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Accelerating Innovation: HP CEO Weisler Disrupting Printer, PC Markets With New Products, Channel Programs
As HP Inc. CEO Dion Weisler followed the competitors in the recent Olympic Games in Rio, he saw parallels to some of the same attributes he's instilled at the Palo Alto, Calif.-based company.
He sees the new HP pushing the competitive envelope in both products and channel programs at a record-setting pace, just like the very best Olympic athletes. "These guys are raising the bar and breaking records," he said. "That is what we have got to do every day—break records."
At the vendor's Global Partner Conference, being held Sept. 12 to 14 in Boston, HP will unveil a new family of A3 Multifunction Printers that Weisler said represents the kind of game-changing breakthrough that sets the new HP apart from rivals.
"What I am super excited about is we are not doing ’me too,'" said Weisler in an exclusive interview with CRN. "This is all about the new HP. We are driving our agenda. We are not playing anybody else's game. We are playing our game. What we are doing with A3 is really disruptive."
The new A3 offering takes the ground-breaking technology the company has brought to the printer market over the past 30 years and applies it to the copier market—a wide-open, new $55 billion market opportunity for HP. The 16-product-strong A3 lineup, which includes both PageWide and LaserJet offerings, is set to tear apart the copier market with 40 percent lower costs for color and a market-shattering lower cost of service that is opening the door to critical new recurring revenue services opportunities for partners.
Weisler said the A3 portfolio—which incorporates HP security technology and the ability for partners to set color copy parameters—is just one example of how the new "lightning-fast" HP is raising the bar in the face of difficult printing and PC market headwinds.
In just 10 months since the historic split from Hewlett-Packard, HP has delivered a series of innovative products to the market. The steady stream includes the Elite x3, a revolutionary mobile device that defies the old product categories and no longer forces road warriors to switch between smartphones, laptops and desktops; the HP Spectre, the world's thinnest laptop aimed at taking a bite out of the Apple MacBook; PageWide printers that set a new mark for speed, price/performance and security; and, ­finally, the blockbuster HP JetFusion 3-D printers that in one fell swoop redefined the economics of the intensely competitive production manufacturing market—opening the door to what some analysts have estimated as a $12 trillion market opportunity.
In addition to the A3 launch, HP is continuing to up the ante in what partners say is a best-in-class, predictable and highly pro­ table channel program with a new simplified compensation model that will be detailed at the Global Partner Conference. The new model cuts by more than half the different tiers and qualifiers partners had to navigate in order to maximize sales compensation.
In addition, HP is moving thousands of partners into its Silver tier, driving higher compensation with access to programs like New Business Opportunity rebates and Big Deal pricing in order to drive more business and double down on support for partners buying through distribution.
The program changes come as HP is on track to move the percentage of revenue stemming from channel sales from 80 percent to 87 percent by the end of the year.
On the product front, HP's new A3 portfolio, which includes new smart device service functionality aimed at making real-time adjustments to prevent failures, was designed to deliver better pricing, serviceability and partner opportunities than existing players in the copier market, Weisler said.
"If you know anything about the copier business, it is that money is made and lost based on the cost of service," he said. "With A3, we are dramatically reducing the parts and service costs and that will translate into increased margin for our partners or they can pass those savings on to the end customer in terms of cost per page."
The A3 family, which is priced from $3,000 to $20,000 and is set to begin shipping in March, is being delivered to the market in "record time" thanks to the entrepreneurial drive of the new HP, said Imaging and Printing Solutions President Enrique Lores, a 27-year HP veteran who led the team that successfully completed the historic HP split without missing a beat. The A3 family would have taken the old Hewlett-Packard at least twice as long to develop and bring to market, said Lores.
"We have never done anything this fast before," he said. "That is because of the ability we now have as an independent company to design, execute and move. With everything around this product family, it would have been impossible to bring this to market before."
The A3 innovation goes beyond the product. The sales offensive includes a new smartphone portal offering specially designed to enable A3 partners to search quickly for product information, transactions or compensation details.
The A3 portfolio launch is a testament to the speed, agility and focus of the new HP, said Lores. "This shows how much investment and passion the new company has for printing," he said.
