HP Inc. CEO Weisler On Moving Direct Accounts To Partners, Windows 10, Elite X3 And The 3-D Printing Opportunity

Weisler On The Record

HP Inc. CEO Dion Weisler spoke with CRN on Thursday about a new initiative to move 1,500 direct accounts to the channel, the impact of Windows 10, the new HP Inc Elite x3 product and the implications of HP's eagerly anticipated 3-D commercial printing product.

Weisler spoke with CRN after the company reported non-GAAP net earnings per share of 36 cents -- in line with Wall Street expectations -- on a 12 percent drop in sales to $12.2 billion. The Wall Street consensus was earnings per share of 36 cents on sales of $12.1 billion, according to a survey of analysts by FactSet.

The results marked HP Inc.'s first quarterly earnings call since being split Nov. 1 from Hewlett Packard Enterprise. It also comes in the midst of an aggressive innovation offensive, including the launch this week at the Mobile World Congress in Barcelona, Spain, of the new Elite x3. The Elite x3, a Windows 10 device, makes it possible for business customers to access everything they need on a single hand-held product -- including Windows legacy applications -- eliminating the need to switch among smartphones, laptops and desktops. Here is an excerpt from the conversation with Weisler.

How did the channel perform in the quarter and what is your message to partners with regard to driving sales growth?

I couldn't be happier with how the channel is operating and embracing our new company and new products. Our [partner] Net Promoter scores are up since we have done the survey as a separate company. That is a tremendous validation of the hard work that the team is putting in and the commitment that we have had from the channel.

Talk about the changes to move direct accounts to the channel.

You know, I came from the channel, and I firmly believe it is the most efficient way for us to go to market. We are moving approximately 30 percent of our direct accounts to the channel. It is about 1,500 accounts globally. From my perspective, they are just going to do a better job in servicing those customers than what we could do. They will add additional value.

Our channel partners are getting fairly sophisticated. They are understanding customer behaviors. They are looking to add real value. And when they pair their capabilities with the technology that we bring to market, that is when the magic really happens. I am excited about extending those accounts in to them.

What is the message that moving the direct accounts to the channel sends to partners?

Approximately 80 to 85 percent of our total revenue is done with or through the channel. It is a great proof point of our commitment to the channel. This company was born based on channel relationships. It is something [HP Inc. founders] Bill [Hewlett] and Dave [Packard] stood on 75 years ago. It is in our DNA. We have never really tried to be anything that we are not.

For years, when I was a competitor, I looked at HP as the company with the best practices with the channel. The work that we have done over the last few years to continue to raise the bar on our partner programs, to make it easy to do business with us, to focus on our quoting system so that we can turn around quotes faster -- which was one of the key pain points mentioned when I first took over this role three years ago -- we have worked extensively on that. I did a review recently in Germany, talking in a roundtable to many of our channel partners there, who said the turnaround time has been reduced from what was many days to about two and a half hours. That is best practice amongst all our competitors, and we are looking to amplify that around the rest of the world.

Talk about the turmoil in the market with Dell buying EMC and Xerox splitting and what impact you see in the field

There is a lot happening in the industry right now. There are of course large deals going on that are complicated and quite distracting and dilutive to the businesses. We have got some of our printing competitors looking at strategic alternatives for their business and reshaping themselves.

What that means for us now as a separate company is we are the pillar of strength and stability in the industry. If you are a channel partner, it is hard out there. You have lots of choices. You are saying, "Where am I going to put my dollar down and who can I depend on?" All we do when we wake up in the morning and go to sleep at night is think about printing and personal systems. That is not the case with the rest of the industry right now.

Talk about the channel investment HP Inc. is making.

Investments in our partner program continue. PartnerFirst is driving sales for us with speed and simplicity. That was our promise to partners. We are doing new training. There are fewer certifications. We are making it simpler for them to do business with us. We are looking to create more opportunities for them.

Our Platinum Partners are growing faster than the rest of our channel. We want to ensure that both our Gold and our Silver partners are also enjoying some of the great technology that I think you have seen us bring to market over the course of the last few months.

All in all, I am excited by what is happening inside the company. I am really excited by the 250,000 channel partners that we have amplifying our efforts. What this is all about is really bringing some awesome products to our customers and doing that with and through the channel.

What are the Windows 10 market trends you are seeing?

I think Windows 10 is a terrific operating system. The promise of Universal Apps [across phone, mobile and PC with Windows 10] is really quite special. It enables devices like the Elite x3 to exist. The x3 is not a bird. It is not a plane. It is Superman. For us, the x3 is not a phone. It is not a laptop. It is not a PC. It is all three, and that is enabled through the Windows 10 Universal Apps and Continuum.

