Capitalizing on AI Transformation – The Six Five On the Road

Patrick Moorhead: The Six Five is on the road here in Las Vegas at the HP Amplified 2024 conference. Dan, there is so much going on. I cannot believe the string of industry leaders that are going to be going on stage or went on stage at the show. It’s a three-day show and I look at everything that’s going on here and it’s pretty much an expression of what’s happening in technology combined with what’s happening in society. It’s pretty exciting.

Daniel Newman: Yeah, we’re at this really important inflection point right now, Pat. The world is changing the way it thinks about work. It’s changing the way it’s going to work, but I mean we’re seeing it in the way we commute, the way we travel, the way we engage, the way we communicate, and of course the big inflection. I wanted to say something else, but you know what it’s going to be.

Patrick Moorhead: I know we’re one minute in. We have to drop the AI thing. Right?

Daniel Newman: Well, I mean it is though. It’s this moment. It’s pivotal. It’s changing everything. And it’s a big topic here at the HP Amplify event.

Patrick Moorhead: It is, and the cool part about this latest generation of AI, the first AI algorithms were created in the 1960s, got pretty popular 10 or 15 years ago with machine learning and then deep learning. And here we are with generative AI and the industry conversation started in the cloud. But as we know, in every single major tech industry event, it goes to the edge and AI PCs, AI smartphones, AI printers. So pretty cool. And with that, I want to introduce our awesome guest, Alex Cho, HP. Great to see you.

Alex Cho: Great to see you guys. Thanks for having me.

Patrick Moorhead: Yeah, I think this is probably the third or fourth time on The Six Five, but I think this might be your first time live.

Alex Cho: First time live.

Daniel Newman: It is the first time and actually, Alex is one of the very early guests. If you go back in 2020 when we first stood up the platform.

Alex Cho: That’s right.

Daniel Newman: Alex came on early, talked about the PC being essential. I think he might’ve even sort of run us through that deck when it was still various machinations and you were coming up with it and then you really rocked the world with that sort of presentation. It became a big platform.

Patrick Moorhead: Well, you said it before, and I won’t say the word because it’ll limit our video views, but before that event happened.

Daniel Newman: It was an acceleration moment for sure. So Alex, you look after the personal systems business, and as you know, AI, is going to have a huge impact on everything. How do you plan in your business to really capitalize on this AI moment?

Alex Cho: Well, we’re very excited about AI. I think you’ve heard me say, and I’ve said it more publicly, it’s a new year, but this is really a new decade. The technology will drive a change in the ecosystem, ultimately customer value and will drive so much innovation. For us at Personal Systems, we think it’s going to change and accelerate our ability to design solutions for people.
Like the hybrid workforce. We think it’ll help us enable meetings and how people work to be far better. And then as well, it’s a platform for new levels of productivity for companies. So, we think it’s very holistic. We think it’ll make a profound difference in people’s lives, not just tech for tech’s sake. And we think it’s a catalyst for a decade of innovation and value proposition growth and just energy in this industry.

Patrick Moorhead: I have to look back and I’ve been in and around the PC business for over 30 years. And when I look back, when has a change in a software usage model driven the demand for a new PC? We saw the desktop-to-mobile, large-and-thick mobile, to thin-and-light. But on the whole outside of gaming and workstations the use case was very similar. I think with hybrid work, particularly on video and audio that was one big one with that. But I haven’t seen this type of phenomena in probably 15 years. So it’s super exciting.

Alex Cho: We think of it, we think of it, I call it the 1999 moment. Remember when in 1999 the internet drove all these new use cases and experiences? It was not a speeds and feeds revolution at first. It was a experiential revolution that drove a decade of growth in the entire industry. We’re at one of those again.

Patrick Moorhead: So can you tell us more about your AI enhanced PCs? There’s going to be different waves, but what could you tell us now?

