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HP Executive Forum 2018, or How to Love Your Channel and Pitch a Few Products

Rob Enderle

I’m in Las Vegas this week at the HP Executive Forum, which is one of the most fun events of the year. This is where HP talks mostly to its channel, and I’m one of a small number of press and analysts invited to the event. This is a sales event designed to get HP’s channel excited about HP’s products, so it is very high energy.

Let’s get to the content.

HP’s Achievements

The first achievement was that they were tightly knit and delivered double-digit growth, oversold by 1M units the printer plan, and showed growth in supplies. This showcases that yet again the pronouncement that print was in decline was premature. Personal Systems also had double-digit growth, reiterated that market share wasn’t a priority, but they became number one again. Apparently, the Sprocket printer was a huge success. This little printer is the closest thing HP has to something like an iPod (around 70 percent of the market).

Feedback

One of the interesting parts of the presentation is that they are making listening to the channel a  major element of the keynote. Repeatedly, they are saying things like HP needs to be humble, needs to listen, needs to work with the channel for success. It is refreshing to see a company not just pitch product but talk, to some extent, about the importance of the relationship.

Service

Service is a big initiative for the company. As have most of its peers, it has realized that it is services where much of the sustainable revenue is and where you control customer loyalty through experience. This is also where the channel adds value so assuring the channel partners have the ability to provide services that reflect well on all of the entities has become one of HP’s highest priorities. This is one of the big things that often differentiates HP from firms like Apple, Acer and Asus.

Virtual Reality


HP now believes that virtual reality (VR) has a far bigger opportunity in the commercial market than in the consumer market. Markets like automotive, ecommerce, automotive, military and health care are being targeted and, according to HP, are adapting the technology aggressively. One interesting use in military health care is to deal with PTSD by reintroducing what caused the PTSD but in a safe environment, so the patient can learn to deal with it.

Retail Point of Sale

They have ramped their retail point-of-sale capability and the end result has been that partners have been more successful at selling bundles of products, increasing the sales of things like accessories. One of the big deals was with the Russian World Cup federation; other big wins came from Arby’s and Best Buy. I later found out they have a huge initiative to revolutionize work flows in areas like this one, health care and logistics.

Endpoint Security

According to HP, every day, 1M new malware pieces are introduced into the ecosystem. There was a 48 percent increase in cyberattacks and this year we are already up 28 percent. The attack profile places endpoints as one of the favored entry points. HP feels that their security solution differentiates them strongly (I should add that the last time I heard Intel talk on this, they called HP out as the segment leader in security). From printers to PCs, HP is arguably the most rabid with regard to this subject. I wish more firms in this segment took this as seriously, given the increasing threats from truly bad actors like North Korea.

Then HP’s CEO took the stage. Interesting to note that he didn’t open the keynote but let his people set the foundation. I thought the approach conveyed the subtle message that HP was a team and not dependent on any one individual, not even the CEO.

Dion Weisler

CEO Dion Weisler is one of my favorite CEOs. The guy tends to speak to the audience and not at them. He opened talking about the death of COO Jon Flaxman earlier this year and I don’t think I can recall another event like this where a recent death was even mentioned, let alone where they spent an extended period memorializing him. This is really a very different company than we typically deal with, one that has heart at the top. It strikes me had Carly Fiorina or Meg Whitman demonstrated similar heart, they both would have done better as CEOs and politicians.

Weisler transitioned to talking about how these channel partners are critical to HP’s success and that the products they sell are designed largely based on the feedback from these partners. This is arguably a best practice because I’ve found that people tend to be far more passionate about things they have had a hand in creating. He mentioned that his biggest concern wasn’t competitors like Dell or Lenovo, it is complacency or arrogance, behaviors he has seen kill other firms.

Weisler then moved to talking about executing on a plan to increase the growth and reach of HP’s partners. Basically, this is reiterating that the HP channel is an important priority and HP is investing in it significantly. He pointed out that the most profitable partners, and I’d argue the most loyal, are those that have rich portfolios of products and services, not those that sell point products at the lowest price. This is generally consistent with most markets, those that provide the greatest value, as opposed to the lowest price, tend to have the greatest customer loyalty and profitable growth. Some of the strongest projected growth, 40 percent, is in value added services.

The investment in printer security and acquisition of Samsung’s printer business has been paying off nicely. HP’s effort with regard to device as a service has been expanding nicely and HP views it as a huge positive differentiator and continues to pour R&D funds into making sure these devices have the sensors needed to provide the information required to make these services effective.

HP’s 3D printing efforts continue to expand, and they have increased the number of 3D printed parts for these 3D printers from 30 to 120. The result was a reduction of three to five months in time to market, millions in savings in tooling, and sharp cost reductions in the cost of the product. I should point out that this is a huge step toward the day when complex machines, like robots, can build themselves form component parts.

Sustainability is the next topic. They want to redefine the impact the firm, and its partners, have on the planet and its communities. Weisler believes (and I should that add surveys support this belief) that employees and customers, particularly the young ones, care passionately about the environment. According to Weisler, $1B of HP’s revenue is directly connected to HP’s sustainability efforts.

