Hardware-as-a-service is key to HP's revival

Ever thought about subscriptions?

Sitting down with HP's new Managing Director for UK and Ireland, George Brasher, I couldn't help but reminisce about how tumultuous the past few years have been for the company.

It split into two, last year, with HP Enterprise (or HPE) being spun out as a separate entity to focus exclusively on pure enterprise solutions. HP still makes business products but they're limited to end-point devices; no servers or storage.

After a rocky start of the year, things seem to have settled down as the company has seen its share price appreciate by more than 40% since early February 2016. That paradoxically coincides with one of the worst periods in recent memories, in the traditional PC industry.

Sales of laptops and desktops are significantly down year on year in most, if not all, markets but Brasher remains bullish about HP's chances. "We're much more responsive and transparent with our partners after the split", he said before adding, "We're more focussed and are outpacing the market in terms of growth."

He recognises the fact that the market is maturing and that there will be more consolidation going forward as hardware manufacturers like HP reassess their positions and long term viability in a market that has, for so long, focused on market share rather than margins.

Innovate or be out-nnovated

Brasher, who until recently looked after HP's worldwide laser business, remains positive. After all, there's plenty reasons for that: HP remains the biggest PC vendor according to IDC, both in the consumer and B2B market and is the largest printer manufacturer (inkjet and laser).

He then quotes Alan Curtis Kay, an American computer scientist and former senior Fellow at HP Labs, whose work was seminal to a lot of technologies we now take for granted. "The best way to predict the future is to invent it".

Ironically, HP lost its "Invent" slogan, shortly after Kay left the fellowship. Still, research and development is central to what the company wants to achieve. Despite the split from HPE, HP Inc. as it is now known, has more than 18,000 global patents.

"This allows us to create solution for everyone, everywhere" adds Brasher. "Our strategy is to compete vigorously in our core, and pursue growth in the medium term from natural adjacencies, all while providing the time and cash flow necessary to create new and exciting categories for the future."

In other words, accelerate pace of innovation and reducing the time-to-market for new products based on them.

This so-called "three waves" strategy was shared by Dion Weisler, HP's current CEO, back in 2013 as the company moved ahead with its transformation plans, in a way similar to Lenovo's "PC Plus" strategy but bolder.

Core (PC and printers), Growth (A3 printing, graphics, commercial mobility) and future (3D printing, immersive computing) are the waves

The premium play

There has been a deliberate attempt by HP to move upmarket, exemplified by the launch of the new Spectre, into premium products where even thin margins translate into far higher profits. That doesn't mean it is giving up on the entry level. "We just launched a new Chromebook and the solution is popular with the education sector".

That's for now though. The next decade for HP will certainly be far more than just boxes. "We believe in a future of blended reality, where physical and digital worlds will fuse together. Sprout by HP is our first iteration of that."

Another example of HP's renewed enthusiasm to explore new (and not so new) form factors is the HP X3. "We want to create new categories and it's [the X3] not a phablet, desktop or notebook. It's all three. You carry one device that is every device." said Brasher.

But there's more. HP has quietly been pushing for a subscription model for hardware. After all, it works well for its printers with MPS (managed print services) moving smoothly from a B2B environment to a B2C one with Instant Print.

The idea of having an all-inclusive, single bill paid on a regular basis is not new. Broadband, mobile phone providers, entertainment services, even a gym pass works according to that subscription model.

Subscriptions, the future of hardware?

Device-as-a-service (not to be confused with desktop-as-a-service both sharing the DAAS acronym) is being pushed by HP as being a better alternative to leasing as provides with a one-stop-shop and a single point of contact for hardware, software and services.

It is not new: HP was part of the Office-in-a-Box initiative launched in the US with Google and AT&T just over two years ago.

For businesses, it is a no-brainer as it removes the capital expenditure, turning it into a more palatable OPEX transaction with the option of upgrading to new products at the end of the subscription.

"The trend in the market is towards consumption rather than purchases. This will only grow and HP wants to be a leader in there" Brasher remarked.

And if it works for businesses, why not for consumers? After all, subscription packages already exist for mobile phones so why not extend it to say, fixed broadband providers like Virgin Media or BT. "It may be too early for that" quipped HP's UK MD.

HP quietly introduced its Mobile Connect scheme a few years ago, one that currently provides up to two years of data for free to customers who buy selected business laptops. It is not a stretch of the mind to envisage ISPs reviving a bygone era where computers were given away with broadband subscription.

Given the resurrection of GIF, growing popularity of Chatrooms, the excitement surrounding bots and the euphoria surrounding billion-dollar startups, it wouldn't be a surprise should this happen.

Read our hands on of the HP Spectre, a 10mm thick laptop

ABOUT THE AUTHOR

Editor, TechRadar Pro

Désiré (Twitter, Google+) has been musing and writing about technology since 1997. Following an eight-year stint at ITProPortal.com where he discovered the joys of global techfests, developing an uncanny attraction for anything silicon, Désiré now heads up TechRadar Pro.