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By | Neil McAllister 3rd June 2015 01:58

Life after HP cracks off into two: Execs spill the beans – tiny little beans

HP Enterprise will be 'simpler, more focused' ... but what else?

HP Discover The theme of the opening keynote at the HP Discover conference on Tuesday was "Winning in the New Style of Business," but what the audience in Las Vegas really wanted to know was whether HP can really win by splitting into two companies.

That transition is expected to complete by the beginning of HP's fiscal 2016, which starts on November 1. Yet so far, precious few details have emerged as to how the new HP Inc and Hewlett Packard Enterprise will actually operate.

Unfortunately, Tuesday's talk left most of those questions still unanswered.

In her opening comments, CEO Meg Whitman said the talk would focus mainly on HP Enterprise – naturally enough, since she'll be the new firm's president and CEO. (She'll also chair the board of HP Inc, but that firm's chief exec will be Dion Weisler, who currently heads HP's PC and printer divisions.)

"Hewlett Packard Enterprise will be a lot more than the HP enterprise business with a new name," Whitman said – but after two hours of presentations, exactly how it will be still wasn't clear.

Transforming: More than meets the eye

According to Whitman, the new company's goal will be to help companies embrace what she calls "the new style of IT." How? By transforming them, natch.

"You have to pick a transformation partner with the vision and breadth to make the best possible future," Whitman said. "That is the mission of HP Enterprise."

OK, so what's that mean, then? In a nutshell, Whitman was talking about apps, mobile, and the cloud – all the new hotness. Companies have to embrace these technologies, she said, or they risk being left behind by modernized competitors.

By way of example, Whitman said car-hire service Uber has had a dramatic impact on the taxi industry in every market in which it operates, using little more than an app and a backend to power it. As a result, San Francisco alone has seen taxi ridership decline by 65 per cent in the last two years, she said.

"Did [the taxi industry] have time to respond? Absolutely," Whitman said. "Uber launched in 2009. But they needed IT infrastructure and they didn't have that. The taxi industry was still operating on CB radios."

Later in the dog-and-pony show, Mike Nefkens, executive veep of HP's Enterprise Services group, said there would soon be "apps frickin' everywhere" – a trillion of them running in 100 billion connected devices and things by 2020, he said.

But HP doesn't see apps alone as the future. Instead, it reckons most companies will have a mix of mobile apps, cloud infrastructure, traditional data centers and networks, and legacy applications – what HP is calling "hybrid infrastructure." And if your company isn't there already, HP wants to get it there – er, that is, transform it – ASAP.

So how will splitting the company help?

Following Whitman's opening comments, a series of HP execs took the stage to explain the four "transformation areas" that HP Enterprise will focus on. Not surprisingly, these corresponded with the various offerings provided by the current HP's Enterprise and Enterprise Services groups. They gave them lofty names, but they boiled down to hybrid infrastructure, security, big data, and mobility.

What wasn't touched on at all, however, is how current HP customers will be transitioned to working with either of the two new companies, post-split. Many will likely end up being customers of both HP Inc and Hewlett Packard Enterprise.

Even more crucially, nothing was said during the keynote about just how splitting HP into two separate companies will do anything to address the firm's sagging fortunes of late.

HP's total revenue for its fiscal 2014 was flat from the previous year. The Enterprise Group's revenue for the year was likewise flat, while revenues for the Enterprise Services division sunk by 7 per cent, year on year.

The story was even worse for the firm's most recent quarter. HP's Enterprise Services revenue was down 15.5 per cent during Q2 of 2015, as compared to the previous year's quarter. And while sales of industry standard servers grew by 11 per cent, year on year, sales for all the other Enterprise Group subdivisions shrank.

The divisions that will become HP Inc have fared better, but not by much. Both the Personal Systems and Printing divisions have reported revenues that were either flat or in decline for each of the first two quarters of HP's fiscal 2015.

Streamlined, focused ... and smaller

During the keynote, Whitman said HP Enterprise's new logo – complete with its perplexing green rectangle – was emblematic of the new company's "simpler structure and more focused portfolio."

Similarly, Nefkens said during a Q&A session with the media following the presentation that splitting off from the PCs and printers business would give HP Enterprise more focus and allow it to move with greater agility.  "We will be quicker to respond, we'll be much more proactive, and we'll be pushing innovation very, very heavily," he said.

And according to Antonio Neri, a senior VP in HP's current Enterprise Group, if customers are worried about their support relationships with the two HP companies post-split, they shouldn't be.

"Customers do business with a line of business, so they already have dedicated account managers," Neri said, adding that the customers he's spoken to never ask much about how the split will affect their accounts. "The fact that we don't have to explain why we are separating is a huge deal."

But chopping HP in half won't be as easy as simply dividing up the spoils. Whitman is reportedly mulling a major restructuring of the enterprise business that she's hoping will save as much as $2bn in costs per year. And during the press Q&A, Nefkens confirmed that HP is already working on "exiting high-cost labor in high-cost countries" – in other words, shutting down spendy offices.

That means we can almost certainly expect more layoffs at HP before the whole transition is done. For HP customers, what remains to be seen is whose. ®

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