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HP Inc chief argues the case to upgrade from older, uglier PCs
Average selling price is going up due to component price hike, but businesses and consumers must be given a reason to dump their old and ugly PCs
For its Q1 2018 results, HP Inc reported net revenue of $14.5 billion, up 14% year-over-year, with its personal systems division (PC) growing 15%, with a net revenue of $9.4 billion, compared with last year.
The company’s CFO, Catherine Lesjak admitted HP Inc has faced pricing pressure due to the cost of components, specifically the dynamic memory needed to make PCs.
She said this is likely to result in increases in pricing. In a transcript of the earnings call, posted on the Seeking Alpha financial blogging site Lesjak, said: “Some of the dynamics that are going on show ASPs [average selling prices] are up.
“They’re up because we’ve been repricing the rest of the market been repricing for commodity cost increases. But they’re also up because we’re getting a really nice mix shift to higher-end products, higher price and better margins.”
When asked by Citgroup whether the price increase will result in people and businesses taking longer to replace ageing PCs, CEO Dion Weisler said: “There's quite a few forces acting on the pretty aged installed base of personal systems today, given it is at five-plus years for the most part. But we see tablets down.
“We see mobile phones under pressure, and that’s creating capacity for investment in other areas. And in the personal systems category, due in large part to the kind of innovation that we’ve been driving, we’ve been giving people a reason to upgrade. If you look at a PC of five years ago, it’s probably unrecognisable from the products that we make today.
“It’s ugly, yes, and as a result of that, I think we’re not quite sure whether it remains at five years or whether it moves to four or it goes to 5.5,” he said. “I think a lot of that depends on us as innovators, how can we keep an innovation engine alive that is giving customers a reason to update their equipment. It’s incumbent, I think, on the industry to provide customers with a reason to upgrade.”
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Beyond actual hardware sales, the executives at HP Inc expect the company will shift towards selling desktop as a service (DaaS). “There is very clear evidence that markets are going to shift more from transactional motions to contractual motions where they value everything as a service,” said Weisler.
“And so the investments we’re making in not only our managed print services, but in really very innovative devices as a service offering, plays out over time.”
Earlier in February, the company extended its PC management service to cover iOS and Mac OS devices, enabling businesses to support Apple devices as well as PCs.