Todd Bradley, the head of HP's PC business, does not view Microsoft's Surface tablet as a challenge.
"I'd hardly call Surface competition," Bradley said in an interview with CITEworld. He listed several reasons, "One, very limited distribution. It tends to be slow and a little kludgey as you use it .... It's expensive. Holistically, the press has made a bigger deal out of Surface than what the world has chosen to believe."
Bradley joined HP in 2005 after being the CEO of PalmOne, and was the leader of its PC and device business through 2011. That business has faced countless challenges in the consumer space over the last year, including the quick abandonment of its homegrown tablet, the TouchPad, and the accompanying Palm phone business, and a brief flirtation with abandoning PCs altogether. CEO Meg Whitman quickly put an end to the uncertainty when she took over for Leo Apotheker late last fall, and gave Bradley more responsibility, handing him HP's highly profitable printer business as well. He's now overseeing business areas that make up about 50 percent of the company's revenue.
His first goal: convince enterprise customers that HP is still serious about personal computers. "We continue to work very hard to overcome the confidence problems that created with our customers," he said. "Communication and execution, that's what we're focused on."
Tablets for the enterprise are a big part of that vision. "The Elite Pad is built for the enterprise; it's built on a 16:10 aspect ratio screen so you can view a whole page as opposed to format through a page. It's focused on backward compatibility of applications, it's focused on the ability to open it and service it, as opposed to return it. At the same time, you clearly have the ability to download Netflix or whatever your favorite app is. We've gone much from a different perspective from that then let's load it up at a retailer."
But making a pure consumer tablet that employees will bring to work -- like the iPad -- is not a big focus right now. For HP, BYOD can wait.
"We're not entering the consumer tablet fray any time soon. We'll be doing something next year, but you won't see a consumer tablet from HP before Christmas. You'll see convertibles that are focused on how you use the device, keyboard, clamshell."
He continues, "Whether we go into tablets – there's a whole litany of ARM-based Android, ARM-based Microsoft, there's quite a grid. We'll be judicious about how we deploy against application availability in the enterprise, consumerization, and price points."
He's also wary about getting back into the phone business. "We've been in the phone business. It's exceptionally challenging in North America. We have to be in the personal devices business, the personal systems business. There are a number of ways of how are you going to be in the phone business, whether we partner or build, none of that stuff we've decided about."
So how does HP get back to its top spot, which was recently usurped by Lenovo? Bradley says "It all boils down to China if you want to go to number one." And there, a lot of consumers are still interested in traditional desktop PCs.
"The usage models as you look at these emerging markets, as excited as we are going to get about ultra-mobile, the billion people in rural China still want PCs that have DVD players in them. It's all about usage."
Which gets us back to Microsoft. Bradley thinks that Windows 8 will be fine for some customers, and that there's a place for touch screens in a lot of cases. But he doesn't think they're going to take over the entire PC market any time soon.
"It's a question of pricing, how do you get a broad set of touch products with prices that are relevant? Microsoft has clearly tried to dictate to customers what they need. If you look at retail orders, what we built with touch related to Windows 8, touch is a small percentage of that. It's a price point issue, it's a go to market issue, it's an orientation issue."
A transcript of our entire conversation, lightly edited for clarity, follows after the break:
CITEworld: How does HP fit into the competitive landscape?
Todd Bradley: There are broad sets of trends that we are working on. Clearly BYOD trend is something we're focused on. The virtual desktop is something we're working on. Broadly, connectivity and what that means, whether it's for printing, tablets, convertibles, all are areas of focus for us.
The transition from XP which is still about 50% of the enterprise world, is a huge opportunity for us to focus on.
CITEworld: Do you think Windows 8 is consumer and BYOD play, or an enterprise play?
TB: I think enterprises have changed. Clearly enterprises are motivated by different things other than operating system transitions. They're focused by cost, by consumption, by efficiency. It'll be a continual transition. Enterprises are more driven by the completion of XP as an operating system from a support standpoint than they are from the latest rev of Windows.
CITEworld: So you think the demand will be from XP to Windows 7, then Windows 8 later?
TB: XP to something. We're not going to be dictatorial to enterprises as to what they should adopt. We're going to provide the service, software, and hardware to make it adoptable. We have to make sure we have backward compatibility of applications, make sure they have the tools they need in the enterprise to be efficient.
CITEworld: We're seeing a lot of IT departments struggle with consumers bringing their own devices to work. How is HP going to help?
TB: The best example is clearly the tablet behind you [points to an HP ElitePad]. The tablet that's built for the enterprise, as opposed to others, tablets that are built for consumers and they happen to bring them into the enterprise. The ElitePad is built for the enterprise; it's built on a 16:10 aspect ratio screen so you can view a whole page as opposed to format through a page. It's focused on backward compatibility of applications, it's focused on the ability to open it and service it, as opposed to return it. At the same time, you clearly have the ability to download Netflix or whatever your favorite app is. We've gone much from a different perspective from that then let's load it up at a retailer.
CITEworld: How will you help IT deal with consumerization?
TB: IT is focused on security and applications. Our focus is to provide a very secure set of devices that allows that backward compatibility to devices. We're not trying to drive devices that IT groups have to figure out how to integrate safely.
CITEworld: Do you think IT will be in the business of dictating usage again, saying "this is what we want you to use in this environment."
