HP CEO Weisler On The Shift To Services: 'There Is Really No Alternative'

HP CEO Dion Weisler says that the IT mega-trends of today--including customer buying tendencies that favor services, the continuous battle for security and the changing nature of work to be more mobile--create massive trends for PC and printer juggernaut HP Inc. And for HP's partners, of course, which drive nearly 90 percent of the company's revenue, Weisler said.

Amid these dynamics, "the role of partners has never been more important for us," Weisler told CRN in an exclusive interview.

[Related: HP Targets Partner Friendliness With Merging Of Online Portals]

Weisler spoke with CRN in connection with the HP Reinvent 2019 partner conference, taking place this week in Houston. He offered his perspective on the necessity of partners shifting to services, such as Device-as-a-Service and managed print services models, rather than traditional sales transactions.

"While it's true there is some initial investment, there is really no alternative" to shifting to services, Weisler said. "Because the market, given the mega-trends, is going to move there anyway. The question is, are you going to be there for that end customer, or not?"

Weisler also discussed how HP is working to outpace its competitors on security in both print and PC, and shared his views on the emerging opportunity around 3-D printing.

Ultimately, in all of HP's businesses, the company's success depends greatly on channel partners, he said.

"Overall we're very committed to our partners' success. I don't think that's ever really been in question, because we've never wavered over the course of 80 years. We don't flip flop. They are very central to us," Weisler said. "We're positioning the business both for today but also for the long term, and we believe that with them we are able to make lives better for everyone, everywhere."

What follows is a portion of CRN's conversation with Weisler.

For partners who are not already doing services with HP, what's your message about the importance of shifting from transactions to services?

I think there's several things. The first thing is, you ought not be afraid of it. There is a tendency to be, because the transactional business, both for us and for our partners, has been very profitable for the longest time. And perhaps in the very short term, while you're investing to be able to deliver services, there's some more investment to be made. And so the fear is that your margins won't be as strong in a service world, as it is in a transactional world. But the stickiness that you have with a customer--your ability to drive line-of-business conversion, your ability to upsell and cross-sell, your ability to add more value and have a long-term relationship with a customer so that you're not entering into a reverse e-auction [where the lowest price wins] every other year--is a long-term dividend on that investment. We've certainly seen it in the evolution of our managed print services business. It pays long-term dividends. So while it's true there is some initial investment, there is really no alternative. Because the market, given the mega-trends, is going to move there anyway. The question is, are you going to be there for that end customer, or not?

I know there will be some partners that will maintain and live in that transactional world. And I would argue that over time their businesses will really suffer. And those that move faster toward services, and really have an intimate understanding of the customer experience, rather than just the speeds and feeds of a product, will inevitably yield not only stronger profits, but sustainable profits over time.

The second thing I would want them to know is that we are not there to compete with them. We are there in recognition that our partners live on a spectrum [between being] purely transactional today or [being] completely committed to services. And there's not many that are polarized on either end of that spectrum. There's many that play somewhere in between the two. And depending on where you are, you've already made a level of investment to some extent. And you have more maturity or less maturity. Our goal is to build platforms that enable as many people to participate as possible ... Our partners can add incremental value over and above the platforms that we build. And there'll be others that are purely transactional that will want to leverage those platforms to start to get into this business as they start their transformation journey. But we are not there to compete with the channel, we are there to enable the channel.

You recently disclosed that more commercial customers are buying print supplies online. Is that another reason for partners to push managed print services?

That's exactly the comment I was making [about reverse e-auctions]. If you are competing against clone manufacturers of supplies [sold online], it's exactly the same thing. If you have a contractual relationship with a customer, you effectively have the ability, as long as you're servicing that customer well, to build a forcefield around that customer and not have those external forces [competing with you]. Managed print services or Device-as-a-Service are terrific examples of how you can build that forcefield around a customer and continue to add incremental value.

Security has continued to be a huge emphasis for HP. Over the past year, do you feel you've outpaced your competitors on security in PC and print?

