Reinventing HP: Taking on Apple, Xerox and driving growth

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Reinventing HP: Taking on Apple, Xerox and driving growth

HP CEO Dion Weisler says it seems like a lot longer than four years since he took the helm of what was then a declining PC and printer business with outdated products and a bleak future.

"Four years in this business is like 28 years in any other business -- it operates in dog years," said Weisler, who along with his executive team have refashioned HP into a company with innovative products that are redefining the customer experience in both the premium systems market against Apple and in the A3 copier replacement market against Xerox. "As a company, we are incredibly different than what we were back then. The main thing we did is we reinvented ourselves in every single area of our business."

Reinvented indeed. HP was considered a laggard with lackluster me-too products, a dearth of innovation and anything but a leader in product design when Weisler was named the chief of HP's Printing and Personal Systems Group in June 2013. Today the company is winning commercial solutions and consumers – including millennials -- for what by all accounts is flat out the best product portfolio in its history.

That has translated into quarterly results for the quarter ended July 31 that were off the charts. HP reported a 10 percent increase in sales, with the PC business growing at an almost unimaginable 12 percent. The printer business delivered its second consecutive quarter of growth -- helped in part by a "stabilising" of the all-important printer supplies business.

HP bested the overall PC market unit growth by 9.5 points year over year in the second calendar quarter, remaining the No. 1 global PC market share leader with 22.8 percent share, said Weisler. That puts HP on track to soon ship one out of every four PCs in a US$333 billion market.

Just as impressive, HP is beating Apple in the highly profitable premium market segment. From the second calendar quarter of 2015 to the second calendar quarter of 2017, HP has grown its premium segment systems market share 5.4 points. During the same period, Apple's premium market share declined 8.5 points. Apple would not comment on the share decline.

In the printer business, meanwhile, HP has been out of the gate fast with its A3 product portfolio -- a US$55 billion market where Xerox has long been considered a leader. HP said A3 sales are ramping and the sales pipeline is exceeding initial expectations.

There is no "magic pill" for the transformation that has taken hold at HP over the past four years, said Weisler. It was born out of taking a "hard look in the mirror" and listening to customers, he said.

"We went to work on the hard things that matter most to our customers, whether it be industrial design or security or the ability to have the right portfolio where the heat is in the market and where we can add value to our customers," added Weisler.

Innovation Ahead

Innovation will be front and center this week at HP's Reinvent World Partner Forum in Chicago from 11-13 September.

HP is kicking off the conference with an extension of its A3 portfolio with two new platforms in a number of different configurations for both transactional and contractual channels.

In enterprise printers, HP is unveiling a breakthrough embedded security feature referred to as HP Connection Inspector that monitors outbound network connections and stops malware. HP said the new software, in effect, learns what is normal network traffic and then stops suspicious packets.

HP Imaging and Printing president Enrique Lores said the company's printer software security advances were a major differentiator versus competitors. "We have been doing a lot of work to analyse what happens with printers when they are hacked," he said. "By analysing that and understanding what happens and how they are attacked, we came up with this concept of monitoring the network and shutting the printers down. It comes from a lot of analysis and a lot of work."

HP is also unveiling HP Roam – a new universal printing offering that enables business professionals to securely print in another company location or while traveling. "This is a new way for business professionals to get access to print," said Lores. "The impact is going to mean more print and more printers sold. Partners are going to be able to monetise this opportunity because it is going to increase the number of pages printed and enable more printers to be sold to business customers."

Another major advance: the addition of artificial intelligence and machine-learning features to HP's Smart Device Services platform, which is featured on HP's A3 portfolio. "We have improved dramatically our ability to do preventive maintenance so we can detect what parts will be failing based on actual data," Lores said. The net impact on partners, he said, will be a "continued reduction in service costs, which will translate into greater margins for them or in the ability to be more aggressive in deals when they sell HP printers."

