Chief Commercial Officer, HP Inc.
Unlocking Opportunities for Growth - The Six Five On the Road
On this episode of the Six Five - On the Road, hosts Daniel Newman and Patrick Moorhead are joined by HP's Dave McQuarrie, ...
About David Mcquarrie
Dave McQuarrie, HP’s Chief Commercial Officer, appeared at the HP Amplify partner conference in Las Vegas in December 2024, where he discussed growth opportunities for partners. He described small and medium businesses as a “massive group of customers with an even more massive spend” that are underserved by internal IT, and said the AI PC is a “game-changer” for them if they can capitalize on it. McQuarrie emphasized a shift from selling devices to selling outcomes and experiences, such as “compute instead of the computer” and “the room instead of the camera.” He also highlighted the importance of partners embracing change and engaging in a “proactive dialogue about capability gaps” to succeed. In earlier interviews from September 2024, McQuarrie described AI as a “tidal wave of opportunity” and compared generative AI to the “advent of electricity” in its transformative potential. He stated that “companies and people who use AI are going to replace companies and people who don’t,” and stressed the need for education about AI because the technology is “so new and rapidly evolving.” McQuarrie also discussed leadership qualities, citing humility, a focus on team advancement over personal ambition, and the discipline of focusing on what one can control as important traits. He noted that HP’s acquisition of Poly gives the company an “unbeatable and unmatched portfolio” for hybrid work experiences, and that the company is committed to deploying its assets to benefit communities and the planet.
Transcript (25 segments)
H
Host0:09
The 65 is on the road here in Las Vegas at HP Amplify Partner Conference 2024. Dan, big headline here is AI, AI, AI and hybrid work.
D
Dan0:22
Yeah, I think hybrid experiences, the next generation of work. I think we're dealing with this pendulum swinging from a lot of remote work to very hybrid work. And we're here with a company that's really focused on giving a next-generation work experience with AI at the helm, AI powering that experience.
H
Host0:44
Yeah, 25 years ago when I worked at Compaq Computer, we were all about partners, and so was HP at the time. And years later, the two married together. HP said today on stage that 85% of its revenue comes through partners. And what I've seen is an unwavering commitment through the years, not a kind of on-again, off-again, and that's super important.
D
Dan1:12
Yeah, partners really need to feel that those they commit their investment, their time, their energy, their training resources to are going to reward them. They've seen companies come in, they've seen them come out, and then they realize how much that can damage the long-term trajectories. A company like HP that's been committed for so long and invested so much... I've been part of some of their partner and customer advisory board meetings in the past, just to see the amount of investment there. I think if I was a big SI, I would feel really good. And obviously they have more than just SI, but big SI and other partners, I'd feel really good about partnering with a company like HP.
H
Host1:46
We get our guest Dave McQuarrie. First-time guest in the 65. Thank you so much for coming on.
D
David Mcquarrie1:50
Thank you for having me. Good to be here.
H
Host1:52
Absolutely. So Dave, let's talk about something that often gets missed in the tech sector. We often want to talk about the big enterprise. Right now, there's been so much attention in the last year to about 10 companies that are buying a whole lot of GPUs. But let's face it, tech is consumed... sometimes we say pocket to cloud, sometimes you say briefcase to cloud. There's a lot of technology in SMBs. They far outnumber Fortune companies and they make a big impact on the economy. You've identified SMB as a growth market and a growth opportunity. Talk about that opportunity, why you think HP is well positioned to take that on.
D
David Mcquarrie2:27
Well, first it's a big opportunity because it's a massive group of customers with an even more massive spend on IT. Second, they are not as well served by internal IT departments or providers across the industry as big companies are, because big companies attract a lot of service and a lot of infrastructure. SMBs, particularly the S in SMB, don't. So they need this infrastructure to serve them, rather than have others serve the infrastructure that serves them. For us, particularly the AI PC, and we may get into that, it's a game changer for them if they can capitalize on it.
H
Host3:06
So as analysts, we're not equity analysts, but we do cover your earnings. And every quarter you talk about growth markets, growth segments, and you list off what those are, SMB being one of them. I'm curious, and I'm sure you love your children all the same, but what are some of the biggest areas of opportunities for partners inside growth markets and growth segments?
D
David Mcquarrie3:31
Okay, so for a start, I have a favorite child, but I'm not allowed to talk about which one it is.
H
Host3:38
So there you go. All parents out there, never say which one.
D
David Mcquarrie3:41
And I can't even say her because I only have three girls. So for me, if one is a favorite, I will never talk about which one that is. They all think they're the favorite.
H
Host3:50
According to my kids, they all accuse the other one of being the favorite. There you go, perfect, because everybody thinks it's the other one.
D
David Mcquarrie3:57
But we do love all of our business partners, as you said at the opening, with whom we have had a long, strong, and successful relationship. I think the partners that are going to do the best in this next few years are those that embrace this change and those that are demanding of us that we help them. Just take one example: almost all of our partners have some services capability. Some have a lot, others have a little. Those that come to us and say, 'Hey, we're terrific at these seven out of ten, but these three we aren't, you need to fill in that gap,' and others come in and go, 'We got these three, but we need those seven.' That dialogue is going to be the most constructive, the most proactive, and I think it's going to be the most successful. So which partners are going to fill that bill? I don't know, but anyone that does is going to be walking through an open door with HP.
