Ushering in a New Era of Printing – Six Five On The Road

Patrick Moorhead: The Six Five is on the road at HP Amplify 2024 here in Las Vegas. It has been a show that has been full of hybrid work and putting that to use, amplifying that with AI.

Daniel Newman: Yeah. It’s been a big focus of this event, Pat. We see hybrid solutions coming into the limelight and of course it’s not new, it’s just evolving. In the last few years as we’ve seen everything get back to normal. We won’t talk about it because it’s stressful, but we are seeing how this technology is evolving and now we’ve got this mega force in AI.

Patrick Moorhead: And printing is a key part of any type of productivity and personal solutions, and by the way, a very integral part of HP as a business. It’s roughly a third of the revenue, about 66% of the operating profit dollars and it’s critical part of HP, the company. And with that, it’s my pleasure to introduce Tuan, who runs the printer business.

Tuan Tran: Hey, guys, how are you?

Patrick Moorhead: Great to see you.

Tuan Tran: Good to see you. Good to see you.

Daniel Newman: So often, Tuan, we are asked about, well again, I think the AI PC maybe is the star of the year, not just here at Amplify.

Patrick Moorhead: Maybe this year, right?

Daniel Newman: Well, last year, it was the Data Center GPU, and I think that’s still a pretty big deal, but this year the AI PC is really red-hot. And printing is still a huge business. You heard Pat rattle off those numbers. How much did you practice on that?

Patrick Moorhead: A little bit. I just got on their investor website, double checked it by Tuan. How about, it’s almost like we get briefed every earnings with Enrique.

Daniel Newman: Absolutely.

Patrick Moorhead: Oh, we do. That’s right.

Daniel Newman: We do. But I’d love to get a little bit of your vision on the future of printing and of course HP’s expected role.

Tuan Tran: Yeah, I think I print printing number one has an important role to play like you said. I think it’s still very relevant. In the home, people are printing because of their kids and homework, people comprehend things. In business, it’s all about paper and workflow and everything else. And then a lot of the things we don’t talk about a lot is graphics, things like this.

Patrick Moorhead: Exactly.

Tuan Tran: This is printing, this is projecting an image, this is creating an environment. And so there’s always going to be relevance for print. And I think I’m really happy to be leading this business and I think I see lots of opportunities looking forward. Now, I’ll mention a little bit about AI. I think as you think about AI, we feel like even in our corner of the tech universe around printing, there’s opportunity for us to really change the customer experience, unleash creativity, and really drive a much more compelling experience for both people who use our printers and people who run our printers for industrial. And we could touch a little bit on that this morning.

Patrick Moorhead: Yeah, that would be great. So hybrid has always had the strict definition, but it seems to be interpreted in different ways based on the timeframe. It’s, “Oh, hybrid is just code for remote.” No, it’s not. It’s remote. It’s where you can be most productive. And the disaggregation of where you get that work done is really coming into full steam. How are you orienting your offerings to best meet hybrid needs? And I know it’s like building a train tracks as you’re riding on the train that’s evolving, but how are you approaching that?

Tuan Tran: Well, I’d say hybrid work for us and it’s funny you talk about returning to the normal, I would say returning to the new normal because the way I work today, I mean post pandemic, I’m on Zoom. I’m in my office at home more than I’m in the office when I’m not traveling. And I work with my team that’s scattered across the time zones and geography. I’m on Zoom a lot and so a lot more than I’ve ever been beforehand. We turn on the video camera a lot. So from a print perspective though, we think about hybrid work is again, disaggregation of work. And with that disaggregation, there’s security, manageability and productivity are the keys that you’ve got to really focus on designing for.

And so of course our products are secure, our products are highly manageable and that’s been always been our differentiation. But the productivity part’s really important. Productivity, you want to have a printer where you work, whether it’s in the home, whether it’s the office, whether it’s at the conference room, whether it’s down the hall, and you want to make sure that those printers have a common interface and have an opportunity to overlay productivity, workflow scanning and digitization. And so I think that for us it’s really changed the way we think about design centers, both the physical product as well as the software and workflow layers we put on top.

Patrick Moorhead: That’s great.

Daniel Newman: Yeah, I like that you pointed to the new normal. We talked about that a lot for a period of time and then that vernacular went away. I think there was an acceleration towards more hybrid work. I mean my firm is six or seven years before the event happened and we were already always hybrid. And so I think a lot of small new, it’s kind of born on cloud companies had already gone that way. But I think we’ve seen it pivot all the way that way. And I talked to the executive team yesterday. I saw it pivot back the other way. I think it became a lot about flexibility, convenience, which by the way is something that printing is.

Tuan Tran: But even today, like commercial real estate, you think about office spaces, I mean it’s still underutilized.

Daniel Newman: We know it’s different.

Tuan Tran: So there’s a big new normal there.

Daniel Newman: If you’ve been tracking that I think I’ve watched on CNBC and some other places, but they’ve been tracking that. There’s a lot of uncertainty there for sure. And I think that hybrid has been a big part of that. But one of the drivers, what I was trying to get to go there was flexibility and convenience have been a driver of home-based printing. And that’s something that I got to imagine HP sees some opportunities coming out of that.

