HP touts digital enablement to top partners as key to strategy going forward

HP celebrated a very strong year with their top partners at the company’s Executive Forum, outlining the direction of their strategy, and the role of the channel in it.

Christoph Schell (L) and Dion Weisler (R) onstage

LAS VEGAS – At HP’s Executive Forum today, HP CEO Dion Weisler told a hall packed with HP’s top partners that he considers his biggest fear to be not HP’s competitors, but the arrogance and complacency that had brought many a great company down. It’s been a theme Weisler has expressed before. That being said, HP was pretty gleeful in summing up their 2017 results to their partners, taking pride in having proved many analysts wrong who thought when HP Inc. was split off from the enterprise business that it was a collection of low-margin businesses that were long past their prime and had little chance to succeed.  The company was also bullish in laying out its high-level strategy going forward, identifying areas in which it wants to expand, and how it wants to do it.

The numbers were impressive including double digit revenue growth in 2017, reaching the number one rank in total PCs, and in both commercial and consumer, and reaching a record 30.6 per cent share in the Personal Systems, up 7 per cent since 2013. Their A3 printer business grew 49 per cent in Q1, and their printer hardware sales far exceeded their budgeted expectations.

Christoph Schell, HP’s President, Americas, said that while HP would remain razor sharp in protecting their core business, they are also looking to drive growth in key areas related to digital transformation, He identified four such categories within HP’s business.

“Everything-as-a-service is an essential part of any digital transformation strategy,” Schell said. “It moves customers from capex to opex, and helps lock in an account for years.”

Virtual reality is another area of tremendous promise, Schell said.

“While this has gotten off to a strong start in the gaming market, we believe that the commercial opportunity of this technology outweighs the consumer opportunity,” he indicated. He described multiple use cases for the audience, which included simulated surgeries for doctors; battlefield simulation for military training, and virtual showrooms for consumers to experience products.

Retail Point-of-Sale was Schell’s third identified area of opportunity.

“We had another huge year in retail POS,” Schell told HP partners. “With it, you are at the heart of the operation of the retailer and it helps you sell a lot of other products.” He then rolled through a list of the big PoS wins in 2017, including Nike and its thousand stores, which he termed a great achievement, the Russian World Cup Federation, who signed a three year deal, and Best Buy.

Endpoint security is not a new area by any means, but it appeared as Schell’s fourth area of opportunity going forward because of the million new malware pieces being introduced worldwide, every day, creating the potential for what he said would be a $60 trillion addressable market.

“Security is a huge differentiator for us at HP,” he said. “It’s a door-opener for a C-Suite discussion. You won’t get to talk to them about a PC, but you will if you can talk about a cybersecurity strategy.”

HP CEO Dion Weisler then took the stage to talk more about HP’s strategy, and he emphasized  – no big surprise at a channel event – that partners must play a central role in it.

“87 per cent of our business is channel and I only see that growing in the future,” he said. He stressed that while many pundits had said that HP wouldn’t be able to grow their business units, that they had been proved wrong, in large part because HP had been successful in accelerating partner growth.

“In the past two and a half years, we have built a very robust foundation, generating an enormous amount of momentum together,” Weisler told the partners. “We have over 250,000 partners on a broad  spectrum from purely transactional on the left to very sophisticated digitally-enabled partners on the right. Most are at points in between, with very few on the extreme poles. The most profitable, however are on the right.”

Weisler stressed that HP wants digitally-enabled partners, and wants to help partners become digitally enabled.

“The digital partner is very sophisticated, and has a very good understanding of all these subsystems,” he said. That helps customers make decisions differently, and helps the partner move from having to compete on price to competing on pure value.

“We want to be your partner of choice, regardless where you are on the spectrum, and help you accelerate towards the far right of that spectrum,” Weisler said.

Weisler also emphasized HP’s investment in device-as-a-service.

“We will continue to invest in R&D to get the right customer insight and predictive failure information to you, to reduce your number of truck rolls,” he told partners. “PCs-as-a-service grew nearly 200 per cent last year. Device-as-a-service is our fastest growing pipeline, and is in the multi-billions of dollars.”

Weisler also indicated that they are accelerating initiatives on the retail side, with gaming and premium offerings, and including investments in virtual reality and voice in personal systems and print.

Weisler also addressed HP’s longer-term plans, for the market or a decade out and more, and stressed their emphasis on next-gen digital manufacturing. Manufacturing, he said was a $12 billion dollar opportunity, and HP is investing in digital manufacturing and robotics.

“3D printing for us is a big, exciting time, and we just released a low-cost series there,” he said. “We are focused on unlocking the power and potential of digital manufacturing. In give to ten years, design and manufacturing will be unrecognizable from where they are today. Goods will be much closer to where customers are. We can lead the next sustainable revolution.” Weisler noted that in 2017, HP had a 38 per cent increase in deals where sustainability was a requirement, and that it is a growing trend.

“Lets get out of the PC RFQ business and get into the workspace optimization business,” Ron Coughlin, President Personal Systems at HP, exhorted the audience. “Customize the PC experience, get into the PC analytics busineses and create the categories of the future like virtual reality.”

This event was not about new product announcements. Several products of interest were announced for release later this year, but media won’t be allowed to write about them for months.  Some printer announcements were publicly announced. These included the expansion of HP’s A3 multifunction printer line with new PageWide A3 skus for both transactional and contractual channels with external finishing. They also announced their security management tools integration with Splunk, ArcSight, and SIEMonster now also includes McAfee’s SIEM.

Finally, HP announced a new Pavilion branded gaming line, aimed at the more casual gamer than their Omen line, which is pitched more at the professional gamer – and those who aspire to be. These are technically consumer products, and the old system builder channel of 20 years ago is mainly long gone. However, at both vendor and distributor events for SMBs, a significant number of vendor booths are from companies which make products aimed specifically for the gaming market – so channel people clearly are selling these products, which have rather higher margins than more conventional PCs.