HP Personal Systems President Alex Cho On Topping Apple At Security And Why Device-As-A-Service Is 'Growing Rapidly'

Cho On The Record

HP Inc. is doubling down on design, security and premium as it looks to the next phase of innovation in its market-leading PC business. That's the message from Alex Cho, the recently appointed president of HP's personal systems business, who sat down with CRN this week at HP's headquarters in Palo Alto, Calif. In mid-June, Cho succeeded Ron Coughlin, who departed to become the CEO of Petco. Partners have told CRN that the appointment of 23-year HP veteran Cho, who most recently ran HP's commercial PC business for four years, suggests the company won't miss a beat in seeking to continue driving growth in PC. HP's fiscal second quarter, which ended April 30, marked the sixth consecutive quarter of double-digit growth for the personal systems division even as the PC business overall remained sluggish.

Following the leadership change in personal systems, HP remains as focused as ever on innovation and on grabbing share from competitors such as Apple, Cho said. In a nutshell: "We've got a lot more coming across the broader portfolio," he said -- adding that the company's culture now fully supports doing new things and making big bets. "The energy of the people and the leadership team is at a level that is infectious," Cho said.

What follows is an edited portion of Cho's conversation with CRN.

What drove you take on this role?

I'm very much already in, having run the commercial side. What was interesting when I had the discussion with [CEO] Dion [Weisler] (pictured), is we're clearly in the middle of something big. There's something much bigger that's happening. It includes, yes, getting our operational excellence in line. There is an element around really shifting from just focusing on products, to what we call focusing on people and places. We're very much insights-driven. And the first fruit of that is showing. But we've got a lot more coming across the broader portfolio. The other is the energy of the people and the leadership team is at a level that is infectious. I've been here for 23 years -- I know HP, I've been through multiple stages of it. There's a level of energy and excitement and passion for wanting to go do things -- and almost permission to [go do things] -- that is notable.

Our culture has really matured in these areas in the past few years, a lot more than I would've expected. This is a culture that is excited and has permission to go do new things, and has a passion for the customers and taking risks.

Your predecessor had brought a focus on consumerizing the commercial PC lineup. Is that remaining status quo under your leadership?

There's a lot that we're going to continue. The business strategy is pretty simple -- there are two things that we're doing. One is that we will reinvent PC experiences. And it's not just hardware, but it's curating hardware and software. We have increased data to make these devices more intelligent through AI. Four years ago, people said the PC was dead. I would argue innovation is driving new experiences and excitement. The ambition is to make these [HP] devices the most exciting devices. The energy around them already is very high, and we can only do more. Who would've thought we would've been growing six quarters of double-digit growth? That's part one -- creating the most exciting devices. And then secondly, to transform our portfolio to these higher-growth segments. And as part of that, device-as-a-service is key. We can build solutions for spaces that also are managed through device-as-a-service, where we pull rich telemetry and analytics so that it's more intelligent for end users and IT managers. And it's across multiple operating systems and types of devices. I just think there's magic in that. And then buttressing both is leadership in security. And then as well, leveraging the muscle and the reach of our channels.

What are your priorities for future innovation?

We still think there's a lot of opportunity for innovation around design. We think about form factor design, we think about material design. We also see design in getting things more svelte and thin, and having more performance. So we have a lot more to do there. And millennials continue to say that design is important, whether it's for the home or work. We have a lot more around all things connectivity. How do you enable better mobility, better connectivity? How does that enable new use cases? How do you do that in smaller form factors? We also see innovations in all of the intelligence around the device. Data allows us to make these smarter and more personalized, and [come with] new ways to provide input into it, like voice. You've seen what we've done with Alexa, just as one example.

We see also a lot of innovation still [ahead] on security. We are very much invested in making security real and meaningful. And then finally around everything-as-a-service. A lot of our work is around enabling modern device management, more-secure device management, management with our analytics platform so that we can identify if hard disks might fail in the future, and get to that hard disk ahead of time. We see many areas where innovation is just ripe.

Is Alexa specifically going to be something you're adding to a lot more devices?

We've started with Alexa. I would say that we are open to more than Alexa in and of itself. Corporate environments have different needs and sensitivities versus home environments. There's also obviously a lot of growth in what's happening with Google Assistant. So we're looking at, how do we navigate among all of them, and curate the best experience on our devices? We are open to all. We're working through that roadmap.

Is the shift toward premium, higher margin devices going to continue? Where does that go next?

That's a big part of our strategy. We are now the fastest-growing premium vendor [by revenue]. We have grown double digits, we have gained seven points of share. There's no stop in that. We look at that across both our consumer and commercial spaces. It's good in many different ways. No. 1, it really pushes the innovation envelope. No. 2, it also enables us to deliver new premium experiences for our customers. It's good for our partners, because [average unit prices] go up. And as well, premium devices also have a rich opportunity for attach around displays and accessories. We see that premium is also just enabling these devices to be increasingly exciting and relevant.

Is competing with Apple still important for HP? How will HP continue working to stand out from what Apple is doing?

