A New Era of Innovation and Growth – The Six Five On the Road

Patrick Moorhead: The Six Five is on the road in Las Vegas here at HP Amplify 2024. It has been an incredible event. It is all about hybrid work and the magic that we can apply with AI to make people more productive, more effective, and also more creative.

Daniel Newman: Yeah, we’re driving experiences here. It’s been really refreshing to hear how we are moving forward with this next generation. We’ve heard it’s the newer normal, Pat, but it’s AI accelerated, it’s new platforms and it’s going to be just a really exciting year. And you could sense that from the parade of high profile CEOs that joined for the general session this morning on the first day.

Patrick Moorhead: Yeah. So it’s my pleasure to introduce Enrique from HP. Great to see you. And we don’t have to say first time on The Six Five, we’ve had you on the show a couple of times before, but this is special. This is kind of the first time we’ve been on stage together, so really appreciate you coming on.

Enrique Lores: Well, thank you first for coming and thank you also for having me here. As you said, it’s a very exciting time, so really happy to share the excitement with you.

Patrick Moorhead: Absolutely. And by the way, the excitement also led to your partners. I mean, where else can you go to get the CEO of Microsoft and Google and Intel and Qualcomm and Lisa Su at the end of the week? I mean, this is great.

Daniel Newman: And you may have missed one, I’m just saying. There may be another big Silicon CEO coming, from rumor. I don’t know if it’s true.

Patrick Moorhead: Yes. We’ll see.

Enrique Lores: We’ll see tomorrow.

Daniel Newman: We’ll see. We’ll see how that goes. But it’s been great. And we had a chance recently to catch up with you a little bit around your earnings. This is more of a platform to talk about the technology, about the partners. I’d just love to start with that kind of big broad brush, Enrique, of what is the biggest opportunity… what are you most excited about right now from a technology standpoint and for the future of HP?

Enrique Lores: I think it is what you said at the beginning, the combination of AI and hybrid work and how we are going to be able to improve productivity. At the same time, improve employee satisfaction, help CIOs to manage the very complex world they’re facing with the requests that they get from everywhere. That’s the big opportunity that we have. This has been the key message that we have delivered because, really to make it happen, we need a full ecosystem to change, and this is why we brought all these other companies to show that this is not only HP. There is a big effort behind it.

Patrick Moorhead: Yeah, it’s really exciting. And Enrique, as long as I’ve known, HP has always been a partner company, a channel company. I think you said up on stage 85% of your revenue goes… by the way, this goes all the way back to even when I was working at Compact Computer in the mid ’90s and also HP at the same time. That’s really core. So what are some of the incremental opportunities that your partners, 1,500 that are here at the show, can take advantage of?

Enrique Lores: I think the good thing is whatever we need to do to grow is what will help partners to grow, because our business has fully integrated. We look at our partners as really part of the company, as part of the sales force. So it’s really about making sure we have aligned plans, that we share the opportunities, that we get ready for them. Because a big part of the conversation these days is not only where are we going, but what do we need to do to be successful in making it happen? That’s a big part of the value of this event and again, it’s about making sure they see what the future is, where our innovation is going, and that they participate with us in all the training activities that we’re going to be putting in place to make it happen.

Patrick Moorhead: Well, and your partners are asking you for this. This is not HP, this is what you have to do. They’re asking you for the education, for the programs to be able to take advantage of this next AI revolution.

Enrique Lores: We have spent during the last months a lot of time sharing the opportunity, sharing the direction, and the number one request has been, “Help us develop our own capabilities so we can make it happen.” I think there is a very clear understanding that AI is going to represent a huge opportunity for us, that when combined with hybrid work, we have a unique way of adding value to our common clients, but that there is a lot of work to do to prepare ourselves to make it happen. And that’s why what they have been requesting and what today we announced.

Patrick Moorhead: That’s great.

Daniel Newman: Yeah, these partners have a ton of work to do to constantly stay up with opportunities to build and expand margin. And of course they’re hungry for what you’re doing in terms of building out solutions that they can take to market, expand their margins. Pat, we talked in an earlier show here at Amplify about kind of moving from boxes to really moving to solutions where they can expand their margins, they can build these long term healthy companies. And HP, Enrique, I have to say, is one of those companies that’s just always been very clear in its mission to be partner led, partner centric. So, a lot of kudos to you on that, and the success you’ve had.

Now, it was about a year ago, I believe, you announced HP’s Future Ready program. Can you give us an update on that program, the status, and just give us a little overview of how that’s progressing?

