Column: Has Whitman found the PSG answer?

Opinion

Column: Has Whitman found the PSG answer?

It's an intriguing story about plans by HP to combine its PC and imaging and print divisions, writes Billy MacInnes.

What to make of it? Someone facetious might say that having decided not to spin the PC business off or sell it, HP is merely taking the logical next step in finding something in-house to merge it with. The PC business is having a tough time of it at the moment (sales were down 15% in Q1) and the print unit isn't doing that much better (down 7%) although it has been a high margin operation for HP for many years.

On one level, it makes a kind of sense to put the two together. For instance, many companies selling HP PCs are also likely to be selling printers as well, so combining the businesses should make it easier for partners and customers to deal with it.

Those "synergies" it plans to reap are also likely to fit with CEO Meg Whitman's comments to investors at the Q1 results announcement that HP needed to streamline its processes, optimise the supply chain, reduce SKUs and rationalise its go-to-market strategy to save money.

In addition, it chimes with her argument that HP's silo approach to its business had helped it to build successful technology groups but made it too complex and slow. Getting rid of some of those silos by merging business units could help change that.

My only (sceptical) thought is that if this is as good an idea as it sounds how come no one thought of it before? The best answer I can come up with is that they never had to. Now HP has announced a merger between the two units, it suggests that the company is doing it because it feels it has to.

Which brings me back to last August and the now infamous announcement about a possible plan to spin off or sell the PC business. While the company backed down from that scheme given the unfavourable reaction from customers and Wall street, it obviously still felt it needed to do something with the PC unit. Business as usual was not an option.

It now looks like HP has found an answer. If it works, HP and Whitman will be very happy but if not, the vendor might wish it had followed Apotheker's strategy after all.

This was first published in March 2012

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