HP at Davos: "We lose money on the hardware we, make money on the supplies." Bet. No Cap.

 

I've been saying this from the beginning: Covid changed the way we saw work, it illuminated the managerial redundancies and hierarchy hypocrisies - then AI hit the masses - and is changing everything again.  

"I think the pandemic showed the different way of work, create a different type of need...this is showing that all of us as companies, we need to make significant changes in how do we connect, manage, develop, grow our employees to make them successful." L, HP

We are doing more with less, because of Ai.

There's more.  NVidia, HP, Dell are going to catch headwinds like nothing else since the 90s.  Indeed, this next iteration will blow all other KPIs, benchmarks and models off the planet.

Imagine, if you will, every PC being refreshed in a five year period...or 24 months or in twelve.

This is what looms over the horizon.

BIG PRO TIP: We will see the largest PC refresh in the history of the world.  Another thing readers of DOTC and NorthStar knew months ago, local Ai for businesses and Personal Ai for individuals is on its way.  No regulation will stop it, no guardrails or "Ai Use Statements', Ai ethics stance, or EU regulation is going to stop the Ai Wave.

Enrique also addressed the third party toner thing. No mention of  Uyghurs of China. Without hesitation, without skipping a beat he readily admitted restricting supplies to HP only is an intellectual property issue and more importantly, it is a PROFIT play.

He was asked, "...do you break even lose money, make money on the hardware?"  

His response, "We lose money on the hardware we make money on the supplies."

Thank the Capitalists Gods from Above!  He said it.  We all knew it and have known it - the razorblade model.  Which isn't new.  General Motors, GM, with Mr. DuPont originated the concept of making money, at times more money, by crafting loans for the purchase of automobiles.

Same idea. And it works.

Here's a statement that should send chills down the spine of all those who sell printers, supplies and the services that stop with the hardware:

"We need to make printing as easy as possible...and our long term objective is to make printing a subscription..."

So, you're going to pass your legacy on to your kids?  A legacy of selling machines and supplies?  By the sku?  Good luck with that... 

HP is betting hard on Artificial Intelligence. Specifically, PC units with embedded Ai processors on board.  

"We are really excited about opportunities AI brings. As you were saying at the beginning, we are introducing in our PCs next year, the capability to run language, large language models locally, which will from a cost, speed and security perspective, a much better solution for consumers, and for professionals and that’s probably biggest change in PC industry in the last 20 years." -L., HP

So what does all this mean to you, a dealer in the Office Technology niche?  Don't ask ChatGPT, Google of your old-school consultant.  Forget about getting direction from your OEMs.

Go Ask Your Customers.