HP is going to unveil even more services-oriented tools in the A3 portfolio down the road aimed at helping partners drive more contractual managed print deals, said Lores. He said the print-as-a-service business is growing five to 10 points faster than transactional sales. "When I look at what is the best opportunity to grow with us, it is clearly in the A3 space as we expand our portfolio and also in Print-as-a-Service," he said. "More and more of our business customers don't want to buy printers or supplies – they want to buy printing services. Offering those services is the best opportunity for our partners to grow."

Lores said the key message for partners at the conference is that HP has reinvented print and is growing the business. "Many companies will say the future of print is uncertain, unsecure or not predictable," he said. "We think the future of print is whatever we want it to be. And what we want it to be is a growing business."

The device-as-a-service offensive

The biggest game-changer at the conference in the personal systems business is HP's relentless drive in the Device-as-a-Service (DaaS) market. HP Personal Systems president Ron Coughlin said DaaS would be a US$60 billion market opportunity by 2020. "This is going to flip like managed print services flipped 10 years ago and we believe no one is positioned better than HP because, first and foremost, we are the most channel-friendly OEM in the industry," he said.

HP has staked out a leadership position with an all-out charge to dominate the DaaS market and it is paying off. DaaS orders are up double digits and over 50 percent of companies are evaluating or deploying DaaS, Coughlin said.

"My message is we have reinvented PCs together and we are driving growth together," he said. "Now we need to go conquer services together. We got lots of feedback last year in terms of what partners wanted. We conducted over 135 individual workshops with individual partners to make sure we heard their needs, to make sure we are customizing our offer, to make sure we are building into our offer what the channel partners need. I don't think there has ever been an initiative that has been so vetted, inputted and worked hand-in-glove with the partners."

As for the company's double-digit PC growth and the gain in the premium segment, Coughlin said it is evidence that HP has closed the gap with Apple on customer experience. "It is all about reinventing the PC," he said. "That has been very successful and it has driven a lot of the share gains."

Ultimately, said Coughlin, there simply may be no supplier that can provide partners with a better economic opportunity than HP. "Our raw growth rate combined with a positive mix shift to more profitable, higher ASP [average selling price] products is extremely attractive," he said. "We are a catalyst with an advantaged offering in areas like Device-as-a-Service and security that provide accretive margin growth areas that allow partners to move up the stack."

If that is not enough, Coughlin points to leadership in future growth areas including commercial market virtual reality, which is expected to be a $10 billion market by 2020. "Our nascent leadership in commercial VR allows partners to start developing a capability in a business that has decades of growth in the future and will ensure their growth and profitability for decades to come," he said.

Reinventing HP By Embracing The Past

HP executives say one of the most remarkable aspects of the reinvention of the company is indeed the tight connection with the entrepreneurial drive and spirit of HP founders, who are credited with literally inventing the Silicon Valley ethos.

When HP celebrated its historic split on its first day as an independent company two years ago, Weisler invited scions of the Hewlett and Packard families to a dinner. Weisler's embrace of the two families was no small matter given the divisiveness of a shareholder fight that had pitted the families against the company when HP acquired Compaq.

HP's Lores, a 28-year HP veteran who worked alongside Hewlett and Packard, said the Weisler reinvention had, in effect, re-created the culture they put in place. "When you look at our values, the culture we are creating, how we behave, the aspirations we have for growth and innovation, what we are doing is not inventing anything new, we are really going back to our roots and going back to what we were when Bill and Dave created the company," Lores said.

"This is the direction Dion has taken. This is why it has been so impactful. It is not creating something new. It is about making sure the values the company had were not lost despite all the changes and challenges. It is about making sure those values come to life again."

Even better days ahead

Weisler said he was most proud of the fact that HP's success is driven on the back of breakthrough products and innovation. "That is what makes me the most confident," he said.

With all the recent success, Weisler is determined not to let the strong performance go to the company's head. "We are far from perfect and we will never reach perfection," he said. 

As long as HP remains "humble, listens to customers and continues to innovate, the company's best days lie ahead," said Weisler. "I couldn't be more upbeat about our future."

This article originally appeared at crn.com

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