The Six Five team discusses HP Imagine 2024
If you are interested in watching the full episode you can check it out here.
Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Transcript:
Patrick Moorhead: Dan, you and I and The Six Five attended HP Imagine 2024. We kicked off the week actually at the HP garage, which is the birthplace of Silicon Valley. That’s not something I made up, it’s actually on the plaque in front of the HP Founder’s home and their lab. And we actually did recordings with the leadership team and the extended leadership team inside of Bill and Dave’s garage. So, it was really good.
So thematically, some of the stuff that stood out for me, first and foremost, they’re all-in on work. HP does a lot of consumer and a lot of work, but they’re doubling down on work and that was Alex Cho’s statement. A couple things there. So first and foremost, there are more profits, profit dollars. So from a business perspective, this makes sense. And then when I look at the portfolio, including things like Polycom and commercial grade printers, this strategically makes sense to me. And then we add onto that the services that go along with that, that they’re willing to pay for. I get it, and they want to drive share. Right? So on AI, of course we talked about AI and moving that forward, and this was in the context of the PC, workstations, printers and more. A couple standouts for me. HP really leaned into an AMD commercial product, calling it the highest performance AI product that they have with 50 NPU tops, and they’re swinging for the fences with AMD. HP has a lot of Intel and they also announced a Lunar Lake consumer platform, but there just wasn’t a whole lot of discussion about that. They were all-in on commercial, and this was AMD. We’ll have to see how AMD sells. AMD can sell in small business, but I don’t feel like it sells even close to Intel.
On the workstation side, what I really appreciate what the company is doing there. It is funny, we throw around this word solution, but what they’ve done is they’ve put together this end-to-end workflow for data scientists and developers, front end and back end developers, and it’s pretty cool. It even interacts with Jupyter files, and think of all of the LLMs and SLMs. Not that they’re training 400 billion parameter LLMs, but when it comes to customization, when it comes to data management, you can very much do that on-premises. Right? When you see a developer cranking out programs and manipulating data, these types of platforms.
One of the biggest challenges right now is getting enough GPU performance. And they introduced a new feature called Boost, and Boost is essentially the ability for anybody in the work group to be able to share a GPU, even though they might not have it on their system. Try to get underneath the technology to try to figure out what’s actually making this work. Like, is it virtualization like we see in the data center? Is it something different? Do you have to pin? Does the other user take 100% of the other workstation? I don’t know these things, but I’m going to give HP the benefit of the doubt right now that this thing works and it works well. So, pretty cool. Dan, you and I talk about GPU sharing in the data center at enterprise and hyperscaler, that’s not easy, by the way. Right? I mean, new technologies to figure out how to virtualize it, because it was typically on or off, 100% or not. Bestie back. And then let me talk about printer. We don’t talk a lot about print on the show. Print is very much a large portion of HP’s profit dollars and they brought out a feature. It’s so funny, I don’t ever want to use social media play and interaction or views as the only way to gauge interest, but I had a lot of people commenting on print. Well, what could HP have done to generate this interest?
So I don’t know, as long as I’ve printed, LaserJet or Inkjet, beyond Dot Matrix, try to print a one-page spreadsheet and you get 17 sheets, and row N is the final 10 pages. Or, you’re just trying to print a web page, or one, trying to print off a map maybe to give to somebody or a recipe or something like that, or a school project off a website, and you end up getting the footer and the header and the right rail, they’re all separate pages and it’s ugly. Well, HP print AI essentially takes a snapshot of what you think you want to print and it asks you, “Are you sure you want to do this? Are you sure you want to do this?” Also on the HTML pages, you can parse out ads, which is great stuff. Final, just to make a long story longer, Dave Shull got up there and talked about solutions and services, and this is more, think managed services, where let us do the driving. It does include service, but managed services is another big revenue opportunity. A couple things, below the bios type of services for remediation, online remediation, and finally, managed room solutions. So think of Polycom coming in and instead of the hit rate being 50% when you walk into a conference room, imagine that being more like 75% or 90%. I’m making up these numbers, we haven’t done the research or done an economic analysis behind this, but that’s the thesis of what they’re doing.
Oh, you’re muted, bestie.
