met vriendelijke groet, Ernst

http://www.pigment-print.com/spectralplots/spectrumviz_1.htm
September 2014, 650+ inkjet media white spectral plots.

[mcbroomf]

It's not splitting printers from computers, printers and computers will be one part and other hardware and service will be the other.

" ... separate its computer and printer business from its corporate hardware and services operations ..."

I think the discussion is still valid though.  I'm also disappointed with the LF printer business, in that it appears to have halted development after the 3200.  I bought a 44" Canon 8300 to supplement my 24" HPZ3100 but I might well have gone for a 3300 (had there been one) depending on it's performance/value etc

[PeterAit]

There will not be a separate printers company. The computers and printers parts of HP will be spun off together into a single entity separate from the rest of the company (networks, servers, etc.). It still might be an improvement, though.

[Alan Goldhammer]

I suspect that this will not be good news in the long run.  HP has established a commodity company (computers, printers, etc) and a value added company (software services, etc).  This is pretty much the same path the IBM took some years ago when they spun off their PC division.  HP will likely focus on volume sales in the commodity company and one might expect R&D budgets to be slashed.  It's also important to remember that with the explosion of tablets and alternative media, photographic print volume is decreasing and will continue to do so.  The big volume in printers is for "all in one" units that can scan, copy, and print for most office applications and not for dedicated photo printers.  It would not surprise me at all if this new HP company exits the large format printer market as it just would not be sustainable business option. 

[howardm]

well, maybe.

If you look at HP's overall product line in printer space, there are of course a million crappy home all-in-one scan/fax/print units but on the business side (where the Z3x00 lives), they have a big line of big and serious printers for business and industry including monster latex printers.  While they  may nuke the Z3x00 high-end photo printer (vs. more graphic arts, signage etc),  I think they are in the large format biz for keeps.  I'm hoping they hvae the Z3300 up their sleeves just to keep Epson/Canon on their toes

[aaronchan]

I suspect that this will not be good news in the long run.  HP has established a commodity company (computers, printers, etc) and a value added company (software services, etc).  This is pretty much the same path the IBM took some years ago when they spun off their PC division.  HP will likely focus on volume sales in the commodity company and one might expect R&D budgets to be slashed.  It's also important to remember that with the explosion of tablets and alternative media, photographic print volume is decreasing and will continue to do so.  The big volume in printers is for "all in one" units that can scan, copy, and print for most office applications and not for dedicated photo printers.  It would not surprise me at all if this new HP company exits the large format printer market as it just would not be sustainable business option. 

Don't worry, as long as the indigo is still belongs to the printer sector, it won't fail.
over 1000s indigo printers are running in China and the sales is still going on.
HP basically made their money by sell these printers, not from PC nor their IT services.

[Geraldo Garcia]

I always said that HP was a Bipolar company, so it makes sense!

The printer's division has been much more profitable than the computers division so it is likely that it will be dominant on the new company. It may very well mean good news in the long run, but surely we will face some confusion in the next months.

[Jim Kasson]

I always said that HP was a Bipolar company, so it makes sense!

I think they're a CMOS company, myself. {Sorry, engineering joke).

Jim

[Alan Goldhammer]

The printer's division has been much more profitable than the computers division so it is likely that it will be dominant on the new company. It may very well mean good news in the long run, but surely we will face some confusion in the next months.

Of course they are profitable as they have emulated the old Gillette Razor strategy - give away the printers and make money on the ink.  This works because of the huge installed base of office printers.  I have had a Deskjet printer for more years than I care to count now and it just keeps on printing.  Every three months I have to shell out $30 for a new black ink cartridge that probably cost $0.25 to manufacture so you can see the huge mark up.

[Alan Goldhammer]

Here is some interesting information from the most recent HP annual report.  The combined PC/Printing group had sales of $55.9B for the most recent fiscal year.  Printing makes up 43% of the sales BUT sales growth from the previous year was only 2.6% compared to 10.2% for the PC group.

HP state, "In Printing, we are experiencing the impact of the growth in mobility, weak consumer demand,
weak demand in EMEA (Europe, Middle East & Africa) and a competitive pricing environment. To be successful in addressing
these challenges, we need to execute on our key initiatives of focusing on products targeted at
high usage categories, developing emerging market opportunities, and introducing new revenue
delivery models to consumer customers."

Printing net revenue decreased by 6.5% over the previous year.  Though there was a large decrease in the Ink Jet segment, it was partially offset by a higher mix of high value ink jet units (not clear to me what they are talking about here as there is no elaboration; perhaps these are the large units used by graphic arts and printing industries.  I'm not familiar enough to make any further statement here).

HP do not break out R&D expenditures per business segment so it's unclear what the spending is for the Printing group.

[enduser]

Had to laugh at the HP wording: "EMEA (Europe, Middle East & Africa", Saying where twice! and: "we need to execute on our key initiatives of focusing on products ..." could read, "we need to focus on products ...".

[zippski]

Anyone who has tried to navigate the HP website or customer service knows what a mess it is.

Fortunately, the HP site has been completely revamped of late and the LF printer stuff is now actually quite searchable and user friendly.

Leigh
zippski

[BAB]

The split was in the planing stages over a year ago, without the separation the company will go bankrupt.

[Alan Goldhammer]

The split was in the planing stages over a year ago, without the separation the company will go bankrupt.

Extremely doubtful.  The company has relatively modest long term debt and the cash flow has rebounded from FY 2012 and is enough to cover interest payments (in fact they have paid down debt over the last five years).  They are also sitting on $12B in cash so I don't think this is a company on the edge of insolvency.

[Justan]

I'm no expert but the primary reason they would do this is to drop what some consider to be an under-performing part of the company, and also to resolve some manufacturing related issues that can’t be resolved any other way. I read they (HP) considered doing much the same thing a few years ago and the then CEO who floated the idea was sacked because of his suggestion. Now, with the company seen by some analysts as wandering without direction, the split has been seen as favored due to a modest increase in stock value.

The downside is that a lot of top talent that was generally available will end up with one company or another. Ultimately, I think that top stock holders want to drop the underperforming part of HP and at the same time, free up a large amount of cash and obligations, and that is what drives the decision….

[deanwork]

Yea, and when giant companies break up into sections it is usually a time when a lot of people get fired.
I saw a discussion a couple of months ago on Bloomberg West that covers tech stocks, and the guest was saying that Wall Street was  really starting to put major pressure on HP to get out of the consumer pc and printing business and focus on high-end business services. Right, IBM already went down that road. But HP has a huge investment in printing so they are not just going to walk away from it unless they had a buyer that would make that work. This was the only choice they had. I agree that the company was just way too damn big and over diversified and they just can't do that anymore, especially now that Canon has come on so strong. I hope it is all for the best. I don't want to give up my Z technology as a part of what I do and the pro photo printer market is not healthy with only two major players.

john