Personal Systems

Ron Coughlin, president of HP’s Personal Systems group, was next. In 2017, they grew 11 percent, or $3.4B in revenue and, according to them, showed more growth than Dell and Lenovo combined. They also grew 7 percent of market share (this was cute because he didn’t mention Apple’s name as the loser but took a big bite of an Apple on stage, placing it near stage center so we could see the fruit with a huge bite out of it).

HP became number one and has remained number one in the market for more than a year, reiterating that it isn’t an HP goal, just the outcome of executing very well. They are particularly pleased that they grew both the premium and gaming PC sharply high profit segments for the firm. Their DAAS efforts have grown from $1B to $3.6B, and they announced a deal with Aon to take their security promise to the next level. They reported 15 percent growth in Q1, this is on top of 10 percent growth last year. They are really tickled that they are taking huge share from Apple. I can guess why. Apple screwed the firm years ago and it was the Apple iPad that put HP PCs and printers at risk.

They then moved to talk about WeWork, a company that focuses on transitioning workspaces to experiences. Think of this company as the direct opposite of firms that sell cubicles (back story, the guy who created cubicles was appalled at the result, as they were never supposed to become permanent workspaces). Millennials are being outspoken about the fact that they don’t want to work in the cubicle hell most of us still live in. They spoke to how success was a blend of work and life. Eighty-eight percent of millennials want more flexible devices and fewer than 50 percent are happy with their devices today (interesting statistic). They went through a showcase of truly beautiful PCs, but the feature that stood out for me was the unique integrated security screen because I really don’t like the person next to me on the plane seeing what I’m working on. I also liked the privacy camera, a simple integrated cover that covers the camera. I am kind of surprised, given how many times folks have been caught on video accidentally, that this isn’t universally standard.

They introduced us to the Envy x2, their Qualcomm/Intel-based, always-connected platform. This is one of several laptop form factor tablets like laptops that have massive battery life and integrated WAN connections.

IT Choice

They then moved on to talking about HP Devices as a Service (DAAS). They highlighted that recent wins were largely because they could manage huge pools of PCs that included Apple products. Currently, they encompass Windows, Apple platforms and Google platforms. DreamWorks was the customer that spoke to why HP was significantly better than their peers. Audi was showcased as the advocate for VR and the ability for customers to explore their car before it is even built. (Interesting point, Dell is doing something very similar with Jaguar and I can speak to the effectiveness because I ordered the car). I tend to agree; VR’s near-term future is strongest in the commercial market.

Printing

Enrique Lores (nickname the Splendid Spaniard) came up on stage to talk specifically about printing. The guy is just a ton of fun. He spoke to how much the energy has improved with the channel over the years. Lores spoke to accelerating growth and how they were going to do that collaboratively with the channel. He was particularly pleased that they were finally able to ship the first printer to the International Space Station, and showed a cute video on the installation team (basically the HP executive staff) training in zero gravity. It is interesting to note that one of the main drivers for this printer was that the astronauts wanted to print photos of their families.

Back in 2016, unit growth was down 20 percent, supplies were down 14 percent, revenue was down 17 percent, and operating profits were down 25 percent. In 2018, units are up 14 percent, supplies 10 percent, revenue 14 percent up, and profit is up 12 percent. He then thanked the channel for this growth. Goal going forward is to continue to make printing relevant to businesses and consumers. I should note they had really decent production values; this part of the talk was heavy with well-produced videos. One of the most emotional was a father showing a picture of his deceased parent to his young son. I’m sure I just got something in my eye.

They also announced the expansion of their business printer portfolio; this latest iteration was designed to significantly reduce support costs and provide more variety for the customer and growth for HP and its partners.

Lores once again reiterated that security was job one. And they announced integration with Microsoft and McAfee security standards. One of the interesting projects was in Europe, where they implemented a book print on demand capability for publishers, so they could store the book digitally and only print what was needed.

One interesting initiative was called Print over Hate. They used printed building wrap to cover hate speech graffiti with art, reducing significantly the power and fear connected with hateful acts. Another showcase of a company doing well by doing good.

Microsoft

Microsoft was one of the event sponsors and Carlos De Torres Gimeno, VP Consumer and Device Sales, North America for Microsoft, opened with that same apple used earlier. He purposefully put it in the far corner, in sight, but no longer important. Interesting visual. He spoke to AI and the need to use it to amplify human intelligence. Like IBM, Microsoft appears to believe that AI is best used to enhance, not replace, humans. A lot of firms are quickly beginning to understand that AIs don’t buy stuff, so replacing humans with AIs is a going out of business strategy. He introduced the term AGI, Artificial General Intelligence. This is applied AI. The important stat is that Microsoft believes that there will be a 35 percent boost in revenue due to AGI, in the developed world in a few short years. The applications will be in customer engagement, employee empowerment and business reimagination. They believe AI will be one of the most fundamental technologies that the human race has ever created.

Wrapping Up: Treating the Channel with Respect

Really what makes HP very different with this sort of event is how interpersonal it is. It is really less about product and more about improving the relationship. Later, I sat in on a session where they walked the channel through future prototypes and asked for feedback. HP aggressively incudes the channel in product decisions, treats them like family at events, and based on what I can see, the channel folks love the company. You know this is the way it really should always be.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+


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