The possibility of a deal bringing together HP Inc and Xerox shows that the PC business needs a shakeup.
The deal’s aim is explicitly to consolidate the print market, because it’s mature and will never again grow significantly.
HP and Xerox already know this because they’ve struck deals that let them avoid investment. One sees HP supply printers that Xerox rebadges. Another sees Xerox supply toner to HP and by so doing keep one of its factories viable. This removes the need for HP to operate such a factory.
So if the market’s stalled, why bother coming together? Because consolidation reduces choice and makes it possible to raise prices.
That’s the responsible thing to do for investors, even if customers have to grin and bear it.
Xerox and HP both understand this. All that’s up for discussion now is whether HP thinks its shareholders will be better off with accelerated consolidation on Xerox’s aggressive schedule.
If the deal happens, it will therefore be all about maintaining profits from printers and adjacent services, not about PCs.
Unlike printers, PCs currently offer vendors and the channel few recurring revenue opportunities. Yet the computing device people actually want and nearly always buy on a short refresh cycle – smartphones – are almost always sold with subscriptions.
The HP Xerox possibility therefore shows the PC industry’s failure to sell subscriptions is lamentable.
Vendors have had years to find a recurring model for PCs. For years they let finance companies have those spoils, by letting them run leases.
Today vendors don’t do a lot more than use their in-house finance arms to fund fleet purchases. They’re nowhere with consumers.
The few PC-as-a-service deals CRN has seen, such as Lenovo at KPMG, are the exception rather than the rule.
Meanwhile the rest of the enterprise tech industry has forged ahead with recurring revenue models. Public cloud gave us IT-from-Opex. Pure Storage changed the way storage is bought and sold. HPE plans to turn almost everything it does into an as-a-service offering.
Microsoft has the same plan – including for virtual desktops that will see it win subscription revenue by offering services for free that it only offers for colossal sums outside its cloud.
If “HPOX” happens, it therefore offers the chance for two masters of milking mature markets to apply that expertise to PCs.
Which is surely a more pressing need for the PC market than yet more design tweaks and upgrades with this year's faster components.