"We are showing how HP can bring a lot of innovation again to the market—with new technology and tools to do business with our partners. We are a partner company. Everything we do is with the objective of making our partners more successful."
Lores, who early in his career as an engineer at HP met founders Bill Hewlett and Dave Packard in person, said the "culture and spirit" of the two Silicon Valley legends are alive and well at the new HP. He credits Weisler with stoking the innovation fires. "We know that we will only win by bringing innovation in a focused way to our customers and partners," he said. "That is the core of what Dion has done for this company."
Joe Hemani, founder and owner of Westcoast, a Reading, England-based value added distributor, has built a $3 billion business by teaming with HP over the past 32 years. He also credits Weisler for turning up the legendary HP founders' innovation flame in a market moving at blinding speed. "There is not an industry like ours that is moving this fast," he said. "If you look at the speed that Dion has HP moving at, it's like a leopard."
It's one thing to move faster, said Hemani, it's another matter entirely to deliver breakthrough products and new business models. He sees the A3 lineup driving an 18 percent to 22 percent increase in sales in that market segment for Westcoast in 2017.
"This is going to be very important for recurring revenue where you don't sell and forget, you sell and service, keeping customers happy," he said. "That is part of the new model of how we are going to take this product to the marketplace. Innovation and quality, guaranteed. Price, affordable. That is the A3. It's a big game-changer for HP. HP's competitors better be careful."
Westcoast is investing in additional technical support reps who will be able to talk about the technology benefits of HP's A3 portfolio and industry-specific salespeople. That means hiring ­financial services experts to sell into ­financial institutions and legal specialists to sell to law firms. "We go into these accounts with our salespeople with partners," said Hemani. "We are doing the digging and heavy lifting. You don't dig, you don't earn."
Hemani is also gearing up to take the breakthrough HP device-as-a-service recurring revenue model to the market—a model HP is currently piloting in the channel.
Hemani concedes the device-as-a-service paradigm will take some time before it gains momentum. "This isn't going to shift overnight," he said. "It is going to take a couple of years before we get there. But you are going to ­find a higher percentage of all our businesses starting with HP streaming downward to us and then the resellers, with customers buying as they use. It's a consumption model."
The entire IT business is becoming more like a utility model, said Hemani. "We are going to a contractual model with device-as-a-service where the more you use, the more you pay. The less you use, the less you will pay," he said. "It is recurring revenue. We are going to love it. We will now be able to forecast our business model, look ahead to our business model. We will know the profitability of the business model, and we can make investments related to that business model."
Jeff Sheahan, senior vice president of product management at Merrimack, N.H.-based PC Connection, No. 21 on the 2016 CRN Solution Provider 500, said HP is the furthest along of all the major vendors in "articulating a programmatic approach" to the device-as-a-service opportunity for partners.
"HP is bringing some of the best aspects of HP Financial Services alongside asset management and leaving room for partners like us that have [asset management] practices to add value to the equation," he said. "We have been involved in a couple of workshops already, and we'll continue to do that, getting something we can take to the market the ­first of the new year."
Although device-as-a-service is in its infancy, Sheahan said, there is strong interest from customers, particularly at the enterprise level. "One way companies can reform their IT and shift more resources to customer-facing technology innovation is by getting out from under the management and support requirements associated with refreshing desktops," he said.
Sheahan said the device-as-a-service leadership offensive is one of many signs of a "renewed energy" within HP under Weisler. "We are all in with HP," he said. "We believe in this management team. Dion has brought more of an entrepreneurial spirit to HP than I have ever seen before. As a result, you are seeing an innovation spark."
There has also been a liberating change in the culture under Weisler's leadership, said Sheahan. "There is a bounce in the step of HP," he said. "They are not afraid to put the jeans on and a sport shirt. It isn't as straight-laced as it once was, and that is healthy. They are allowing for much more individuality."
The HP executive engagement with PC Connection has also never been better, said Sheahan. "It's an extremely approachable, engaged and committed management team under [Weisler] across the board," he said. "They are accessible, and that obviously translates into the field. We have a really good partner account management team that is very tenured and understands our business model."