Apple does clearly have a good segment of the market in terms of mindshare. They have actually lost share, and we've gained share in that space. I'd give you a couple of perspectives. Our north star really is customer experience. And we're very serious about looking at Net Promoter Score, customer experience, watching who is using a device, where they're working, how they're working. And then identifying how we want to build solutions for them. Our eyes are kind of fuzzy about competitors because when you're trying to do the right thing for customers, that's first. Secondly, I would tell you we're very much focused on improving Net Promoter Score. We now have the highest consumer NPS among Windows devices. And we've actually eliminated the gap between our consumer premium notebooks and Apple's. For me it's more than quality, it's craftsmanship we're going after. And we want to go do more...

We have clear differentiation as well, because of our focus on security. Quite frankly our differentiation also is the strength of our channel. I've been here in PCs, print, in our former services business. Our muscle, our strength, is our channel. No change there. And then we're differentiating by rapidly building out our device-as-a-service platform.

Would you put your security up against Apple's?

Our strategy is very much that we anchor across three areas -- device, data and identity. And we're very focused on protecting below the OS, in the OS and above the OS. That is a strategy that has leadership across all vendors -- Windows and Apple. We still are the only ones that have a self-healing BIOS. It operates where antivirus doesn't sit. It's where advanced persistent threats want to attack. And it's what enables us to create a root of trust for all the other security layers. Secondly, with things like Sure View, our integrated privacy screen -- there's no solution like that in the Apple space. We also have Sure Click, which allows us to protect you if you were to click on a bad website. Very unique to HP. And you will see that going forward, through DaaS, we will be able to offer even better security. And so for us, it's the most secure and manageable PCs, and it's even better when it's managed as a service. We are looking continually at how to bring more innovations [in security]. For things like Sure View, we would call that "above the OS," and we have a roadmap of additional [innovations]. And then also in the OS and below the OS.

What inning are we at with device-as-a-service?

I won't give you an inning. What I would just say is we are in early stages. And yet, our funnel is very large, in the multi-billions. It's growing rapidly. We are now at a place that we've had a steady set of capabilities that we've been enabling and launching, device-wise, which is a persona-based way to match the right device for the right user. We launched a partnership with Apple to include Apple devices [in DaaS]. We communicated a partnership with VMware. We've communicated advances in our APM -- our analytics proactive management platform, for managing devices. A month ago, we announced an acquisition that's focused on AI ops for managing all the events. So we've had a steady stream of new capabilities, and we've got a lot more. And what that means is, we've got more value that we can offer customers. And for our channels it means, we are continuing to grow the platform. And our strategy is very much around enabling DaaS with and through our channel. That was an important design criteria for us...

You are going to see a lot more around security in DaaS, like I mentioned. You're going to see a lot more around intelligent device management services. You are going to continue to see how we grow the platforms so we can look across the lifecycle of what device management requires.

Would HP's personal systems business ever look at doing an acquisition of a channel partner, as the print side just did with Apogee, to boost your DaaS capabilities?

We are always looking at all ways that we can continue to grow scale, across the value chain. So I guess I would say I would not rule anything out. What I can say is, DaaS is a very formal priority of ours. We're very serious about building capability end-to-end, and that capability can be a combination of organic and inorganic. Our funnel, like I said, is bigger than we had expected, which we're thrilled about. So our intent is to go as fast as we can. So I would say, all things are possible.

What are your biggest bets going to be in commercial ? What risks are you taking?

Going back to device-as-a-service -- you can call it a bet, you can call it a risk. It's shifting the dialogue from IT procurement to really more line of business, that is enabled by bringing solutions and looking at lifecycle management. And talking about more than speeds and feeds and prices, but around how do we enable better security, how do we enable more productivity for employees. How do we enable better engagement [through devices]. It turns out that millennials, while they care about compensation, what often is a swing factor is they come into a company, they think about the technology [they'll be using] and the workspace. Our solutions enter into the space of enabling better employee engagement. So that is a big shift we are investing in. We internally call it "commercial transformation."

How can channel partners get involved with commercial VR?

VR today has been largely consumer. Where we believe there's a lot more upside, longer-term, is on commercial. For us, commercial is a space where we're able to bring new immersive experiences, and offer them to areas that are ripe for what VR brings. I'll give you a few examples. With training, the ability to enable first responders to train. The ability to use VR in health care, so you can simulate and practice procedures ahead of time. Stanford used our Z VR solution ahead of a procedure they did with some conjoined twins, just as an example. The largest deployment of VR is around "Jurassic World," at 112 Dave and Buster's locations, and that is on HP solutions. We have pilots in place around design firms that develop concepts, and render them faster and in a more-tangible way, for their customers. And all of this for us is about creating products and solutions that enable those new use cases in the commercial space, and leveraging our channel to be able to get them out there. It's early, and we think it's very promising as we go forward.

We talked earlier about premium -- all of the things that apply to premium, apply here. Higher-end systems, attach. It's really stickier because it's a more-relevant dialogue, around use cases and specific verticals. From our partners' perspective, all the goodness of premium applies here.

Can you keep beating the odds in the PC business?

We have a mantra -- watching people and places allows us to create great products and solutions. That will keep the market and the innovations healthy. We have still a lot of room to grow in share. We've gained a lot of share, and we've got a lot of room to grow. We also have a lot of room to grow in adjacent spaces, such as retail point-of-sale and gaming. We also have a huge opportunity on more attach -- displays and accessories. We have our new Mindframe headset that has active cooling. And then we get into the segments around device-as-a-service, where there is a lot of future growth, just as you get into more managed services and multi-OS environments.