CRN Exclusive: HP's Weisler On The Future Of PCs And Printing

A New Day Dawning For HP's PC And Printing Businesses

Hewlett-Packard Executive Vice President Dion Weisler, who will become CEO of HP Inc. as of Nov. 1, spoke with CRN about the HP split and the future of the printing and PC businesses. Here is an excerpt from the discussion.

What was it like when you found out you were going to be running HP Inc.?

We looked through all of the strategic alternatives open to us [and] we felt that the best way to accelerate not one but two companies was to separate and, of course, there was lots of discussions. [HP CEO] Meg [Whitman] is an inclusive manager. We are a very tight executive committee community and very open. And so we discussed all of that, and this is where we landed. I couldn't be more excited about it.

Was there one moment when it became clear that HP had to split in two?

Looking through a customer's lense, listening to our partner community that was giving us this feedback constantly, about how our competitors were approaching the market, we said setting these two companies up that are laser-focused on the areas in which we are looking to serve is the way to accelerate.

What are some of the things you have done to make sure the separation goes smoothly?

We set up a separate group of folks -- the separation management office -- to deal with the day-to-day mechanics of separating these two companies -- more than 750 legal entities in 166 countries around the world with a tax structure that is incredibly complicated with IT systems that had been together for 75 years and 70 companies that we purchased.

Have solution providers been impacted by the split?

We are more than halfway through the separation process. So we have done a lot of work here and our channel partners are not feeling it. I hope that they don't feel it all the way through the separation.

We have 400 people working full time on the separation. Ninety-nine-and-a-half percent of us are focused maniacally on our business. That is what we need to do. We can't lose sight of that.

What is the potential for growth in the PC market?

The personal systems market, including tablets and phablets – not including mobile phones - is a $550 billion TAM [total addressable market]. It is huge, and it is actually consolidating. The three big guys are getting bigger -- lots of players have exited the market.

We are excited by that opportunity. We believe there is growth there. We have been growing for many quarters in a row now faster than the market. We have a portfolio that is second to none.

What is the potential for growth in the printing market?

The printing business is still a $250 billion TAM. Actually, the commercial printing business is still growing. The consumer print is in secular decline. But the commercial printing business is in growth. And we are the market leaders there. We have been for the past 30 years.

We believe that you can't cut your way to glory. You have to innovate your way to success. And that's what we have been doing.

What is the potential for growth in the 3-D Printing market?

3-D printing is in total about $2 or $3 billion TAM. By 2020, depending on which analyst you talk to, they say it will be between $8 billion and $40 billion. And the reason the ranges are so big is because, frankly, I don't think anybody really knows. It is incumbent on us as a technology company to make the market.

What is HP's differentiator in 3-D printing?

While all of our competitors in the 3-D printing space today really operate either as a technology squeezing toothpaste out and fusing it together or laser-cutting out an object, our technology is completely different. Multi Jet Fusion bakes a layer of material and then it prints the layer, and then it comes and fuses that layer and it keeps going through that process and it builds up the image. And it leverages our PageWide Array technology. The net effect is it is 10 times faster than the fastest available printers on the market. We can do really strong functional parts. We have a road map that can include color elasticity properties, electrical properties, translucency properties at the voxel level. And we can do it at economics that are far below any of the competitive technologies.

Talk about the potential for 3-D printing in the commercial market.

So think about prototyping. If I make a notebook product today, I have to make a tool [to build the laptop case]. That tool costs $400,000 to $500,000 to make the tool, and it takes three or four months to make the tool.

Now what if you could make that tool for $100 in a half a day? It is transformative to the manufacturing process whether it is prototyping, whether it is machine shopping, whether it is bespoke parts that actually can't be created in analog fashion. That is the interesting part of the market. And it is not a one-year journey. It is not a two-year journey. It is a 10-to-20-year journey. And the market will be as big as we can make it. The technology is breakthrough.

Talk about how third parties can participate In 3-D printing?

We are about enabling an ecosystem. So we are doing that in a multitude of ways. In the same way that we help create the language that a PC talks to a two- dimensional printer, we are very involved with the language that software providers can talk to these 3-D printers.

So you could see us getting to that middleware layer. But we don't want to be in the business of creating the next AutoCAD or the next Illustrator. There are companies that do that expertly. Do we want to partner with them and strategically work very closely with them? Absolutely. Do we want to enable it through middleware? Absolutely.

What excites you about what is going to become available to partners with the split?

I think it is a multitude of things. I think we can certainly innovate at a product level faster than we have been able to innovate in the past.

How will HP Inc. use new style IT itself to improve the partner experience?

I think over time partners are going to see an entirely new IT system for both organizations. It'll take us a little while to build it.

Both [HP and Hewlett-Packard Enterprise CEO] Meg [Whitman] and I are investing a lot of money to completely bring ourselves to the new style of IT, so that when a partner's PRM [Partner Relationship Management] system is linked with ours and we are seeing opportunities coming into the CRM system, it will actually trigger automatically back-end forecasting and it will place an order. It won't touch anybody. It will go straight to the manufacturing plant. That will change the speed at which we operate, and it will go from where we are today to leaders in how that IT process moves in the future.

How far off is that?

By Nov. 1, job No. 1 is to ensure that we can stand up both companies and close the books. So you won't see much this year because that is what we are working on. Over the next two years, after Nov. 1, is when we will go through this transformation process. And things will keep coming online. It won't be a big bang at the end of two years. Here we go. But we will do things and move to the new style of IT ourselves.

Will we see more specialization in the sales force?