Alex Cho: Yeah, so what we’ve announced is the industry’s largest portfolio of AI enhanced PCs. And what is it? Number one, they’re very modern. They’re modern in the fact that they’re using Windows 11, which is the most modern OS for productivity and security. And by the way, for companies who need to recognize that end of life of previous generation PCs are happening, they need to get started. Even more though, this is the introduction of AI on the device and it’s AI that allows you to access copilot in the cloud quickly. It’s AI that allows that PC to be far more optimized so that the friction that exists to date gets substantially addressed. And then third is even more than AI, what defines every employee? It’s hybrid work. And so we’re infusing our devices with all of our great technology around audio and video and allowing them to do Zoom and Teams throughout the day more effectively than before. We think it’s the right portfolio for the future workforce that we have now available.

Daniel Newman: I’ve been following some of your commentary on AI PC and obviously there’s sort of this continuum of buzz. There’s those that think within the second half of this year, there’s going to be this new device and it’s going to completely revolutionize. Then there’s the people that are saying this is still a step function that’s gradual, and these AI experiences are going to be embedded into our everyday work on our devices. The executives here are always so generous at these events and you guys spent some time with us yesterday and I asked you a question, I was probing, about the fact that return to work was in and I thought you had a really great answer about hybrid work, hybrid meetings.

What I loved about what you were saying is whether we’re at work or not at work, we’re still going to be using these technologies. You’re still going to have meetings with vendors around the world and customers and partners. And even when you’re in the same office, you might be on five floors apart and you’re not going to always run to a room together. HP seems very focused on transforming these hybrid meetings. What is the AI, we are gonna lean into this a little bit, because no one is talking about AI- What is AI’s role in making hybrid work meet the potential even that we thought it could have just a few years ago?

Alex Cho: We talk about an AI revolution; I think of this as a productivity revolution. It’s about productivity. And by the way, productivity got more complex in a hybrid environment where people are working in the office, at home, in one office, in other offices, in a world where people need to collaborate a lot more. So for us, AI is enabling productivity. It’s productivity if I’m an individual trying to get work done-like the amount of summarization and research that you can do now with new AI tools is really material. So that’s for the individual, but AI that allows that meeting experience to be better.

So we introduce the ability to use AI in our Poly Meeting solutions instead of just seeing a group of people in a room, you could see each person individually that allows you to connect with them. It allows you to see their body language. It’s so much more valuable for engagement and productivity. Then we also talk about AI for improving company processes. Every company has a mandate from their board to find ways to improve productivity using AI and our platform around our AI workstation is really an industry leader in enabling companies to use AI models to improve their internal processes. So we think it’s people, places, and platforms. That’s our three P’s.

Patrick Moorhead: I think that was a good explanation of how companies are using, or will be using AI, to improve the user experience and increase productivity. What opportunities industry-wide does this present to the industry?

Alex Cho: Well, at the base level, we think that this will drive a real transformation of the core PC business. We’ve shared that in the next three years, we assume that over half of every PC sold will be an AI PC. It’s not just going to be an ingredient, it’s going to be a PC that delivers far more productivity, far more personalization. For us, we’re going to be able to secure that PC better. So number one, that will be driving a refresh that will be very meaningful in the industry. Secondly, solutions to help companies leverage AI for their internal processes. All of the space around workstations, workstation solutions, software in that space will continue to grow. And by the way, I use the word software because this is not a hardware play and this is not a software play either. This is a hardware software play where the combination of both designed to take advantage of new generative AI models will drive that productivity enhancements for people.

Patrick Moorhead: Appreciate that.

Daniel Newman: It’s a noteworthy call-out about the productivity item, Alex. We talked to many of your peers, executives, and of course your customers and the feedback we’re getting through our research and through the data we’re collecting is that companies are looking for meaningful measurable productivity gains to come from their AI. So while they’re trying to figure out how to spend money, they want to make sure ultimately it’s about deflationary attack. They want to be able to get more with every dollar they spend. We’ve seen the technology revolution do this.

