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HP CEO Weisler: Innovation Is Driving Best Personal Systems Sales Growth Since 2014's Windows XP Refresh

Steven Burke

HP Inc CEO Dion Weisler says the company's no holds barred bet on innovation is paying off as the company posted the biggest sales growth in its personal systems business since the Windows XP refresh three years ago.

"The last time we saw this kind of revenue growth was in 2014 triggered by the XP refresh cycle," said Weisler in a conference call with Wall Street analysts. HP posted 10 percent personal systems sales growth to $8.22 billion for its first fiscal quarter ended Jan. 31, up from $7.46 billion in the year-ago quarter. "In contrast, this growth was driven by HP's innovation engine and our ability to outperform the market," Weisler said.

[Related: HP Teams With Partners On Print, PC Security Solutions Offensive]

Weisler told CRN that the strong personal systems sales growth demonstrates the "fundamental strength" of the HP PC business. "This performance is not driven by any single event," he said. "It is driven by a lot of hard work across every single segment. It is about understanding the macro trends – what is happening with the way customers are buying – is it transactional or contractual? How are millennials purchasing – what do they value? what do they not value? – and then embedding that in products and solutions across the portfolio. So it becomes systemic. It is foundational as opposed to event-driven."

Weisler said the HP focus on targeting specific market segments with highly differentiated and innovative products is paying off in profitable share gains in both the commercial and consumer PC markets. HP's average PC selling prices were up both year over year and sequentially driven in part by mix shift to premium products.

In the fourth calendar quarter, Weisler boasted that HP's Personal Systems team, led by HP Personal Systems President Ron Coughlin, beat industry-wide PC unit market numbers by 8.5 points. "We outperformed all our key competitors and achieved our highest-ever worldwide market share position of 21.8 percent (in the fourth quarter last year)," he said.

HP's most innovative personal systems product portfolio in the company history – including the world's thinnest and lightest notebook – the EliteBook X360 - is driving the share gains, said Weisler.

Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla. solution provider, said the strong personal systems sales are a sign that HP has closed he design and innovation gap against Apple.

"It's amazing growth, but it's not surprising when you look at HP's investment in innovation," said Goldstein. "The HP products are amazing! They are thin, fast and groundbreaking. HP has come a long way with innovative design. They are listening to their customers and firing on all cylinders."

HP delivered double-digit sales growth in notebooks and workstations in the first fiscal quarter compared with the year-ago period. Commercial personal system sales increased seven percent in the quarter, while consumer system sales were up a whopping 15 percent.

Rick Chernick, the CEO of Camera Corner Connecting Point, a Green Bay, Wis. HP Gold Partner, said HP's innovative PCs and printers puts the company head and shoulders above competitors. "The products are innovative and cool," said Chernick. "They are just beautiful. Customers love them. They have stuff like BIOS security, so if someone tries to break into a system, it automatically repairs itself. They have stuff that nobody else has. We are having great success with both their printers and PCs."

Several Camera Corner Connecting Point customers are anxious to pilot HP Inc.'s new 3D printers, said Chernick.

HP Americas President Christoph Schell told CRN that he sees a strong device as a service starting to gain momentum in the channel. "We saw our funnel on device-as-a-service really grow (during the quarter)," he said. "We have partners very much focused on moving the engagement with their customers into a services-led contractual engagement."

Weisler said his call to action for channel partners is to continue to have a "strong dialogue" with their channel reps and the HP executive team. "We are an organization that operates with two ears and one mouth and we use it in relative proportion in which it was given to us," he said. "I would like to think that we continue to be humble and that we are really listening."

Overall, HP posted better than expected results for its first fiscal quarter ended Jan. 31. The $48 billion printing and PC powerhouse posted non-GAAP diluted net earnings per share of 38 cents on sales of $12. 68 billion, up 4 percent from $12.2 billion in the year-ago period. The Wall Street consensus was non-GAAP diluted earnings per share of 37 cents on sales of $11.84 billion.

HP shares were up $0.39 (2.41%) to $16.59 in after-hours trading.

"This quarter can best be characterized as relentless execution and innovation that delivered really strong results," said Weisler. "It's the second quarter in a row of growth and solid performance. Innovation is at the heart of driving the meaningful share gains we have had. We are the pillar of stability right now in the industry."

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