In "Fixing HP: Highlights of HP's Financial Analyst Meeting," I wrote about how CEO Meg Whitman's opening talk set the tone for a very impressive event and how that was strikingly different from what I saw last year. I'll finish up today with my thoughts on one of the best new presenters, what the CFO had to offer, and why HP came across as a team, not a collection of players.
HP Printing and Personal Systems Group
Dion Weisler is the new executive over this group and he was arguably one of the most entertaining speakers of the day. I point this out because Todd Bradley, his immediate predecessor, sucked on stage so badly he was actually painful to watch. Weisler is night-and-day different; he has good pacing, a sense of humor, and most importantly appears to care about the audience. He was also the least polished, but he did better on his first day in front of this audience than Bradley did on his last day, suggesting that he should be amazing after a few years of experience.
He started out talking about three waves, the current technology wave and the next two that are coming. The coming wave includes the Internet of Things, 3D printing, digital packaging, services and new ecosystems. The following wave will bring new interfaces, flexible displays, and more flexible power systems for personal devices. He is investing in all three areas, but this is the first time HP has formally said it will have a 3D printing business and is working on flexible displays again (it actually had one of the first eBooks and first smartwatches, the last using a flexible display, but these efforts were killed under Mark Hurd).
This is a product group that is typically very close to the user, and Weisler wisely started with a bit of a product showcase. His first product was the Officejet Pro X, the only printer growing at double digits in a declining market because it has a unique full-page print head. On the PC side, he spoke to the fact that PCs in general are declining, but all-in-ones are growing at the same amount, commercial tablets are growing at 29 percent, hybrid notebooks are growing at a whopping 65 percent, and related PC services are growing at 8 percent. Oh, and accessories for these devices are growing at 12 percent. Overall, the market is expected to be $400 billion.
The product showcase continued with the Zbook, an ultrabook-sized workstation. HP has number-one market share in workstations. It also has number-one share in thin clients. Moving to notebooks, it has dropped to a number-two market share, and he showcased the Elitebook 800, a reasonably priced new ultrabook. HP recognizes that it is behind in tablets and its mix in desktop computers isn’t where the market growth is (entry level). It plans to correct both. The next product he showcased was the “Rove,” an all-in-one desktop with a battery. Finally, he showcased the new low-priced Chromebook for the education market (around $289), and it was a rather nice-looking product.
Moving to printing, HP still has number-one market share. It just launched 16 new printers, ink growth continues at double digits while it has reduced ink SKUs 15 percent, and it actually grew revenue 2 percent and is projected to grow 3 percent, with ink growing at 9 percent. And HP expects to grow managed print services at 11 percent.
Stephen Nigro took over to drill down into the printing business. He showcased that unit growth in multi-function printers is a whopping 34 percent. What is driving this is actually the scan side of the solution, because companies are scanning in their paper documents in order to digitize them and then managing the result with Autonomy. He covered the Indigo high-end industrial commercial printing solution, where the group is seeing page growth at 19 percent and currently has 64 percent digital press market share. They are moving this solution to packaging, where digital press is under penetrated. This last is a $5 billion opportunity, and packaging won’t go virtual (I don’t agree with this last point, given the growth of 3D printing).
He spoke about a new service (actually a whole new printing business model) called “Instant Ink,” where you basically subscribe to printing. These printers meter the activity and are tied to cloud services, which provide ink supplies when needed to keep the printers going. Prices range from $2.99 for 50 pages a month to $9.99 for 300 pages a month. Trials have had large renewal rates and the result is an annuity-like income to HP and the customer is locked to HP printing supplies.
Finally, he spoke about the three big trends in printing. These include mobile devices, the digitization of existing documents, and the movement of the result to searchable cloud services and printing from the cloud, and security with regard to protecting intellectual property.
The closing presentation was from Cathie Lesjak, HP’s long-suffering CFO. Lesjak has been the one constant in what has been a near revolving door at the top of HP over the last several years. She is one of the strongest CFOs currently in the market. She showcased that HP has consistently outperformed expectations since Whitman took over, and she remains well regarded with the financial analysts in the room. This audience lives numbers, and Lesjak remains one of the best numbers people in the businesses, which is how and why she has outlasted so many HP CEOs.
Wrapping Up: HP Sets the Stage
This financial analyst-focused event is one of the best organized and presented I’ve ever attended. The CEO talk at the beginning set the stage for the divisions that followed, and the pacing was consistent throughout. Each division could showcase a strategy for growth and the closing talk by the CFO emphasized that HP had consistently outperformed expectations since Whitman came on board.
Overall, however, the takeaway is that HP is now more a team and less a collection of CEO candidates waiting for their next job. This is really Whitman’s HP and it got there not because of any magical formula but through solid strategy, staff selection and promotion, and a focus on execution that the company was missing through much of the last decade. As a result, you walk away with the firm belief that this turnaround, while far from done, is running ahead of plan and that Whitman’s HP will be able to execute where it couldn’t before she took over. That’s solid work from the CEO and the executive team.