H-P Probably Smart to Spin Off PCs and Printers

Hewlett-Packard will once again split its company into two, basically spinning off the low-margin PC and printer business according to reports. We have seen IBM pull this off with its PC and later server business thanks to Lenovo.

The reason I say “once again” of course is the company said it would do this a while back and abruptly changed course. They then reassured hte market that they would not spin off the units.

The move does make sense from the standpoint of focus and valuation. The company is gargantuan and having to deal with PCs and printers is just one more area to devote precious resources.

These same resources could instead be aimed at cloud,-software and services.

Moreover, it seems the pressure is really on the the PC market to price devices at $99 or $199. H-P’s own Stream announcements confirm this. Chrome book competition is forcing the market to rethink itself. Then there is Android – hundreds of thousands of apps are available and prices are plummeting. In short, Apple is at the high end of the market, commanding Tiffany-plus margins, then there is Samsung and then a huge gap before you get to the others.

I said sometime back that Meg Whitman would have a short tenure at HP. The reality is she is doing an OK job – this move is probably the right one.

In a weird way, I think the stutter- step towards this decision in the past has readied the market for this move.

The news of this spin-off may result in loss of some customers but don’t expect calamity.

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