Daniel Newman: Someone’s car alarm’s going off so I had to go do a little triage real quick.
Patrick Moorhead: Bee-oh.
Daniel Newman: Closed the door, so I hope you saw my little note. But yeah, you covered a lot of ground there and it was a really interesting event, Pat. And we did have a lot of fun, we hung out in the HP garage, oscillators and vacuum tubes. It was a wooden shed, it was probably the hottest day in the valley in a long time so we were glistening. If you see Pat, little beads of sweat on his head as we talk to these executives, just know it was like 110 degrees inside that shed. But what was even hotter was the announcements, Pat. You and I, we’ve gone back and forth a bit about kind of how this next wave of AI devices plays out. I think we’re starting to see in the real world how companies are adopting.
We did hear a fairly prescriptive comment from Enrique Lores, CEO, who we sat down on the pod this week and talked to about commercial leading the way. So that was one of the interesting things here. We’ve been through about two decades of what I call consumerization, where consumer technology has really led to commercial, but we are right now seeing the first iteration. And why would that be, Pat? Well, it’s efficiency, productivity. So companies are excited about this. 18-hour battery lives, more sustainable devices. Companies are excited about this. The potential for various agents and co-pilots to use an NPU to enable people to do private, secure work on their device. I think enterprises and companies are excited about this. I think consumers are sort of still looking for that killer app to some extent, that thing that’s really going to drive. And battery life of course drives, but as you’ve seen generation to generation with iPhones, a new battery life and a slightly improved camera only can create so much enthusiasm. So people are really waiting for what those next things are.
On the productivity and business side though, Pat, there’s some really great built-in capabilities in these new HP devices. I like some of the things that we’re doing with the AI production. For podcasters, video creators, being able to do with one person what feels like a three-person crew, webinar, webcast, video, stream, very, very powerful. The AI Director, you’ve got what AI can do for video conferencing to be able to basically take four or five people in a one room together, but give them the same sort of screen equity so that unlike in the past, Pat, where it’s like one executive and five people in a room. And then you get each person, you’re trying to figure out who’s talking. Depth of the room, you can’t really read people’s faces and emotions, which was cool for 2005 video conferencing. But in 2024-5 five video conferencing, we want each person to be represented. We want each person to be able to see them. And, Pat, I don’t know about you, but when I’m on a video, I want to see their face. I want to see if they’re sweating when I’m talking to them. I want to know that I’m hitting the right buttons. That’s how I get the reaction. That’s how we close the business. So that’s kind of where a couple of things my head was at.
I do really like and I don’t need to spend a lot of time doubling down because you covered this well, but look, sometimes, Pat, it’s about basics. And the print thing, the AI print thing to me was like, I don’t print a lot. I’m not going to sit here and be like, I’m an everyday printer, but I swear every time I print something it’s screwed up. It’s like, oh, I wanted to print a webpage really quickly because I wanted to look at something or read something, and it’s like 19 pages for one page. I wanted to just print a homepage image to look at something, or a spreadsheet. Gosh, for sake, I want to actually sit down and maybe make some scribbles and notes on it while I’m working. You always get that weird column Q that’s on the next page and it ends up printing 11 pages for that one column. Fixing that, Pat, is meaningful. By the way, it actually is useful from a utility and a cost and ink and everything else, it actually really adds up.
So some of these things you can call iterative, some of these things you could call breakthrough, but I thought it was a really encouraging event. The numbers will tell the rest of the story from here. And so how this innovation finds its way into business and ultimately into consumers, is where we’ll watch. Oh, and I like the GPU sharing. I think people are going to need to understand the application a bit better, but I like what they’re doing there. I mean, this is all about utilizing horsepower. You have horsepower, use horsepower. So HP in this case, with that particular service, Pat, stands for horsepower. More AI horsepower.
Patrick Moorhead: No-
Daniel Newman: That’s it for me, that’s all I got.
Patrick Moorhead: Yeah, so you can imagine somebody on a low power notebook that doesn’t have a discrete GPU who is going to tap into the GPU on the big workstation. That’s kind of my expectation of what they’re going to do. Kind of in a very similar, I mean, it’s like a client server relationship. And instead of it being a server in the data center or a server in the cloud, it’s a giant HP Z workstation.