One of the things that this exponential technology growth creates, Alex, is risk, especially on the security side. HP is no stranger to creative security marketing. I remember the wolf and that entire campaign was a lot of fun but now with AI, you do have a new opportunity for bad actors. You have all kinds of new data being created that can be used, generative tools that can be used both negatively and positively. I’d love to understand what you’re doing with endpoint security controller and how you’re thinking about security. How do you tie security into this revolution? How do you make sure that people know their data is safe and secure yet still productive, efficient, and great overall?

Alex Cho: I think you said it well, but let me just add onto that. Switching seats.

Patrick Moorhead: Mic drop.

Alex Cho: If you think about it, security has always been important to customers and with AI it only becomes more important because AI is about data. AI is about harnessing data and using it. And you’re right, that just means that something that has been important will only be even more important. That’s why we’re very excited to take years of our innovation and investment platform security and use that as a foundational bedrock of securing that AI PC. We just announced our next generation endpoint security controller and it’s more than great tech. It’s very important technology because it is the first of its kind in protecting firmware against quantum compute hacks. It’s the basis by which we believe that we need to be even more vigilant and innovate even more on securing that productivity device because data and models are expanding, and securing that for our customers will be top of mind for them.

Patrick Moorhead: I like about what you’ve done with security and AI. This is not just something that’s new, in fact, I remember attending a security event in New York, five or six years ago, where you introduced AI as a part of your security portfolio and you were doing AI before it was cool. So, I’m sure this next generation is even better. And it’s funny, some people say, oh my gosh, Quantum’s like 10 years away. That’s the wrong way to look at it. Quantum algorithms will more than likely happen in two to three years, according to our research.

Alex Cho: What we’ve said is, look, AI should be used to secure their PC, and that’s what we’ve been working on. Also, security needs to help you protect AI as well. So this whole space around AI and security is dovetailing very much into one that will be important for customers. It’s important for driving even more innovation and it’s important for the world because there are new types of threats that are continuing to materialize. Cryptographic challenges that present themselves in the future are very much around the corner, we believe.

Patrick Moorhead: So Alex, HP is very much a partner-led organization. You leverage the channel and different partners and you’ve been like that for as long as I’ve known HP and personal systems and even with Compaq. What’s in it for channel partners, and HP, and everything you’re doing with AI?

Alex Cho: Well, that’s why we’re here today. We’ve invited 1500 of our partners from around the world. We are channel company number one. And it’s not because that’s the way we do it, but it’s primarily because we think we can make the most impact for the world in working together with our partners to reach, communicate, deliver value to them. There’s a lot for them based on what we’re announcing. First is this is an incredibly exciting new area of delivering new value for our customers. It’s value for customers and they can participate in that. Secondly, it’s about new growth.

This is all about delivering more value that’s going to drive new growth. I talked about the PC refresh cycle at minimum being one beneficiary of this, they’re going to participate in more growth. I think the other thing is they’re going to participate in something that’s more than just a device, but it’s an ecosystem. It’s the hardware, the software, and the services. It comes as a solution for companies to benefit from AI. Whether it’s on the AI PC,we announced our leadership, AI for meeting experiences through our Poly Portfolio, or AI for new platforms. We are offering an improved process through our workstation solution. It’s a much larger shopping basket for them to participate in a growing TAM that’s more relevant for customers. We think this is a great time for our partnership.

Patrick Moorhead: I love it.

Daniel Newman: Alex, I want to thank you so much for joining us here. We really appreciate it and I know we’ll have you back soon.

Alex Cho: Thank you.

Daniel Newman: Look forward to seeing all that you’re doing with the AI PC. We’ll be tracking it for sure.

Alex Cho: Great.

Daniel Newman: See you soon. All right, everybody hit that subscribe button. Join us for all of our coverage here at the HP Amplify Partner Conference 2024 in Las Vegas. For Patrick and myself, we got to say goodbye for this episode, but we’ll see you all really soon.