How millennials, gaming and bespoke design are shaping HP Inc’s market potential
Splitting technology giant Hewlett Packard (HP) into two separate groups stunned staff and investors alike initially, but the breakup has given HP Inc the opportunity to accelerate its innovation in response to its customer needs.
On the back of former eBay boss Meg Whitman’s decision, the separation of computer and printer business (HP Inc) and corporate services (HP Enterprises) was completed in late 2015, with Gary Tierney appointed Managing Director for HP in Ireland.
Whitman, who stepped down from her position as HP CEO after a six-year stint last November, described the Hewlett Packard Enterprise as it was prior to the split as “an enormous conglomerate” that confused customers.
The intention was to reduce the group’s size and management structure, which she saw as an obstacle to staying aligned with current technology trends.
Tierney agrees that the split has allowed this “smaller, nimbler, more focused” business reignite their innovation as HP Inc broke its strategy down into three pieces: core, growth and future.
HP Inc is moving in the right direction as sales in each of its regional operations in USA, Europe and Asia have grown.
Investors who were unsure about HP Inc’s future were offered some relief when encouraging results for 2017 were posted, with revenues, earnings per share, operating profits, cash flow and share price all showing increases.
Having the ability to really dig into all the different segments across the PC and printing markets has given HP Inc the ability to stay abreast of the current trends, according to Tierney.
“Looking at the behemoth and the size and scale of the market, you can lose sight, it’s very difficult to see. But we are now looking at all the different segmentations, where we think it’s going to go, what’s the requirement, what’s been happening, where do we need to invest,” he said.
In taking this approach, the relatively new group realised that gaming was a sector that they needed to take a closer look at, and created a whole new brand ‘Omen’ aimed at gaming specifically, where “performance beyond anything else is critical”.
When Hp Inc’s research and development (R&D) teams took a step back, looked at the market and asked what it was looking for, trends in the virtual reality (VR) and augmented reality (AR) came to the fore.
They’ve already come to market with the Omen X VR backpack and are currently investing very heavily in this area as “it’s the VR/AR trend that’s really going to change the market.”
And while they are looking to continue collaboration with firms like Occulus, Microsoft and HTC in this regard, it was in their analysis of the gamers themselves that revealed how else their requirements had evolved.
“Once of the things we noticed was this ‘game rage’, so milliseconds make all the difference and fine tuning for performance was critical,” said Tierney.
“Traditionally, for the gamer, it was all about performance but the trade off is that the PC looks just like a box. We wanted to bring the form factor in and the coolness of the product into the same thing so there isn’t a tradeoff.
“If it’s sitting in the living room at home and it’s an expression of yourself, you want it to look good, you want it to look cool.”
This development of “expression” as a key consideration in product design – arguably driven by the digital natives – has meant that HP Inc has had to bring design to the fore across their entire range of PC and print products.
From the Envy to the Spectre, the Elite All-in-One to the Deskjet, Tierney maintains that, because consumers are using one device for work, home and play, the form factor is becoming just as important as performance.
“There was a time when the consumer PC was design centred whereas the commercial PC was like a brick. It was functional it was sturdy; and actually, the whole blending of consumerism and commercial has completely smashed the business. It’s one device for everything,” he said.
“We brought the CEO of Harvey Norman in Australia in to look at some products for women to the point where rose gold became a feature within our product set. It really was to help our design teams really break through to thinking differently about PCs.
“From an engineering perspective, we focus on the reliability, quality, the speeds but actually the aesthetics, the form factor and the materials we use – the look and feel of the products – is critically important. It is really embedded in how we did our future planning and since we’ve adopted this approach, the results have been phenomenal – we’re growing both the top and bottom lines of our business.”
Perhaps the most visible influence of the younger generation, and the related impact of social media platforms, has been the development of the Sprocket photo printer, a mobile, social-linked product that can print customised photos on-the-go.
“We were looking to reignite the photograph and that millenial space, making us relevant to that digital native which has grown up with the phone, with their personal life revolving around that,” said Tierney.
“So getting connected with that and the power of photo. When we first showed the product as a concept, I was surprised how it drove that connection back with the connectedness people have with something that is printed. It’s like vinyl coming back in the music industry.”
But the Sprocket is just a sample of what we can expect in the print business in terms of design, according to Tierney.
Having established how different form factors work with their consumers, the group is looking to have a little bit of a “play” over the coming years.
“We want to create a printer product that someone wants to have sitting in the sitting room or kitchen, it’s aesthetically pleasing, it looks like an ornament, it fits in that lifestyle,” he said.
“Eventually, would you even want to bring voice to it? [With Alexa and all those other options] We’re exploring all those things, how we bring it to life and how we think of it. How do we use that trend that we’re starting to see?”
Another key trend spotted in HP’s “heatmap” is the huge shift happening from analogue to digital, including using technology to bring latex to the market, in the areas of textiles and wall coverings.
“When you walk in to buy wallpaper in the future, you can personalise it whatever way you want and have it printed there in the roles and it doesn’t require paste because the latex actually sticks it on the wall. And you can take it off easily and apply it again,” he said.
“If you see a car ‘wrapped’ it was probably printed on a HP Latex. We’ve done the same thing in the building arena so when you see a big building wrap , where the construction is going on, and there’s 50ft signage around the building, it’s pretty much printed on a HP machine.
The same digital awakening is happening in packaging, according to Tierney, and is visible with Coca Cola and the personalised campaign for the bottles, printed on HP Indigo.
“That digitisation, that personalisation was never achievable in old printing technologies. If you break the mould of what you think of as a printer, if you can make the personal transaction with consumers, personalisation knows no bounds.”
What does create concerns, and potential limitations however, is security – especially when pushing the boundaries of end-point devices as far as possible in personalisation and, in particular, mobility.
HP are looking at commercial mobility as being a huge opportunity for them but the issue of security needs to be addressed, according to Tierney.
“Every customer has strong data center security, on their servers, their storage, their booters, but the end-point devices – especially with the growth of Internet of Things (IoT) where everything is connected – security has become a key focus.
“Typically, people were more focused on the protection piece but we’re about resilience, trying to take it to a whole new level so we’re innovating heavily in the security arena and really driving that agenda.”
With GDPR fast coming down the track, firms and individuals are ever more aware of being mindful of stored data online, but Tierney believes there’s still a gap in understanding there.
“Society as a whole needs to get used to the idea of what could happen [in terms of technological advances] and dispel concerns over the good old Orwell prediction of the future.
“Big cities are going to get bigger and when that happens we’re going to have to totally rethink how we live and work in those cities. How supply chains works, how factories work, how 3D printing can be a digital enabler for totally transforming the supply chain, for example.
“It’s going to pose a lot of questions as people are fearful of the unknown. And yet they still continue to put out a ton of information about themselves on social media. That balance is something that society in general is going to have to grapple with.”
One thing Tierney reveals that HP Inc is not afraid of is a little competition. With almost 30 years at the group, and having essentially grown up with the IT business here in Ireland, he said having multiple people coming to market and investing will only drive innovation.
“We’ve got finite innovation budgets ourselves. Competition is great for the consumer and it’s great for the industry as not everyone can push the boundaries of everything. We’re not afraid of it at all,” he said.
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