HP Inc. (HPQ) Earnings Call Transcript & Summary

Good morning. I'm Daniel Amir, Director of Investor Relations at HP, and I'd like to welcome you to our second topic in our Investor Tech Talk Series. This series of investor updates will provide investors with focus and educational updates on HP's innovation, products and services and solutions consistent with our Advance, Disrupt and Transform business strategy. Today, we will be focused on our strategy in commercial Personal Systems as we work, learn and teach from everywhere. With me today is Andy Rhodes, General Manager and Head of HP's Commercial Personal Systems business. Before we begin, let me remind you that a replay of this Zoom webinar will be made available on our website shortly after the call for approximately 1 year. In the first part of the webinar today, Andy will provide a presentation; and the second part, we'll have Q&A with Andy. As always, elements of this discussion are forward-looking and are based on our best view of the world and our business as we see them today. For a discussion of some of these risks, uncertainties and assumptions, please refer to HP's SEC reports, including our most recent Form 10-K and Form 10-Q. HP assumes no obligation and does not intend to update any such forward-looking statements. Andy, thank you for joining us today. The floor is yours.

Great. Thanks, Daniel. And just want to add my thanks for people joining. So good morning wherever you are in the country or the world. Last year, we talked a lot about the PC being increasingly relevant. And when we talked about relevance last year, we talked about more and more people having screen time whether it was in their daily lives or at work, across multiple generations. Millennials were actually spending more time on their PCs than ever before, even with the fact that they're attached constantly to their phone. And I think what's happened in the last 8, 9 months during COVID, we've realized and we've been told by many of our customers, whether it's those at work, those trying to run their lives, those learning from home that the PC is now absolutely essential. And I've often used the words mission-critical. And that's everything from the workplace, all the way through to telemedicine, the fact that people don't want to be exposed as much, don't want to be outside. So -- sorry, don't want to be where lots and lots of people are. So really, we're seeing this big, big shift to the PC as an essential part of our society, whatever you're doing with them. And the impact that's had on the commercial market is profound. And so when I think about the growth in the market, this year will be, our forecast, probably a little down just because of some of the buying, a lot of that is due to the supply constraint right now. But because of this essential thing, what we're seeing is, as we move into next year, that the market's going to continue to grow. So a little bit about the dynamics of the market. Really, what we found is a huge amount of buying at the beginning of the year, where companies looked at their business continuity processes. The immediate shift to get people out of offices into home and to be really productive caused a lot of buying from IT. And a lot of that buying came in the form of mobile products, notebooks, laptops, some all-in-ones as well, very, very good device if you're at home for a long period of time. And then what we saw as well is a massive boom in the education market. That's going to continue to grow throughout this year and into next year as more and more customers in school districts know that they need, absolutely have to have PCs in the hands of children so they can learn. And then a lot of parents as well for those learning from home that don't get issued a device across the world by a school district, they know that their kids needed those. So a huge amount of buying to learn from home, independent of school districts as well. What we also saw, and you can see it from the right-hand side of this slide on the graph, is that the desktop market itself has definitely declined due to 2 major factors. The first is this BCP buying and lots of IT wanting to secure for the future in case there's a second wave, in case when people are at the office, something like this happens in the future. So there is a permanent shift of many of our customers' buying behavior. But the actual desktop still has many, many use cases. And we'll see it stabilize over the next couple of years. The other thing is that there's still a lot of use cases for fixed compute, those that are going to be in the office permanently; kiosks, areas where you still need a lot of performance and horsepower in those devices. So the PC, definitely not bad as people who are staying in the desktop will still have a place in terms of the form factor mix. So lots of dynamics. A lot of those are shaped by what we see as some of the insights that we gain from our customers. And I've titled this Work Will Never Be The Same. And so just 4 here that leads to the challenges that we're seeing a lot of our customers face. The first is that people who are working from home are in the millions. And then what we find is that if you dig down into that, a lot of them want to stay working from home or have a very, very flexible model. So they might not want to be there permanently, but they want to be there a lot more than they are today. So this notion of a distributed workforce even post-COVID is going to be absolutely real, and I don't think that anyone is going to see their offices full to the same extent they saw them prior. The second is as we surveyed lots of CEOs, business travel will never be the same. It will never return, as they've told us, to those pre-pandemic levels. And so that has a big impact on how IT set up their offices, set up their home workers to be able to collaborate on cloud tools like Zoom, Teams, Google Meet and other devices like that. The third is that as people shift to multiple locations outside of the office, homes, just by themselves, are a more insecure environment because of not being behind the VPN, having home routers. And so we've seen a huge increase in these threat vectors from malware, a lot of those based on phishing around the COVID. And then the last is that we've heard from our customers that IT is not fully ready to support this distributed workforce. And they set up their IT practices. They set up their security protocols with the office being the primary area. Many, many people have to go back