07 Nov 2014

HP and Symantec split in two: nimble business is fast becoming the future

In the past month there has been breaking news that both HP and Symantec, giants of their respective industries, would both split their business in two.

HP announced it would spin off its PC and Printers business into an entity to be called HP Inc. The other side of the business would be Hewlett-Packard Enterprise. This is the side of the business the company’s CEO, Meg Whitman will remain at the helm of.

The news was received well by investors, with HP’s shares rising 4.7 per cent in value following the announcement, and there’s a good reason the move has been seen as a positive for HP – leaner, more nimble companies are the way to go in the current tech climate. Yes, Apple, Facebook and Google are splashing out big dollars buying other start up technologies that might seem random (to say the least) but these are all companies that, for all their current presence, are still in the process of building their competencies. Mature businesses, including HP, are already complete and focused, and from that point the goal is to cut the fat where necessary to give the company a razor-sharp edge which they may have lost over the years of acquisitions and experiments.

Symantec, meanwhile, has found itself with a need to split its businesses because it grew too quickly and became unwieldy. And so Symantec has opted to split its cybersecurity and information-management businesses into two separate companies. These are still going to be very large businesses (the security business generated $4.2 billion in the last financial year, while the information businesses generated $2.5 billon). The current CEO, Michael Brown, will be the president and CEO of Symantec, while John Gannon will be the general manager of the information-management business.

As with HP, the company has cited a need to focus the business, stripping out its complexities in order to remain nimble in the current climate. With a couple of tumultuous years for the company that has seen it oust two CEOs in two years, and increasing criticism that its core Antivirus security product was struggling to keep up with the more advanced cyber attacks that are going on in the modern technology environment, it was clearly time for the company to refresh how it operates.

Invariably, these types of splits allow one company to separate from a slower-growth business so that it can rapidly achieve growth.  Therefore, I look forward to seeing if these splits lead these two businesses back to their heritage of innovation.