TB: There's no one stock answer. Different firms are taking different approaches as to how they deal with those security questions, those productivity questions.
CITEworld: Will you win at consumer level by having hottest devices people want, or at the enterprise level by having enterprise ready devices that IT departments love?
TB: Both. We're large enough and have a broad enough footprint in both the channel, the enterprise and the retail world, that we need to be effective at all of the above. We need to be effective in the consumer space, but frankly we have a lot of work to do in the last 10 feet. The last 10 feet in a US retailer, an Apple Store, is something we struggle with. Our VARs and our channels have very clear capabilities, very clear product knowledge, very clear distribution with us. But to be reliant on a retail environment is a challenge.
CITEworld: HP has a lot of shelf space in retail, right? Won't that help?
TB: We'll continue to have that shelf space, it'll continue to be important. Our strategy has never been shelf space. Our strategy has been to make sure we have an assortment of products that meet customer needs and are available where they want to shop.
CITEworld: Where is that? Where do they want to shop?
TB: It's changing for everybody – they go to e-tailers, online shopping is becoming an increasingly used channel.
CITEworld: Among consumers, how do you stand out from the competition? There are a ton of Windows 8 devices competing with HP, including competition from Microsoft itself.
TB: First, I wouldn't say there's competition from them. I'd hardly call Surface competition.
CITEworld: Why not?
TB: One, very limited distribution. It tends to be slow and a little kludgey as you use it. I just don't think it's competitive. It's expensive. Holistically, the press has made a bigger deal out of Surface than what the world has chosen to believe. If you want to go to any of the 30 Microsoft Stores in the United States to buy one, I think you should probably do that.
CITEworld: You're not exactly saying that from a position of strength in tablets.
TB: I'm saying that as somebody who understands the consumer market pretty clearly. Obviously the decision by our board to shut down the WebOs business caused us to have a significant delay in our tablets. We're catching up slowly, both with tablets and with convertible devices.
CITEworld: What would make me buy an HP tablet?
TB: We're not entering the consumer tablet fray any time soon. We'll be doing something next year, you won't see a consumer tablet from HP before Christmas. You'll see convertibles that are focused on how you use the device, keyboard, clamshell, just like the X2 these guys can show you later on. Whether we go into tablets – there's a whole litany of ARM-based Android, ARM-based Microsoft, there's quite a grid. We'll be judicious about how we deploy against application availability in the enterprise, consumerization, and price points, there's a whole host of things we'll look at.
I'm not a big [Windows] RT fan either, by the way.
CITEworld: But the desktop environment is evolving. The PC is dead, right?
TB: You guys have been writing about how the PC has been dead for 20 years. You and your colleagues have. Desktops are going to morph depending on where you are. All-in-ones in China, are clearly a significant piece of the Chinese market. The usage models as you look at these emerging markets, as excited as we are going to get about ultra-mobile, the billion people in rural China still want PCs that have DVD players in them. it's all about usage.
All-in-ones will be a big driver of usage. All-in-ones with touch, or we've created a very thin all-in-one with a pad that goes with it to give you all the touch sensation without having to touch the screen.
CITEworld: That touch pad, does that say something about touch on a screen as Microsoft has conceived it?
TB: We're as focused on design elegance in our products as we are on what Microsoft thinks is important. So that's a very thin screen on that device, thicker than if you get touch on it. Look, we built touch products against Vista, or maybe Windows 7. Touch isn't a new environment for us. We have a touch product without it on the screen, touch with it on the screen. It's all about elegant design, elegant form factors.
CITEworld: Do you think touch on the desktop is viable?
TB: Sure. Clearly viable. We've done touch for six years.
[When you talk about] productivity, you're implying a keyboard. For navigation, a touch screen fine. There's an interaction between the two that's fine. You're seeing the same thing on notebooks. You can navigate with your finger but you can also type.
CITEworld: What do you do about the Lenovo competition? They're gaining share, right?
TB: They're buying share. It was pretty well documented this week. The competitive landscape is just as you said, hyper-competitive. It all boils down to China if you want to go to number one. We've grown our position there 2 points in the last quarter, we've hired some significant Chinese talent to drive our Chinese business, we've invested in design centers in China. I was with the Legend guys yesterday, our latest Chinese notebooks are doing very very well.
CITEworld: What do you bring to market versus them in terms of innovation?
TB: We have very different branding strategies in China. From a product perspective, notebooks. There's a big difference with our use of Microsoft in China vs Lenovo. There's a big difference in how we go to market in the channel. They have a big advantage with the government.
CITEworld: We recently interviewed the head of Lenovo North America, and he said that Lenovo's not getting into phones in North America any time soon, but perhaps eventually. Do you have to be in the phone business?
TB: We've been in the phone business. It's exceptionally challenging in North America. We have to be in the personal devices business, the personal systems business. There are a number of ways of how are you going to be in the phone business, whether we partner or build, none of that stuff we've decided about. I don't think we have to be in the TV business either.
CITEworld: Are you still seeing an overhang from Leo Apotheker's floating the idea that HP would get out of the PC business?
TB: We continue to work very hard to overcome the confidence problems that created with our customers. Leo's tenure here broadly has created an enormous amount of challenge with customers. Communication and execution, that's what we're focused on.
CITEworld: Where do you stand with customers?