We are disappointed that Windows 10 hasn't provided the stimulus we would all have hoped for. Recognizing that there are still 550 to 600 million devices out there that are four and a half to five years old that are looking for a refresh, I think it is important for the industry to stimulate the market to upgrade those 550 to 600 million machines. I would be very cautious as the industry thinks about pricing policies in the market, ensuring that we are not stifling demand but indeed encouraging demand.

How important is the commercial mobility opportunity to partners?

If I was a partner today, what I would be focusing on would be understanding customer workflows and how commercial mobility can enable an organization to change the way they have been doing things. Let's face it -- we are all looking at -- us included -- at ways of being more efficient.

In many cases, we operate in a fairly inefficient way. We have multiple devices with our data scattered across multiple devices. In many cases, it is pulled together by the cloud, but not always. You are always moving from platform to platform.

How does the Elite x3 solves that issue of moving from smartphone to laptop to desktop?

What the x3 offers is the ability to put all of that in one place with enough computing power to move from the different work modes that all of us have. Sometimes we do less complex tasks and other times we do more complex tasks.

With the Elite x3, we now have one device that enables you to do all of those things. When you are doing less complex tasks, you may use it in phablet format. You dock it at your desk and you are able to do spreadsheets and Power Point and all the things you do in that [PC] environment. And when you get on a plane and you want to do more than just pushing buttons around on a small screen you take out your sort of clam shell device [HP Inc. Elite x3 Mobile Extender], you open that up and that syncs with the x3, and then you are able to do real productivity work.

All of us do varying degrees of complex tasks during the day, and you want your device to be able to morph with you. That is the promise of x3, and that is why we are real excited about it.

What is the 3-D printing opportunity for partners?

I would love to be able to bounce my grandkids on my knee one day and say, "Look how we [at HP Inc.] changed the world."

I think that is the promise of 3-D printing. We get to democratize manufacturing and give the tools to the artist directly again -- just like the blacksmiths used to create the perfect horseshoe, and then along comes the industrial revolution and we are able to make lots of horse shoes -- great horseshoes -- but they are not perfect. They are not fit for purpose for your particular horse.

We get to do that with 3-D printing, because manufacturing can take place anywhere. Anyone can do it, particularly when it is blended with immersive computing. You get to go from the physical to the digital and back out to the physical again.

Our focus here is on the commercial market -- not the consumer market -- in the specific areas of both production and prototyping. It is a long-term journey here. This is not something we are in for the short term. We have a really long road ahead of us. We are excited about the launch of the product later on in the year.

What are the sales compensation changes you are making in printer supplies and how will it impact partners?

The compensation changes are to really focus our organization, because it has to start with us -- to make sure we are selling the value of our supplies. When you use HP original supplies, you get a better output. You get better yields out of your toner cartridges. That is really important for our customers. I wanted to direct our organization to ensure that each seller inside our company is having the conversation with our channel partners and the customers about the value of HP supplies.

Talk about security around HP Inc. products, particularly printers.

We are focused on making sure we have the most secure devices in the industry for our customers, particularly in the print business. We know that the printer is often the Trojan horse on a network. The bad guys out there will look for the weakest vulnerability and attack that. We have been focusing for a long time now at ensuring our printing devices are really bolted, that when they have that blue cable plugged into the back of them they are not the Trojan horse on the network.

We have taken a lot of the lessons we have learned from our personal systems business around security and bolting our systems, and applied it to printing. It is a major concern for our customers, CEOs and CIOs, who are looking to protect the data of their corporations and their customers. And that is what we want to bring to market.

What is your mood coming out of the first quarter?

I couldn't be more excited about our team and the kind of product portfolio we are bringing to market. The portfolio we are bringing to market is second to none. It is spectacular. I am so proud of what the team is doing creating new categories with products like the Elite x3. That is what we promised we would do across the three waves of innovation.

The PageWide XL in the graphics market is opening up a $1 billion TAM [total available market] for us that we weren't playing in with both mono and color printing. Internally, this product was code named Niagara, because it is so fast that it looks like Niagara Falls when the pages are flowing out. We truly have an awesome road map ahead. Our 250,000 channel partners around the world are a natural extension of us as an organization.

I feel really good. Of course, we are operating in challenging markets. We are not blind to that. But we know when we get together with the channel and we have great products, great things happen.