Tuan Tran: Yeah, I mean in the home it’s always about convenience. Right? Consumers value convenience and they value convenience. And as we think about what’s happening in the home printing space, one of the ways they value convenience is they want all of their ink upfront and they’re willing to pay for it. The average selling price for printers, believe it or not, has been going up. It’s going up because people are choosing to buy printers. These are tank printers and we have a lineup. Epson has a lineup. Canon has a lineup that basically has two years worth of ink upfront. A lot of convenience ready when you are ready to print. They also value convenience with what we’re doing with Instant Ink. And last week we launched an all-in plan.

So Instant Ink is our subscription plan for customers who print and want to pay over time. And so they buy our printer and then they can sign up for an Instant Ink plan. What we’ve done with our all-in plan last week was we integrated actually the hardware into that subscription plan. So now you can buy the hardware, you can pay that for that hardware over time. You pay one price every month and you get the hardware, you get the supplies delivered to your door, you get 24 by seven support and after two years, you have an opportunity to actually upgrade your printer. So it’s like, okay, I don’t have to think about buying a new printer. I don’t have to think about support. I don’t have to think about ink, I just want to hit print and it works. And customers in the home, they want that convenience. I think there’s a value proposition for the office. We’re still looking for that, but that convenience is a big deal when you think about how little time people have.

Patrick Moorhead: Analysts like us need to be really careful with absolutes. But I have to tell you, HP created the market for as a service in there and really blaze the trail, I think, for all as a service from other categories. And PC is a service, device is a service. I mean, I’ve been a subscriber to your Instant Ink. I think immediately the first printer I bought that they come off it and it just shows up at my door and I absolutely love that. But, hey, we’ve talked a lot about what you’ve done in paper. Now, I’ve been to your headquarters, I’ve seen 3D printing, I’ve seen what you’ve done with this and a myriad of customization. Can you talk about where you’re going beyond paper or maybe where you’ve been and where you’re going?

Tuan Tran: Yeah, I mean I think obviously we have a big 3D presence who are there. 3D is a big deal for us. I think moving the world to services and as they think about services, not only we want services and as a service for PC and for print, but also as we think about and AI opens up this opportunity unlocking a whole layer of services. So this morning, who was it? It was one of the guys that talked this morning, it was Satya. He had this great phrase, and I’m trying to remember it. He said, “Hey, AI allows you to unlock creativity.” And we’re, “Wow, okay. That’s a very interesting thing,” because I could do many things and one of the things that we know when it comes to printing, people want to print things that are creative, but they’re encumbered by the tools that we have.

They want to put a photo book, they want to print a poster, you’ve got your kids taking your kids’ soccer matches or basketball matches. Well, yeah, those little four by sevens or five by sevens and eight by tens look good, but wouldn’t it be cool if it was a sports poster? And that unlock, that ability to do that and get that in physical form is something that we think we can unlock. So when we say services, we don’t mean just services about subscription for hardware and supplies, we mean creativity. And I think for print, that unlocks a whole universe of posters, banners, all the things you see professionals can create. Okay, well yeah, this could be done via AI with a person sitting at home who’s thinking about a birthday party. It wouldn’t say Amplified. It’d say something else.

Patrick Moorhead: That’s cool.

Daniel Newman: Yeah, it is really interesting. We spoke to Vivian Chow on the couch and probably part of your team, and we asked her some questions about the impact of AI and machine learning. And I thought she had a good answer, but I’d love to get yours too because I think this is an evolving space. What do you see as the opportunity with AI and machine learning to influence print?

Tuan Tran: We’ve been working on AI and machine learning for, I mean, probably five or six years ago I was at this meeting, I talked about smart device services, how we make smarter printers. They have sensors built in that’s always connected to the cloud. And so on our A3 printers and our enterprise printers, those printers actually have self diagnostics, predictive maintenance, so we know when a fuse is going to fail. We’ve done all that machine learning with data we’re collecting from the printers.

I think AI just puts this on steroids and I think the difference between that machine learning with AI now is you have this multimodal interaction with a device and whether that be today, copilot in a chat box, tomorrow it would be voice. And from there, I think the sky’s the limit. You start unlocking use cases that we don’t even know yet.
We’ll preview a couple of use cases. One around really looking at your output and making sure that you never have a blank page, a spreadsheet that’s spread over 10 different pages, a website that’s get all sorts of weird content.

Patrick Moorhead: Yes, yes, yes.

Tuan Tran: That’s a very basic use case that we all feel the pain. And it’s like the printer is doing exactly what you told it to do.

Patrick Moorhead: Exactly.

Tuan Tran: But now what you really want is, “Hey, I want this on one page. I mean, come on, dummy, that’s one page.” But then I think we’re also going to preview a use case tomorrow about unlocking creativity and how you can actually enable creativity, but also balance that with security and privacy because we’re talking about your content. So how do you marriage those two and how do you build an ecosystem for that? So I think again, use cases are evolving, but it opens up that next level of innovation.

Patrick Moorhead: Right.

Daniel Newman: And, Tuan, that’s a great set of examples and I know that we really are going to be looking to hear from the market and everything from sustainability efficiency to just doing things that come across our minds. I want to thank you very much though, Tuan, for sitting down with us here at Amplify.

Tuan Tran: Thank you.

Patrick Moorhead: Thank you.

Tuan Tran: Great talking to you guys.

Daniel Newman: All right everybody, stick with us here for all of our coverage of HP Amplify. It’s been a great event. But, Patrick, we’ve got to keep moving. We’ve got a lot of great conversations. Hit that subscribe button. Join us for all of them, but we’re out of here for now.