HP Inc.'s CEO On 3D Printing, Layoffs, And Being Nimble
It’s been nearly four months since HP, Inc. split from its data center-centric sibling Hewlett Packard Enterprise to become an independent company.
Since then, HP, Inc.’s shares have sunk 9% amid a declining market for personal computers and printers. It also recently announced that it would speed up planned layoffs.
In an interview with Fortune, HP, Inc. CEO Dion Weisler acknowledged the tough environment. But he said his company is better off alone because it previously had to compete with its sibling for resources.
As a separate company, Weisler said HP can more quickly respond to market changes and invest in the necessary research to keep it relevant. It’s going to need that speed, especially as the market for PCs and printers continues to decline, but Weisler welcomes the challenge saying he’s a “glass half-full kind of guy.”
Here’s an edited interview with Weisler in which he discusses the tough marketplace, layoffs, and a push into 3D printing.
Fortune: Walk me through the past year and the separation.
Weisler: I’ve been working with Meg [Whitman] on the separation since Oct. 6, 2014, a day that will be forever infused in my mind. There was always this great promise that embedded within one Fortune 100 company there were two Fortune 100 companies; both of almost equal size but really invoking quite different markets.
The board, Meg, and myself contemplated many options to maximize shareholder value and ultimately landed on separating the companies because it allows us to be more reactive to a market that we see is changing at lightening speed.
Explain HP, Inc.’s mandate to not cut research and development.
The directive there is let us take out non-revenue generating parts of the business and keep the innovation engine alive.
What’s an example of a non-revenue generating part of your business?
There’s lots of processes that we run in the background. Is there a way to rebuild processes, like in finance? Are there better ways to do things from a legal perspective? Are there different ways to run sales operations, customer services, or support?
Are you referring to administrative processes?
All the things that aren’t creating products, marketing, and go-to-market. Those are the areas we are looking to re-fence and protect, so we can keep the innovation engine alive. We have to tell a story to our customers, because you can create great stuff and let people know about it, and then let the magic in the products go to work. That has to be done with a view of the short, the medium, and the long term. Our strategy is anchored around core growth for the future. The core is the vast majority of our $55 billion in revenue. It’s core PCs and core printing.
Are there going to be more trimming and cost-cutting measures coming up?
Look, we announced that we’ve accelerated that. We are looking at processes. We are looking at ways that don’t necessarily involve people, but involve leveraging technology to do things in more effective ways. We are looking at outsourcing things that aren’t core to our business that don’t fit the strategic, and there’s other companies out there that do it more efficiently than we can.
What are your plans to enter the 3D printing market?
Today, 3D printing is like a $5 billion or $6 billion market. It’s not going to change the trajectory of the business. But what will is when we can start tapping into the $12 trillion injection molding market. We get to democratize manufacturing with 3D printing.
And you want to focus on 3D printing for the commercial sector as opposed to the consumer market?
It’s not where the value is today. The value is in production and in prototyping.
We are aiming to be clear market leaders there, solving the problems of quality and cost, which has fully held the industry back. You got to hit the inflection point where it makes sense to go 3D printing versus traditional injection molding. If you don’t get the formula right, then it always remains niche. So you can tap into production runs where the curve from digital to analog makes sense: where you can get that right injection point, where you can start to change the market.
What do you say to people who say HP has been behind on 3D printing?
We will release a technology that’s ten times faster than anything else in the market. We can produce parts with unbelievable density. We’ve got 21 microns of accuracy. That’s the tenth of a size of a human hair or one blood cell count. That’s how fine we can print.
We can do it at a fraction of the cost because of our technology, which leverages 30 years of inkjet based printing to produce a 3D printed object. We are changing that formula relative to traditional manufacturing on the vectors of speed, quality, and costs that nobody else on the market has today.
Yes, others did get into it faster, and they are making $300 desktop-based printers. We never saw value there.
The home market hasn’t grown; it’s actually going backwards. The real money and opportunity is in the commercial side of the business in prototyping and production.
Are you working with customers on 3D printing?
We have signed five what we call co-development companies. These are all companies you will know when we announce them. They come from different industries like apparel to manufacturing to all sorts of things, and they are working with us on our technology exclusively. This is serious stuff. That’s why we announced it a year and a half earlier than launch, because we’ve been co-developing in big businesses.
Are these companies using this technology in production?
We are certainly not being public with it. It goes into these companies early in the second half of this year. And then the product becomes generally available towards the end of this year.
Can you elaborate on recent comments you made on the Windows 10 operating system and whether you see it leading to an increase of PC sales? You said you were disappointed that you failed to see higher sales because of Windows 10 like you were expecting.
I am disappointed. I think it’s a tremendous operating system. The promise of universal apps is tremendous.
I get concerned when there’s anything that might derail momentum inside the ecosystem. People have to be sensible and make sure it’s stimulating the market and not destimulating the market. Eventually, this will take off and in the commercial realm there’s more customers looking at Windows 10 at this juncture of a new operating system than they ordinarily would.
I think as custodians of an ecosystem, as Microsoft msft and Intel intc are, and to some extent we are with some of the other large players, we need to stimulate the 550 million or 600 million people that are still running devices five and half years old to go buy again. Companies need to be very thoughtful about where they’re making their investments.
Microsoft entered the space with Surface, and they’ve spent a lot of money, and that’s good; it created a category for the industry. You got to be careful that you are not leaving behind the rest of the ecosystem. As industry custodians, we got to do all the right things to stimulate demand.