HP Keynote: PCs and Printing Are Back

HP's handling of its PC and printer lines provides a textbook example of how to use marketing in a declining market.
Posted September 13, 2017
By

Rob Enderle


I’m at HP’s partner event in Chicago this week. Two of the more interesting keynotes featured Enrique Lores, who heads HP's printing effort, and Ron Coughlin, who leads the company's PC effort.

For about the last 15 years, we’ve been talking about the end of printing and what was believed to be an unstoppable migration away from paper and to consumption of media via tablets. Strangely, for most of the last 10 years, we also talked about the end of PCs — also to be replaced by tablets.

But something funny happened over the last couple of years. Instead of accepting that outcome, HP split off from HPE as a separate company, kind of a big startup, and started fighting back.

It reminds me a bit of what also almost happened with the mainframe. Back when IBM seemed to agree that the mainframe was dead, the platform dropped into massive decline. But the company decided to fight back and updated that old mainframe. Now it is one of the most powerful platforms for mixed cloud loads.

For the last two quarters, HP has shown modest growth in printers, double-digit growth in printing supplies (which is where the money is in this market) and double-digit growth in PCs. Like IBM with the mainframe, the company decided to fight the trend. Suddenly printing, at least for HP, isn’t in decline; it is a growing and profitable business. (I should add that tablets, which were the supposed to driving this joint decline, have largely dropped into decline themselves, which should have had us challenging this premise long before now).

Let’s talk about the problem of perceptions and why HP seems to be doing so well in printers, and in PCs for that matter, by directly challenging the belief that both are in decline.

The Problem with Perceptions

A lot of folks don’t understand that while perceptions are our reality, they aren’t reality. Just because we believe it doesn’t make it true.

In the past, we’ve believed that the world is flat, that it was impossible to fly in a heavier-than-air aircraft, that you couldn’t go to the moon and that the sound barrier was impossible.

Current beliefs that, in my opinion, likely should be more aggressively challenged is that we can’t reverse global warming, that electric cars are a foregone conclusion and that we, in a few short years, won’t be allowed to drive. And just because we can’t yet imagine a replacement for the smartphone doesn’t mean there isn’t one coming. Back in the age of the flip phone, smaller was better, the idea of the big screen phone just seemed terrible, but here we are.

This is the problem with perceptions. We tend to drop into a groupthink, and once everyone seems to agree, we think we have a reality. However, we actually only have a perception — and one that may be false. And when it comes to the decline of the printers and PCs, that perception does appear to be false.

Marketing 101

When I went to business school, one of the very first marketing lessons was that if your market drops into decline, you should increase your demand-generation efforts to fight the decline. This is for two reasons: First, you want to slow the decline, giving you time to switch businesses. Second, the common, and wrong, reaction is to cut marketing. If you, in contrast, increase marketing, that will shift market share to you.

Watching HP is like watching this lesson in play out in real life. It invested in printing and PCs when everyone else seemed to be cutting. As a result, it demonstrated double digit growth in both businesses and took enough share in the PC space to regain the number one spot. (It remains number one in printers).

Security as an Edge

HP has been using security as a competitive edge for some time. It is the only firm both Intel and AMD have showcased as unusually aggressive at security and the only one that aggressively pushes security screens as well. One of the most common ways that third parties pick up confidential information is from just reading it off a laptop screen on a plane. It still surprises me that security screens remain an exception and not a rule for most users.

We’ve known for some time that printers can be used to hack networks and that their records are vulnerable. Yet HP is the only vendor that has made what I think is a significant enough effort to secure them. With breach after breach, clearly a lot of shops are taking this far more seriously, and I think that is part of why HP is doing so well in both markets.

Device Wise

One of the things I’ve advocated for some time is a tool that better matches a user’s needs with PC hardware. Sadly, I made very little progress with the OEMs. So I was surprised to see a tool called “Device Wise” on stage at the HP event. This tool for IT shops allows the user or manager to specify the job requirements for a new employee and then use this to select and configure the ideal hardware for that new employee.

Eventually, I see tools like this becoming a great AI showcase. Not only could firms better select hardware but parents and individuals could as well. That’s part of how you reverse a declining market — remove a lot of the friction in the sale and better assure buyers get the products they actually need.

VR and 3D

Two of the most interesting examples on display at the event were virtual reality (VR) headsets being used by cancer patents to distract them from pain and the use of HP 3D printers to create custom insoles, orthotics, in shoe stores coupled with 3D foot scanners. It is fascinating how some of these technologies are spreading into new markets and creating new opportunities.

HP University

Building on this idea of investing in demand generation, which is where I started, HP announced the foundation of HP University. This education effort is designed to help the channel come up to speed on HP products and more effectively sell them. This kind of concept was very popular when the technology market was first started but, for whatever reason, largely fell out of favor. In my opinion, this likely contributed to the decline and slowing success in the segment. Reversing this bad decision and reinvesting in the channel shouldn’t be unique but is. I expect, it will pay big dividends if companies execute, and HP is executing.

Self-Fulfilling Predictions

My big takeaway is that often predictions can be self-fulfilling. If enough people, with conviction, claim a market or segment is dead, budgets get cut, and the segment dies out. Whether we are talking consumers or businesses, money flows where demand generation is funded and away from areas where it is cut. HP reinvested in PCs and printers, and the money moved back into the segment and to HP, which grew its market and gained share. Like I pointed out above, this was marketing 101, and the rules still apply.

HP is focused and investing in demand generation. It has an executive team that is both experienced and able to execute. In short, it is a living case study on how to run a business. I think that is largely why it is successful and a validation that the stuff I learned in business school actually had merit.

Photo courtesy of Shutterstock.




Tags: PC, HP, printer


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