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HP Inc. Expands Device as a Service, Trims Channel Inventories

Dion Weisler

Dion Weisler

HP Inc. (HPQ) has successfully ramped down channel inventories while ramping up a device as a service (DaaS) push and managed print services, CEO Dion Weisler and executive team members stated during an HP earnings call yesterday.

HP’s revenues were $11.9 billion for Q3 2016, down 4 percent from Q3 2015. Net earnings were $783 million, down from $854 million for the corresponding quarter last year. Overall, the results beat Wall Street’s expectations but a weak printer sales forecast disappointed Wall Street.

Still, there are signs of progress. The company has scaled back channel inventory levels to ensure only the highest-demand products are available at distribution for channel partners. Moreover, HP Inc.’s device as a service push — basically, pay-as-you-go sales programs for PCs and mobile devices — is off to a good start, company officials said.

HP Inc. Channel Inventories

Weisler offered this update during yesterday’s earnings call:

“Turning to supplies, in Q3, we began to execute the sales model changes we discussed earlier this quarter. As we shared on our call on June 21, we made a strategic decision to evolve how we run and manage our supplies business in recognition of the changing market dynamics, giving global price transparency. To harmonize pricing, we determined an increase in marketing, combined with a reduction in channel inventory levels, was necessary. And we took the first step in the third quarter. With continued support from our channel partners, the execution is on track. We will continue to implement operational changes to our supplies inventory management in the fourth quarter and we’ll provide a further update on our Q4 earnings call.”

In terms of subscription services, the company’s managed print services revenue was up year-over-year in constant currency, Weisler said. And on the consumer side, HP Inc. experienced continued momentum in Instant Ink — a subscription-based supply service.

HP Inc. Device as a Service (DaaS)

On hardware as a service (HaaS) front, HP Inc. won a three-year device-as-service contract with Volvo. The deal involves Elite PCs and workstations together with Care Packs, factory services and priority support to more than 25,000 users across all regions, Weisler said.

HP Inc. launched the device as a service push in June. It’s the latest in a growing list of HaaS initiatives across the IT channel. Ingram Micro recently announced its own HaaS efforts, and Microsoft has been promoting a Surface Membership Plan for its combination tablet-notebooks.

A range of MSP-savvy companies have also promoted forms of HaaS — with names like CharTec and GreatAmerica Financial Services pioneering the market. GreatAmerica, in particular, has been promoting more of a Hardware as a Rental model.

Now, several PC makers — including HP Inc. — are joining the HaaS movement. Although the Volvo win sounds like a direct sales engagement, HP Inc. mentioned channel partners dozens of times during yesterday’s earnings call — a clear indication that partner-led DaaS initiatives also are front of mind.

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