HP combines printer, PC units; Analysts question synergy
Summary: HP said in a statement that the combination will help the company's go-to-market strategy, branding, supply chain and customer support. — HP on Wednesday made it official: It is merging its PC and printing units in a bid …
Context & Ripple Effects
HP had considered combining its printer and PC groups as early as 2009, but reaffirmed in 2011 that it would keep the PC division. The March 2012 restructuring turns that long-debated overlap into an operating change.
The move comes after HP reported a 15% year-over-year decline in PC revenue and a 5.2% operating margin for the business. HP argues that shared go-to-market, branding, supply-chain and support operations justify the combination, while analysts have questioned whether the two units have enough strategic synergy.
First-order effects
- HP combines the teams serving PC and printing buyers, giving the company a single structure for the sales, branding, supply-chain and customer-support functions it named.
- The PC business gains access to a broader combined operating organization as it absorbs management attention previously separated from HP's printing unit.
Second-order effects
- HP's channel partners and suppliers face a more centralized buyer and sales organization, making cross-selling PCs and printers a more explicit part of HP's route to market.
- Analysts' doubts put pressure on HP to demonstrate savings or stronger customer relationships from the merger rather than merely combining two mature hardware businesses.
Third-order effects
- The reorganization is a test of integration rent in mature hardware: vendors seek efficiency by combining adjacent product groups when standalone growth and margins are under pressure.
- If HP can translate shared operations into better economics, PC and printer vendors may place greater value on bundled customer coverage and procurement scale over separate category management.
The trend: Mature hardware vendors are consolidating adjacent businesses to extract operating leverage from shared channels, supply chains and support organizations.