You will see us invest more heavily in specialization. After the bringing together of [HP] IPG [Imaging Printing Group] and PSG [Personal Systems Group], we moved to a generalist sales force and I think we over-oriented to that. I steadily have been putting specialists back into the marketplace, and I think you'll see us do that at a rapid rate. That is there to support the channel.

Talk about the managed services push by HP Inc.

You'll see us accelerate our partner MPS [Managed Print Services] and our channel MPS programs. You'll see us enabling the channel to bring everything as a service: desktop-as-a-service, printing-as-a-service, mobility-as-a-service, to market.

The first incarnation of that for SMBs in the U.S. is Instant Ink. Instant Ink is a subscription model that is borrowed from commercial managed print services.

We are able to do that at $15.99 per month with an Office Jet ProX Instant Ink subscription, where you get x number of pages for that price amount and when the ink runs out, because it is web-connected we know and automatically we are shipping a new ink cartridge. They send us back the old one and we get rid of it. You'll see more of those services -- smart services enabled by technology -- that will be brought to the channel.

Talk about that change for SMB partners.

It's an example of a business model change for SMBs that is like a managed print services borrowed from the commercial ecosystem. They can throttle up and down their computing demands. They have to sign up for two years. It scales up or scales down so they can do less pages, more pages, pay more, pay less, from month to month. You'll see us do that for PCs. You'll see us do that for mobility.

How quickly will the market adopt everything-as-a-service, including hardware?

It is happening pretty quickly. And it is not just mature markets. It is emerging markets as well. In some of our countries, take Brazil as an example, 80 percent of their go-to-market motion today is contractual.

How does the split help you provide that service better?

In the past, we had two major business groups: the Personal Systems Business Group and the Printing Business Group. I started a third: the Services and Solutions Group. They will produce these cookie-cutter solutions to be able to take into the channel.

So that group is essentially building a services level of SKUs with the product set?

Yes. And business model innovation around that.

Are you seeing greater efficiencies with the split?

We all operate to what is called the owned operating profit level. And then below that there is a bunch of allocations that are made across each of the companies. Well you can't do that when you split an organization. We have been busy over the last 150 days running ropes to the ground for both companies, because you need three years of full audited financial reports. So what falls out of that is, 'I didn't realize I was paying this for this and that!'

As you separate, you say, 'These things are important to me. I am going to double down on them. That is actually not important to me and I am not going to do it anymore,' and each of the companies is doing that.

Talk about some of those efficiencies.

You do find efficiencies. And it forces questions. Think about, for example, the phone bill. My organization, 40,000 people, part of 250,000 people. The phone bill is actually split by revenue -- and we are 50-50.

Now we have a situation where people are thinking differently about the phone bill and looking for different solutions around that. And that is just one example. You run every rope to the ground here, and you end up with lots of questions being asked.

Will your research and development budget go up?

I am expecting to take it up. That is why I can fairly confidently say that I expect to innovate at a faster clip for our resellers. And It is not just about product. It is partner programs. There is marketing. There are sales specialists. There are many places that you can choose to invest a buck.

I am a firm believer of putting more dollars behind fewer things rather than spreading it around all over the place.

Would you worry if you were in your competitor's shoes?

I am always worried about competition. I am paranoid about competition. If I were my competitors, I would equally be paranoid about competition. I think both of us get much stronger, much more clarity of thought, more flexible, more agile. And speed is key in business today.

Do you see more consolidation in the PC space?

It is happening. It is happening every quarter. The big three are getting bigger. I think the ink market is fairly consolidated. I think the laser market is not.

What is the potential for the Sprout Immersive Computing product?

It is about an immersive experience where you are using your hands to manipulate shape and do things in a very simple way.

The applications are quite surprising. So you have, for example, education. Imagine being able to sit there if you were studying the cardiovascular system and you are looking normally on a screen like this at a heart. Imagine being able to pull that heart down here and pull it apart, and dissect it and being able to change it and then bringing physical objects in other models and 3-D scan it, change it and manipulate it, and print them out with 3-D printing.Think of the speed at which people could learn if they could touch and play with things. I think the education applications are very clear.

What is the rallying cry to partners with regard to the potential for HP Inc.?

We are growing in the markets in which we choose to play. Put a dollar down on this company. Go all in. Rally behind what we are doing here. We are a very channel-friendly-based organization. We grew up in the channel. The channel is core to what we do. It is 80 percent of my business. What horse do you want to back here? And not just for today but for the company that has an eye on the future, whether it is the Machine in Hewlett-Packard Enterprise, or Immersive computing and blended reality and 3-D printing [for HP Inc.], in our business, there is a bright future for today and for tomorrow.

Does HP Financial Services help HP Inc.?

We want to continue leveraging HP Financial Services. I think it is a terrific asset, and it is tremendous for Hewlett-Packard Enteprise as well. In every instance where they want to choose to play, they are going to be my primary partner.

But as we separate, if I want to do microfinancing in Brazil, and they are not particularly interested or equipped or ready to deal with that, I can go to another partner to go out and get microfinancing services for Brazil.

How much innovation is there still to be had in the PC market?

I think there is innovation within the core, differentiation to make that better. I think about this access of what I call complexity. Not one device fits everybody. At one end of the spectrum you have got low complex tasks that are well served by phablets and tablets. And at the other complete end of the spectrum are the Dreamworks animators making the latest movies, and they are going to need workstations. And then you have got sort of PCs and notebooks over here. In the middle, you have this category of 2-in-1s, and convertibles and detachables. There is a lot of innovation to be had in the core there.

But then there is this whole, new area of immersive computing. Sprout is just the first incarnation of that. Think about different form factors. Think about new surfaces. Think about different applications. So we think there is a lot of innovation as we recreate a category.