In 1988 I spent most of my time using HP test equipment, and my most treasured HP device was the HP15C scientific calculator that I used everyday. It was around the same time (I think it was) that HP sold off its test equipment division to focus on computers and printers. By 1990 we had a lab full of HP computers and printers, but the HP test equipment was being replaced by other brands.
So it seems that HP were right to sell the test equipment division, but were they? One of the great benefits of buying and using HP test equipment was that there was an HP engineer on hand. Whatever the problem, you could make the call, and they would work with you on the solution.
Fast forward to today, where PCs and printers are commodity items, and half the printer hardware business comes from 20 of the more than 2,000 printer model variations. Rumour has it HP loses money on each laser printer sold, and is challenged to recoup this loss within the first year through consumables sales. The fact the division makes a profit is due to the sale of HP inkjets, where they own and control the IP.
As a shareholder (through my pension fund) I think splitting the business will give shareholders the value they have not seen for a few years. But HP’s current situation is built on years of board and senior management screw-ups, which continue to dilute the brand. The split, when it comes, will be permanent: where the enterprise half will grow, or just be another big company. If the HP board is not going to commit long term suicide in terms of the brand, it will need a better plan than they have told us so far.
The new HP print business as it currently operates will be incredibly vulnerable to the market, which is currently at a low point. Where will the value-add come from? Will the focus be on inkjet? On the laser side, will they stick with Canon engines, or look for a new more agile partner? Will the new unit have cash reserves to acquire? Or will it be vulnerable to takeover?
For remanufacturers HP has been a staple product, and with HP selling a million printers each week, the landscape won’t change overnight: but it will change.