In Break up HP?, Bill comments on how analysts are calling for the breakup of Hewlett-Packard. Bill points out that there were similar calls to break up IBM in the early nineties, but Lou Gerstner kept IBM together, and the company has been a lot better for it. The comparison between IBM then and HP today is an apt analogy, but I don't think it applies to HP.
The Gerstner administration was able to help IBM find and develop a lot of synergies between its business parts, the most obvious being IBM software products running together and on IBM hardware. IBM Global Services got started in the '90's and now a lot of its business involves helping clients with using IBM software on IBM hardware. The businesses work well together and compliment each other. I don't know if that was obvious when Gerstner started, but it's obvious today.
I don't see the HP businesses working well together. The vast majority of HP's profits come from printers and supplies. Their PCs, servers, and storage are also-rans, their software loses money, and their services/consulting haven't taken off. (Check out recent articles in Fortune, Business Week, etc.) Where's the synergy? I don't see how they're going to be able to form an IBM-caliber enterprise IT company around printers.
Another leading technology company that's been in trouble for a while is Sun Microsystems. Linux is stealing Solaris' thunder, their custom microprocessor R&D is becoming prohibitively expensive, and despite their enormous leadership roll in Java, they can't make money off of it. (By comparison: IBM defrays the costs of developing Power chips by selling them to lots of partners; IBM's WebSphere Application Server leads the J2EE marketplace whereas Sun's Java System Application Server has very little market share.)
So where is all of this going? Will HP break up? If so, will the non-printer parts survive or be bought? Will parts or all of Sun survive or be bought? If bought, by whom? IBM already has these products and businesses. Microsoft doesn't want them. Computer Associates used to buy anybody going out of business, discontinued software products at least, but CA is in its own trouble these days. Oracle can't buy everybody (or can it?). Symantec's looking for new businesses to get into (now that Microsoft's stealing its thunder); are these it?
Where are these decent but unprofitable business units going to go?
(Usual disclaimer: I don't speak for IBM nor know what plans my employer may have. I'm just an informed outsider who reads business magazines.)