H
Host4:47
And just so I understand, when you say the change, is it from a little bit of AI to a lot of AI, from bag of parts to solutions? Is this what you're talking about, this type of change?
D
David Mcquarrie5:00
Well, yes. And I would say yes, it's the move to a solution, the move to an outcome or an experience away from a device. We have a long history of successfully selling devices. We got to move into... we have some businesses that sell experiences today, like Instant Ink or MPS. These businesses sell experiences today, right? Pages or pages in both cases. But we got to move to compute instead of the computer, we're going to move to the room instead of the camera. And if we can do that, the more we can do that effectively, the more we're moving away from point spec sales at a price to 'What do you need done? You need hybrid work enabled? We can help you with that. You need to collaborate? We can help you with that. You need compute?' And you talked about AI. That AI curve is going to be, if not forever, it's going to be for many years. Are we just kind of climbing that capability curve? I think a lot of customers are going to go there with us, and some won't go there straight away. And that's what's beautiful about this. We're going to get some customers that are following, others who are picking up the products as they come in. Maybe a product's been used for two years, it's done with it, the original user because that next latest and greatest is what they need for their AI PC, but that device has got a lot of life left in it. Let's get it to someone that can benefit from it. So lots of refurb and recurring revenue opportunities in there if we do it well.
H
Host6:19
A lot of that thinking too is really an ASP growth driver, it's a TCV driver. When a customer has a solution and they can... we spend a lot of time focused on economic validation. When a customer says, 'Well, this can drive this much economic value back to the business,' they don't really start to think as much about the cost. But this industry is very guilty of box selling. On the data center side, bent metal; on the PC side, it's lots and lots of shipped units. The AI PC has a great opportunity to change this. And of course, you started talking about the small business. Small businesses are big consumers of economic anything you can give an economic advantage, because they don't have big staff, they don't have big support. If you said, 'Hey, this gets 10%, 20%' — these are game-changing differences.
D
David Mcquarrie7:04
Yeah.
H
Host7:04
So this is a partner conference though, and I'm kind of curious, are you thinking about how to incent more of your partners to play in that SMB sandbox, to create those experiences, to drive that longer-term economic opportunity? And how are you doing that?
D
David Mcquarrie7:19
So we are. Let me just go back to your point about SMB. The AI opportunity for the average SMB employee — and it depends on your country whether that cost is 20 or 30,000 or 70 or 80,000, but somewhere in that range — if the cost of the PC to make that person materially, double-digit more productive is a couple hundred bucks extra, which it is, I mean you can do that math on the back of a napkin. So there is a really compelling economic value unlock of this. To your question, how we're incenting: the first and biggest example we announced here recently is this Smart Buy program, a much faster, much more available, much more aggressively and competitively priced offering that starts with PS, starts with our PC business, but it's going to roll across all of the portfolio pretty quickly. And then we have a number of other programs that are aimed at making it easier to deal with us. We have great relationships, so it's not about trust, it's about enablement. We got to make ourselves faster and easier. We're working on that. We got more stuff coming out on it.
H
Host8:17
Dave, things are moving fast. Your partners are moving fast. The actual buyers are looking for advice, they're looking for solutions, which means you're trying to transform your partners here. Let's time skip a year from now. What do you want to have accomplished in the next year with partners? Let's pretend we're having this interview next year and you can do a victory lap for what you and your team have accomplished.
D
David Mcquarrie8:53
Yeah, well, last year we came here and said a few things we wanted to do with and for partners. This year we've affirmed that we made good progress on them, we've got more to do, and I look forward to doing that on this subject next year so we can pull the tape out and have a look at how much of what I say now I say then. The first is that they and we will have made material progress in transforming our internal operations using AI. It's not enough to sell it unless you use it, because there's nothing as compelling as showing what you're doing with it versus 'I don't, but you should.' That's one. Two, that we as a collective sales organization — ours and theirs — are educated on the subject. Right now, all this AI conversation, with very few exceptions, is really high level. We need to get down to use cases that customers can benefit from, savings, economic value that they can get from, and then prove it, demonstrate it, roll it out, show the use case, then the business case, and then the best practice so others can benefit from it. So if we've as an industry, as an ecosystem, become proficient at using, proficient at communicating, and have implemented in enough places to prove the point, that'll be a good year.
H
Host10:01
That's great. Yeah, let's put that on the calendar. Looking forward to it, Dave. I like the idea of drinking our own champagne. I do agree very much, and I think there's some metaphor for the way we talked about our favorite children, raising children, all that stuff. And in that too, doing as we say. So speaking of doing as we say, we said we'd let you get on with your event here, but we do really appreciate you joining us here on the 65. Dave, thank you.
D
David Mcquarrie10:27
Thank you. Thank you for being here. Looking forward to it next year. We can just make sure we go recap all these things and do it again. If by then my kids still don't know who the favorite is, I look forward to getting it done right.
H
Host10:37
Great, means you've done it right. All right, everyone, hit that subscribe button, join us here for all of the episodes of the 65 at HP Amplify 2024 here in Las Vegas. For Patrick and I, we've got to say goodbye for this one. We'll see y'all soon.