It’s been a strong first quarter for HP and the company is engaged in an array of initiatives to keep the momentum moving forward.
(Pictured above: HP's A3 devices.)
An excellent first quarter, traction in A3, and growth in the graphics business. Those were just three highlights HP, Inc. executives shared with analysts during a briefing on February 26.
HP, Inc.’s first quarter revenue—the first combining HP’s and Samsung’s imaging and print operations—was $5.08 billion, up 14% year over year. Enrique Lores, president of HP printing, noted that even without Samsung, the numbers for HP, Inc. alone would still be positive.
The first quarter was the fourth consecutive quarter of year over year growth for HP imaging and printing, representing the first period of growth since 2011.
Breaking down specific segments of the business, supplies revenue was up 10%, commercial hardware units up 73%, and consumer hardware units up 7%.
Lores reported that HP’s graphics business continues to grow and that the company continues to see progress in the analog to digital transformation within the graphics segment.
“This is a great opportunity for us for continued growth,” he emphasized.
He added, that in the office space HP is continuing to make progress with the introduction of its A3 products. The transition from transactional to contract business is also growing, driven by MPS.
Stephan Schmitt, head of product management Office Printing Solutions, HP, Inc. spoke about how the company is looking to disrupt the office by gaining profitable hardware share, aggressively growing the contract business, and by differentiating its products with security and solutions.
“We will continue to aggressively grow our contractual, and by 2020 expect up to three quarters of all pages will be under service contracts,” he predicted, noting that HP is looking to take a leading share in that area by developing strategies to disrupt the labor-intensive delivery of pages.
With all this talk in this industry that print is dead, HP has a different perspective as Schmitt spoke about how HP wants to bring printing into 21st century with security, cloud, mobility, and workflow solutions, which he noted will become common practices for innovative printing.
Since the close of the Samsung acquisition last November, HP has been aggressively onboarding Samsung partners into the HP system and expanding its presence in the market to make sure they continue to maintain the combined market presence the two companies had not only from an A3 perspective, but from a A4 perspective where HP was already number one.
“Samsung brings phenomenal assets to us, including A4 and MFPs, and they’re particularly strong in Western Europe, the Americas, and some Asian countries,” stated Schmitt.
He further emphasized the company’s strong momentum in the fragmented A3 market, noting that HP is expanding its channel reach with the signing of 600 Premier A3 partners worldwide. That figure includes some Samsung partners that met the qualification criteria to become a Premier Partner.
“We’re not onboarding all Samsung partners,” acknowledged Schmitt. “We have very strict qualification criteria. This is a joint strategy approach and a joint sales approach therefore partner onboarding, joint planning, and funnel management are very aggressive and important metrics that we jointly manage.”
Market share, unit placement, and size of installed base of machines in field are some of the key business metrics that HP tracks against its plan.
Schmitt also revealed that on the partner services side of the business, the shift to more contractual business is evidence of how HP is aggressively expanding its services portfolio and scaling its offering.
“We now have 19 consecutive quarters where we’ve grown the MPS channel and we continue to grow at twice the speed of the market in contractual,” revealed Schmitt.
The Office of the Future
The theme of The Cannata Report’s March issue is The Dealer of the Future, so it was opportune that Schmitt shared four trends that HP sees impacting the office of the future along with how HP is leveraging those trends.
First, everything is transitioning into a service. Here, HP is rethinking how service is delivered and expanding its service capabilities to print as a service and device as a service.
“Ideally, this becomes an HP asset and a partner opportunity to expand their services beyond traditional printing,” observed Schmitt.
One example of HP’s innovation in the services realm is Smart Device Services, a solution for remotely monitoring and managing HP devices under an MPS or pay-per-use contract. According to Schmitt, partners who have installed Smart Device Services are experiencing savings of 15-23% from a service efficiency perspective.
Schmitt is also seeing the emergence of subscription- and outcome-based models, not just service-based models.
“HP is leading aggressively and have every intent to lead the transition from basic device management all the way to outcome-based services,” he said.
The second trend is that everything is mobile with the increasing numbers of mobile knowledge workers significantly changing the way work is performed.
“It’s being done where you are, increasingly less at the desk where you have a printer or workstation,” said Schmitt.
Last September HP introduced ROAM and plans to roll it out to the business community this summer. The technology allows mobile users to securely print from any device, at any location and to retrieve those prints from a growing number of print locations at home, at work or at public sites.
Trend #3 is smarter devices.
“What really is happening is as businesses go digital, business content goes into the cloud and workflow and business content becomes accessible from cloud,” explained Schmitt. “We’re very aggressively leading into cloud services and workflow solutions which leverages one of the Samsung assets. We’re going to be able to integrate our MFPs into digital workflows as they access cloud content.”
That program will be released later this year.
The fourth trend is security, which Schmitt described as the foundation for building an innovative, distributed IT environment. Here he referenced HP Connection Inspector, an intelligent embedded security feature that can protect print devices from malware attacks.
The program concluded with a presentation by Santi Morera, general manager and global head of Graphics Printing Solutions, HP, Inc., who underscored Lores’ earlier comments that graphics is a growth engine for HP and that the company’s mission is to convert those industries from analog to digital.
He also outlined HP’s initiatives in the graphics space, including disrupting applications with “breakthrough” technology, and reinventing print service provider (PSP) operations. Two first quarter highlights included the expansion of the PageWide XL portfolio and the introduction of the Indigo 2000 digital press for wallpaper manufacturers.
Looking at the numbers, its recent initiatives and rollouts, and the many initiatives the company is undertaking, these are good times for HP. HP executives are content with the progress they are making signing up A3 partners, and we view the success they’ve had to date in this area as a positive sign even if the numbers reported were worldwide. And from what we heard in the briefing, Samsung technology is well poised to complement HP’s offerings. And in the graphics world, we see HP being a force with its PageWide and Indigo products.
What The Cannata Report will be watching intently is how much mindshare HP will capture in those dealerships who have multiple legacy partners? For those dealers who are taking on HP’s A3 line, the company’s perception as a technology provider in the marketplace will be strong. Nobody will need to explain to a customer who HP is and what they do. That perception, to an HP dealer’s benefit is much stronger than some of us who have witnessed HP’s previous forays into the MFP space. But that was then, and this is now. We think the results will be different this time around. It’s just going to take some time.
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