IT + CE
Digitimes Research: Enterprise segment to benefit, but PC segment to suffer from HP spin-off
Joanne Chien, DIGITIMES Research, Taipei
Thursday 9 October 2014

Hewlett-Packard (HP) will separate into two companies, HP Inc. and HP Enterprise with the former focusing mainly on PC and printer products and the later on servers, storage, software and services.

Digitimes Research believes the strategy will help HP break through bottlenecks in its overall operations, but the company's PC and printer businesses, now under HP Inc. will have issues in long-term development since the company is still not able to achieve any significant results in the mobile market and is mainly defending the PC market and pushing the 3D printer business, an emerging industry, but still small in scale.

With bring your own device (BYOD) becoming a trend in the enterprise market, HP Enterprise is expected to accelerate its cooperation with other mobile device brand vendors to answer its enterprise clients' demand for mobile applications. In the past four quarters, the company's server, storage and Internet products have been mostly achieving positive on-year growths (negative 2% to 2%).

During the period, although the company's operating profit rates were not able to reach a level similar to those of previous years, they still stayed firmly above 14% and did not drop as in previous years.

As for HP Inc., although the printer business is able to contribute strong profits with the latest quarter's operating profit rate reaching 18%, revenues continued to stay in decline with a 4% drop in the latest quarter. Trying to use 3D printers, which are still emerging products, to reverse its situation is unlikely to occur in the short term.

The PC business, which contributes 60% of HP Inc.'s revenues, has seen shipments, revenues and operating profits significantly improve thanks to the company's aggressive moves to land education and enterprise orders in the previous year, and strategies to launch new entry-level notebooks and expand related shipments.

Since HP Inc. will continue to be operated by its original team, Digitimes Research believes during the spin-off, the company's competitors are unlikely to have much chance to snatch its market share.

However, most of HP Inc.'s target industries are already mature. Mobile devices, which are expected to stay the mainstream products of the end device market, are expected to become a weak point of HP's future development since the company has been operating in the related market for several years, but has not achieved any practical results.

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