Chris Froman, president and CEO Pomeroy, the $1 billion national powerhouse, No. 41 on the 2016 CRN SP 500, said his company is also seeing the bene­ ts of strong executive engagement starting with HP Vice President and General Manager of the Commercial Sales Channel Stephanie Dismore. "[Dismore] is fantastic," he said. "She is proactive, customer-focused and responsive. She does a lot of listening and stays ahead of the curve. We have access to all the top executives, and when we need a decision they make it fast. They have eliminated a lot of layers of bureaucracy. They move faster and make decisions closer to the street."
Froman credits HP with helping Pomeroy drive managed services sales—a segment Pomeroy is growing at more than two times the industry rate. In fact, Pomeroy has doubled its sales and technical team supporting the HP practice over the past three years.
"HP is doing a good job partnering with us in managed services," said Froman."That's important because everything we do at Pomeroy needs to lead to a managed service. When I talk to clients, they want someone to manage the technology for them. They don't have the resources to manage all the projects they have on their plates."
Pomeroy, Hebron, Ky., is one of the partners piloting HP's new device-as-a service offering. "We think this is going to be a meaningful program in response to clients requesting more consumption-based service models that will allow them to move from Capex to Opex financial structures," said Froman. "We are excited HP has taken a proactive stance on this. There is a lot of flexibility for customers to reduce costs. We know this mobile device area better than anybody, and it ties in with all the life-cycle services we sell. We are seeing this in other technologies. It just makes sense. This is the future."
Ken Lamneck, CEO of Tempe, Ariz.-based Insight Enterprises, the national $5.4 billion solution provider behemoth, who sits on HP's Partner Advisory Board, said he feels as strongly as he ever has about the future of HP given the channel commitment, consistency, predictability and stepped-up pace of innovation. "HP Inc. is driving more business through the channel," he said. "They are a channel-­first company in everything that they do."
That channel-first approach—combined with a stellar product portfolio—is paying off in double-digit sales growth on the HP business for Insight. "Everyone in the channel is excited to see them taking the leadership role back in innovation," said Lamneck. "The focus on innovation is so clear with the separation of the companies. The products are cool. They are addressing the right parts of the market, and what they are planning for the future with 3-D is really exciting. HP is so much quicker now with the innovation cycles, programs, supply chain, inventory. All those things have to move quickly. HP always had a good operation, but now they have been able to perfect it even more."
Lamneck credited the HP channel team with driving simplicity, consistency and predictability in the channel program and engagement. "That's the reason they are growing faster than many others," he said.
HP's Dismore, for her part, has pledged to continue to drive a straightforward, simple and predictable model aimed at helping partners drive sales growth. "In this type of ­fiercely competitive market where the margins are thin, predictability is ’do or die,' and that is what we are all about," she said. "Partners know that with HP they will not be surprised by programs that come and go away like many of my competitors. This is all about simplification for partners to drive higher pro­fits and more revenue with HP. It is all about allowing partners to move from managing the program to selling more product," she said.
The new simplified compensation model is one more sign of HP listening to partners and responding, said Dismore. "We know we are successful because our Partner First program is predictable," she said. "You will continue to see us work with our channel partners for a simplified approach to managing the business. Partners know if they work with HP they will continue to have consistency."
The stepped-up product and program innovation is aimed at grabbing market share and keeping HP in the No. 1 position in the PC and printer markets, said Dismore. "That is not an easy task given the complexity, fierce competition and the price wars that sometimes my competitors start," she said. "The reason we are No. 1­ first and foremost is our products; No. 2, our programs; and No. 3, our people working with our partners. That trifecta will continue to propel us to a No. 1 position."
The HP market-share offensive and innovation acceleration comes with several of HP's largest competitors mired in uncertainty. Dell is in the midst of the largest acquisition in the history of IT with its blockbuster EMC deal. Xerox is splitting in two, and Lexmark in April agreed to a merger with a group of investors led by Chinese manufacturer Apex Technology in a deal that is expected to close in the second half of this year.
Weisler, for his part, said he couldn't be happier with the rapid pace of innovation at the new HP even as competitors scramble to restructure.
"There is a lot of change going on in the market, and that change equals opportunity," he said. "When you have the innovation payload, and you have the epic products and services, that is when you unlock the real value for us and partners."