HP had what was likely one of the best financial analyst meetings this week and the difference between the company this year and last was quite pronounced.
Last year it felt like HP was struggling to figure out if it was still a company and there was obvious dissent in the ranks and confusion at the top. This isn't entirely unusual given the turnovers, executive changes and structural flip flops the corporation had been through.
But this year HP was so dramatically changed from last that I almost had to keep looking around to see if this was really HP. From beginning to end, the presentations built on each other and the executives not only highlighted what they’d fixed, but what still needed doing. In other words, they went from being a confused rabble to an army that knew what needed to be done and were hell-bent on doing it. I’ve been involved in a lot of turnaround efforts over the year but I’ve never seen this stark a change in so short of a time period - ever.
However, one of the more interesting talks came at the end and was given by Dion Weisler. Frankly, his talk was one of the more interesting ones, both because he spoke about personal technology and because he was such a sharp contrast from Todd Bradley, the executive that preceeded him. Bradley didn’t seem to care about his audience and appeared openly disrespectful of Whitman while Weisler was engaged and loyal. Really, Weisler seemed to get personal technology in a way Bradley never seemed to understand and Dion spoke of three technology waves.The one we are on, the one that is emerging and the next one.
What he spoke of was interesting but I also think what he left out is just as interesting.
The Three Waves
Weisler spoke of the three waves like a surfer, though I would have said it somewhat differently than he did. He talked about the current wave of cloud services and personal technology that is disrupting the market and then spoke about the coming wave of “the Internet of things,” 3D Printing, digital packaging, services, and new ecosystems. Then he moved to the third wave as something the company should watch out for. This third wave had in it flexible displays, vastly improved power systems for mobile devices, and another big interface change.
Given he was working from a surfer analogy and I grew up on the coast with surfing I started to think about how waves actually work. As a surfer, you don’t watch the second and third waves after the one you are riding in order to ride them - you can’t get back out quick enough. Si you watch them because, if you don’t, those are the waves that will knock you under water and maybe drown you. It isn’t the wave you are on that is the problem, it’s the ones that you aren’t prepared for. The analogy still works but it creates an even more powerful reason to be aware of, and prepared for, each wave but focuses more on defense than offense.
Like surfers, companies can’t ride every wave, but they have to be prepared to defend against the ones that will drown them.
What was Missed
There were four big technology areas that could be considered one wave, two or three that weren't discussed. Personal/Low Cost robotics was likely the biggest and HP probably doesn’t think it is in the robot business. However, this is reminiscent of Digital Equipment Company initially believing they weren’t in the personal computer business. This new class of robot, like Baxter, are basically personal computers which build things and would have connects to both HP’s PC and Printing groups in terms of underlying technology. They’ll also move broadly in the market first emerging with products like Baxter in business and then migrating to the home.
Wearable technology was also left out even though the flexible screens that HP did mention will have the highest potential market with this class of device. HP actually was a technology leader with eBooks and smartwatches but had those programs killed through budget cuts, so folks are probably now nervous about restoring those efforts. But, like personal robotics, this could be a critical miss for the company in line with smartphones which should have sprung more successfully from HP’s calculator and PDA businesses.
On the enterprise side they didn’t mention voice convergence and I think this could be because both AT&T and IBM got fried trying this a couple decades ago. Then again, the voice market has since embraced VOIP - which has the combined benefits of being a digital technology and one that has proven to be both far less expensive and far more capable than what proceeded it. Only a company like HP or Cisco could successfully create this next generation but only Cisco is solidly on the path.
The last missed big technology move is towards decision engines as showcased by IBM’s Watson effort. This has the potential to corner the market on applied analytics and be the bridge to true artificial intelligence. Once again, HP is in a good position to explore this and if IBM succeeds in cornering the market most other analytics solutions will near instantly become obsolete suggesting that if this turns out to be a second wave rather than a third wave product a lot of firms will share HP’s fate and be screwed.
Wrapping Up: Looking To the Future
HP has made amazing progress in 12 months. Nevertheless, while it did speak to a number of emerging technologies I think it was the ones they didn’t talk about, which could even be more disruptive, that were just as interesting. One thing that Dion said in passing did hit me as strange though, and it reminded me of HP’s mistake with eBooks.
As you may recall, with eBooks HP actually had a product and ecosystem before anyone else - yet still missed the market.
Dion spoke of digital packaging as something that wouldn’t go away, even though he also mentioned 3D printing. Material that is printed doesn’t need to be packaged and while HP should lead in 3D printing, and does actually sell many parts in this market, they have yet to release a 3D printer of their own. So HP was vastly improved, more than I thought possible in a year, but the stuff it doesn't see could still bite them.