I really think we did. We really do this at three levels -- we do it below the operating system, at the operating system and above the operating system. That's true whether it's print or PCs, because both print and PCs have an operating system. We're doing an enormous amount of work that many people don't necessarily see. At the firmware level, it manifests in things like Sure Start, where we're able to detect intruders that will attack at the BIOS level and try to work their way up the stack. Then we've invested heavily at the operating system level, and got some really exciting things in the product roadmap that are leveraging these learnings and a subset of artificial intelligence to, on-the-fly, do some incredible things in this space. More on that in the future. And above the operating system level, where we've added Sure View [integrated privacy screen] not only to our notebooks, but added it to our desktop screens and other display devices. I think we are continuing to progress our security across both print and PC at a really rapid clip. It's an ongoing battle against the bad guys--as soon as you're doing something, they're trying to catch up. If you stand still in this space, you are going backwards.

Do you see partners finding success by making HP solutions into a security sale, as opposed to as a device or product sale?

I think a lot of our fastest growing partners are taking many of our messages--whether they be around security, whether they be around services, or whether they be around some of the work we're doing in premium. Or whether it's driving the A3 business, where they weren't there before. We're providing a very complete set of products, services and solutions. When partners zoom in on them, and invest behind them, either through sales force or complementing on top of them leveraging the platforms we have--those partners are growing faster than those that don't.

What do you want partners to know about your 3-D print business at this stage? Has the opportunity expanded for partners over the past year?

I would say it really depends which part of the market you are going after. There is a role for the traditional channel partners to participate, as it relates to prototyping and potentially in some areas of production. But if you really want to get into digital manufacturing transformation, it requires extremely heavy verticalization knowledge. So if you want to penetrate how cars are manufactured in the future, you better know how to manufacture a car. Our traditional partners, for the most part, don't have that deep verticalization. If they want to invest in that, it's not too late, because there's not many companies that know how to do it. And the companies that figure it out will be enormous businesses in the future. But it is not for everybody. And I've been very consistent about this--I wouldn't want to suggest to our partner community, "Hey, just go out and become a 3-D partner and it's all going to be good and easy." It's not--it's complicated. But it is incredibly rewarding when you really do make those transformations for end customers.

In the 3-D printing business, do you feel like you're ahead of where you were expecting to be at this point?

I would say that I'm really excited about this business. I knew it was a long-term investment and venture when we got into it. I've never said anything other than that. I think where we've come in such a short period of time is incredibly impressive. To go from nothing to the market leader in the segments where we're playing, by a comfortable margin, when you've had a business going for about two years, is quite unbelievable. But it shows the deep level of value that is associated with our breakthrough technology. If you would've said to me, even a year-and-a-half ago, you guys would have metal parts out in the market, I would've said no way. So the breakthrough speed at which our engineers are doing brand new invention and discovery is amazing. And we're learning a lot, as we get into a deeper understanding vertical by vertical, and choosing where we want to play, and the pace and sequence in which we want to do it. I'm really happy with where the teams are at.

What do you feel like is still not fully appreciated about the opportunity with HP?

I still believe that even our core businesses are colossal businesses. It's over $500 billion of [total addressable market]. People kind of get hung up on, "Well the market's down 1 percent, or the market's down 2 percent." Or it's flat this quarter, or it's up a little bit. And everyone spins around these [small percentages] of a $500 billion market that is consolidating. It's getting harder to be a sub-scale player. It's all we do. We wake up every day and we think about printing and personal systems. These markets are enormous. People thought innovation was over [in these markets], which was just nonsense. And I think we woke the market up to that. I think the answer would vary, partner by partner and customer by customer. There's some that completely get it, and they're transforming already. There's others that are sitting on the fence and wondering what will happen there. And there's others frankly that have their head in the sand. So our job at Reinvent is really to paint the future--tell them the future is largely here and now, and bring them along this very exciting journey.

What is your message to partners?

The channel is at the heart of HP's reinvention. We wouldn't be where we are, three plus years after our separation, without them. The rate and pace of change, driven by those mega-trends, has probably doubled or tripled since we started this company three years ago. Therefore the urgency for us to transform, in order to continue to perform collectively as an ecosystem, is our biggest opportunity. And if we can transform faster, collectively, we will win faster. And I have every confidence that we will do that.