Enrique Lores: Sure. Yes. Future Ready was our way to summarize all the work that we were doing across the company to be ready for the opportunities that we see and the transformation that we think technologies have been in the world. And it’s about, first of all, centered on what our customers are and what our customers need. And it’s about evolving our portfolio, building a more growth oriented portfolio, and we’re doing both organically and inorganically, developing our operations and making sure that we are ready to support new service oriented businesses, manage our business more digitally, building more capabilities in security, and then finally making sure that our teams, both internal teams and our partners, develop the knowledge necessary to continue to grow.

These are the three parts of the program, and we are very pleased with the progress. And today summarizes well the work that we are doing, both from an opportunity perspective. We also talk about all the work that we are doing operationally, and there are many sessions today explaining how our tools are changing, our supply chain model is evolving, which is part of what we need to do and especially as we discussed before, new capabilities for us and for our partners.

Patrick Moorhead: Yeah, AI… it’s funny. The first thing we do as analysts is we try to separate fad versus trend, bringing real value to businesses and also to consumers. And I feel pretty comfortable that we’ve gotten past that and not surprised. I mean, listen, the first AI algorithms came out in the ’60s, about 15 years ago, machine learning with object recognition, University of Toronto, and some of the cool stuff we were able to do on devices came out, which was pretty powerful, particularly around imaging and audio. And then we had a phase of deep learning, and now here we are in generative AI.

Looking at the year, what are some of the keys to success? And I want to say Enrique’s ELTKPI, but maybe I will, you can bring out the PowerPoint if you’d like to. What are your keys to success this year? What has to happen?

Enrique Lores: I think there are probably three big things. One is we need to release the next generation of AI PCs where we are going to see a significant increase of the processing capabilities for AI algorithms. That’s a major step. Second, we need to make sure that our full ecosystem is ready to support it and sell it. And third, and also very important, is we need to have the software companies having developed the applications to really take advantage of the new capabilities hardware is going to be bringing.

And this is why it was so important for us to have Satya today because they’re doing a lot of work building these applications, and we need to make sure that they are ready as we are ready, because customers will take advantage of the new PCs when the applications are ready. Just having the PC, if Copilot is not able to run locally, will not work, but they’re doing a lot of work and a very good work to make sure things work.

Patrick Moorhead: Yeah, I’ve been really happy with your characterization as a company on the different phases of the AI PC, where it started in, let’s say, January. It’s moving to a different level mid-year and then over the year it will mature as well. And I’ve been in and around this industry almost as long as you have, and I would say that this is the biggest software and experience shift since the internet. How many software changes forced a hardware upgrade? Separate from maybe workstations or gaming-

Enrique Lores: Yeah, and the mainstream. Yes.

Patrick Moorhead: Right? But this is going to be huge. I believe we’re under calling this long term, but maybe that’s just my over exuberance and the fact that I don’t have to invest hundreds of millions into R&D. It’s easy for analysts to spend other companies’ money.

Enrique Lores: But we agree that… and as you said, I have been in technology for a long time. Every 10 years there is a huge change, and we think this is the change now. And probably the implications will be even deeper than the implications of other changes because it is not only going to be about technology, it’s going to have a fundamental impact in how we work as individuals. So it’s a very, very big change.

Daniel Newman: Every industrial revolution has been exponential in some way and has reshaped the workforce. We’re still in that phase where I think we’re all kind of whispering a little bit amongst ourselves. We see the productivity gains, and now we’re trying to figure out where the upskill opportunities really lie. Every one of us that run companies are a little bit afraid to talk about augmentation versus displacement, but we understand that certain, like you said, the highest quality skills will rise and we’ll get more out of people, but we just don’t know exactly yet whether it was the way social media came on the way, mobile engineering… it’s just, there are new things that are going to happen and it’s very, very exciting.

And Enrique, just thank you so much for putting such a stellar group together for us analysts. We like getting in front of a room and hearing from people that you just don’t get to hear from every day. And you, Sundar, Satya, Cristiano, Pat, great cast and thanks for having us.

Enrique Lores: No, thank you for coming.

Daniel Newman: Thanks for joining. All right, everybody hit that subscribe button. Join us for all of our coverage here at HP Amplify 2024 in Las Vegas. We appreciate you joining us. We appreciate you continuing to tune in and check out all of the coverage. But for Patrick Moorhead and myself, time to say goodbye.