HP President Alex Cho On Making Millennial-Friendly PCs And Why It's A 'Scale Year' For Device-As-A-Service

Cho On The Record

Coming off a year when HP Inc. continued to generate strong growth in its commercial PC business, the company has kicked off the new year by unveiling a number of advances in the commercial lineup at CES 2019 in Las Vegas. They include HP's first all-in-one PC featuring the Sure View integrated privacy screen, along with the company's first convertible model in its EliteBook 800 series notebooks for mainstream workers—featuring a high-brightness display that can be used outdoors. "Millennials are not just working at their desks," said Alex Cho, president of HP's personal systems business, in an interview with CRN this week at CES. Overall, younger generations of workers are "looking for technology that integrates into their life. Not just functionally, but designwise," Cho said. And HP is responding with many of its design choices in its commercial PC updates, he said.

For the year ahead at HP, "you will see continued innovations in the form factor," Cho said. "Secondly, our goal is not only to continue making the world's most secure devices, but to ensure that when they're managed as a service, they're even better." Cho said he expects HP's Device-as-a-Service (DaaS) business—which pairs device leases with advanced analytics for proactive maintenance—will have a breakout year in 2019.

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

How do your CES launches set the tone for your direction this year in personal systems?

Our announcement spans our consumer business, our commercial business, our gaming business—and what you'll see is a focus on our display technology across all of them. One key area that we've been spending a lot of time watching is the ‘modern lifestyle’—where people are looking for technology that integrates into their life. Not just functionally, but designwise. Among millennials, among Gen Z, their technology is a reflection of themselves. One key pillar of what we see as happening in the market is design that matches who they are functionally as well as design aesthetic. The second key area is all around security—and also privacy. We see that for commercial customers, they are very much concerned about people looking over their shoulders on their devices. So Sure View is big for us. You've seen that in our notebooks, and we've now integrated it into our all-in-one and displays. That is huge because 70 percent of offices are becoming more open. And feedback among employees is that they don't feel as private.

And when we're watching where people work, millennials are not just working at their desks. At our site, they're always in the patio working—they're outdoors, they're in coffee houses. And so with our latest EliteBook, we made it brighter—it's the brightest screen out there. That is important so you can work from brighter ambient light conditions outside.

Will the features you're focusing on in the CES releases become more widespread throughout the year?

Yes. The pillars around design, security and performance—you're going to see that theme happen over and over again, all year. You're going to see us continue to [enhance] form function design as well as aesthetic design across our commercial portfolio this year. You will see security continue to be a focus area—we will have a lot of new innovations we're introducing this year. Not only on the device, but also if you want the maximum in what HP has to offer in security, it will come as a service. And then around performance, [we're] not only continuing to improve performance around productivity, but also collaboration. We're adding better mics—mics that have noise cancellation—and louder, deeper speakers. And we're also optimizing visually with brighter screens so [employees] can work in more places. In commercial, all year long you'll see this—design, security, performance.

What are your main goals for innovation in the commercial PC lineup this year?

You will see continued innovations in the form factor. Secondly, our goal is not only to continue making the world's most secure devices, but to ensure that when they're managed as a service, they're even better. Security across the broader surface area of the device is very important, and for it to be very real time and dynamic. That's whether it's visual security, such as through Sure View, or whether it's security around policy settings, application layer, at the BIOS level. And thirdly, we're continuing to innovate around enabling people to connect and create better. Because collaboration, and doing it in a more immersive way, is what's happening. And the last area I would say is sustainability—we are going to be accelerating what we do there. We care about what we do, but we also care about the impact of these devices. So you'll hear more from us about what we're doing to make the most-sustainable portfolio.

What kind of a year are you expecting for Device-as-a-Service, particularly when it comes to what you're doing with partners?

The need for DaaS continues to grow—we hear that from our customers. And the reason why it's growing is that the complexity of devices, the number of devices, continues to grow. Secondly, a lot of customers are spending more time than they had planned on security—patches and fixes and updates. And third is they are continuing to look to improve the productivity of end users as well as IT managers. Not only are they looking for us to make the device, but also to manage the device. Our entire strategy this year is around continuing to build our DaaS platform, which we call TechPulse. It's an AI analytics-driven platform that manages and monitors devices. It will ensure that they're optimized. It will identify proactively when there's failure that could occur, so that proactively we can get to them. And all of this is designed to be delivered in toolsets for our channel, so that they can enable their customers to be more successful. If you're preventing an end user from having a hard drive failure—because through TechPulse we were able to identify it—then the end user is more productive. So this year's all about continuing to build our platform, and making it available with our channel partners to meet the needs of IT managers as well as end users. [TechPulse is] making them more productive and secure, and giving them more-predictable costs.

Do you see this as the year that DaaS takes off?

Yes. What's very exciting is that the proof points around the value of it are really starting to show up, from customers that we had deployed DaaS to earlier. And as our analytics database grows, and we continue to build our AI engine, we're able to do better and go faster. So this is going to be a scale year for DaaS.

As we look at 2019, our priorities working with partners are three things. First is we will continue to drive and grow premium. We've made a lot of progress on premium. Secondly, we're going to drive a lot more attach. We are now designing displays and accessories to really be a part of the total experience. So designing and delivering attach is a key part of how we're working in 2019. And the third one is around scaling services, and using our platform to do so.

How do you hope to expand profitability of channel partners in 2019?

I'm excited about what this all means [for partner profitability]. Because premium has a higher margin. Attach drives a bigger basket, and adds incremental margin. And services provides an ongoing recurring relationship and revenue stream. So for us, it's about designing for the total customer experience, and designing for our partners to be able to sell, integrate and expand their offerings. That's how we look at this year.

How much of an impact do you see the CPU shortage having on HP and on partners this year?

Intel does have constraints. We've been more cautious in the near term, and it's playing out roughly to what we assumed would be the case. We work very closely with Intel. We look at the full year. We think that shorter term there are constraints, [but] for the full year we will be in a better position. We are also very much managing across a broader portfolio, so we have a portfolio of options for our customers.

How are you staying ahead of Apple on innovation?

You can look at what our [x360 models] can do versus Apple. You can't touch more than a touch bar on Apple. We are continuing to innovate around form factors—360s and attachables—that cater to multiple use cases. We are also very much committed to building our security stack, not only in the device but also to be managed. And I'm proud of the progress we've made around share. Our premium share has grown three points and we've made a lot of share improvements against Apple as well.

We are introducing most of these innovations in our top end, in our 1000 series, and then we're bringing it mainstream to our 800 series. ... Our 800 series x360 is important—we took our 1000 series x360 and we brought the innovations to the 800, and that's the mainstream. That also is relevant for our channel, because our channel is about scale.

What do you think is still underappreciated about what you're doing in your personal systems business?

This DaaS platform is very meaningful. We're taking everything we've learned about how to make, maintain and manage PCs, and building it into an intelligent platform that can help our customers. As I mentioned, this is the year we're going to scale. The value for IT and end users is real. We're seeing ongoing demonstration and proof points. I think that's an area for more visibility.

The second area is we're very serious also about continuing to grow our attach. We're designing for it increasingly. Very simple things—when you design for it, you introduce accessories at the time of [the PC launches]. You introduce them in marketing materials together. We're making sure we have programs that support them, and making sure that the experiences are really complementary. We have a lot that we have done, and we have a lot more coming. And I actually think both of those areas will be very material for our partners as well. And there's a lot more there that we're excited about.