into the office to get updates, get new systems. That was the workflow, and that's radically changed now. You have to think about everybody being a first-class citizen in this new world. And so that brings us to sort of a bunch of challenges in the workforce. How do our customers really go and accelerate this digital transformation? How do they quickly move modern applications and modern IT practices? How do they support these remote devices? It was okay when there was a small percentage. They could cope with that. But now when it's [ big ] percentage, how do they make sure that they get devices to the right people at the right time, get people up and running; or if there's a problem, make sure that they can actually troubleshoot and fix it from a remote location. I talked about security. But believe it or not, privacy is still paramount at home. We have a lot of our end users tell us they might be sharing a home with multiple people. Maybe their spouse works for a competitor or their spouse is in the workforce as well, and they want to keep a lot of private. And then what we're finding is that people are actually working longer and longer hours. And so this whole notion of well-being or wellness is now really, really paramount. And it affects most of our customers. And a lot of IT and HR and different departments in the corporations have to come together to go solve for that. And so productivity remains a key challenge. And many of our clients are coping with problems now by just working longer and longer hours. And then the last is this hypergrowth in conferencing. I think that's very prevalent across the world. But what does it mean? And I think right now, it means having great devices at the home. So you have good cameras, good audio, enough horsepower in the PC to be able to run those applications while running many other applications like PowerPoint or Excel spreadsheets as you're sharing content in the modern workflow. But I think that's going to radically change as people go back to the office. Now you have a hybrid world. And so conferencing is still massively important in that hybrid world. And then I think about education as well. School is still ready for day-to-day, how they're going to cope. And it's different across the U.S. It's different across the world. And a lot of IT is not prepared. A lot of the administrators aren't prepared. Teachers aren't prepared. In fact, I think this focus on teachers is what we're really looking at right now. Because if the teachers are unproductive, then that means a whole classroom is unproductive or don't get the most out of learning. And I read a stat the other day by the -- by an education -- the National Education Association that 1 in 3 teachers is thinking of retiring or quitting early as a reaction to the pandemic. Buying still is huge, and supply is limited because of upside of demand within lead times. And the technology is still not filling the whole gap. There's still a need for a lot of personal elements. And so everyone's sort of frustrated with those outcomes. So those are the challenges that are happening in the education market. So when we think about our role at HP, we think about [indiscernible] this world. We've been talking about what we call the 3 Ws for a while, and that is workforce, workplace, work style. So I'm going to go look at a little bit about how we see that changing and evolving. The first is the sort of new role for the home and new rules for the household, as we call it. What we've realized is that every home is different and every household is different. Let me give you an example. Some of us live in larger homes because of geolocation. I'm here in Texas, lots of land. Houses tend to be more affordable and bigger as a consequence of that. But we know in other parts of the country, square footage is of a premium and especially around the world. And so where our customers work within the home is radically different. They could be fighting for the couch, fighting for prime real estate in the house. And then people are different. My biggest distraction is my 2 dogs. You might hear them bark sometime on this call today. I'll try and keep them under control. But other households have multiple children that they're trying to educate at the same time as they're trying to work. And then we look at the reinvention of the office. The office radically changes. It's going to become more a place for office community, where people come to solve creative problems or problems that really, really need lots of collaboration. But many, many people won't return because their roles can be done in different locations. And then really, what's going to happen is the world is going to be much, much more of a work-from-everywhere world, where you're really looking at how do I go from one space to another: from home, on the road, back to the office and back again. And then how do I manage those transitions in between to stay highly productive? And so yes, so this is going to really, really shape a lot of what we do. And then the work style is changing, and what do we mean by work styles. More and more people will be doing everything through remote cloud-like collaboration tools. And then the big challenge there is how does everyone become a first-class citizen. How do we -- if we're in the office and you do have multiple people there but people are still in satellite offices or at home, how does the experience for those people and how do they get their voice heard, how are they not ignored on a lot of those calls? The second is distributed workflows. A lot of workflows were designed for the office environment. I do my piece. I walk down the corridor. I speak to someone else. That's now changed. So a lot of collaboration-based tools in the cloud allow for that distributed workflow. And then the last thing is blending of these hybrid worlds. We are going to have to quickly adapt to being able to be working and dealing with our personal life. Those 2 are more combined than they've ever been before, having to deal with these distractions. And one of the things that I've always found is the fight for productivity is often a losing battle if you have multiple different distractions in the household. So how can you quickly get back to being productive? How can your PC adapt to that? How can you quickly move from one room to another room, from one workflow to another flow and get back and get back in the zone as quickly as you possibly can? And then the third is the workforce. How are they changing? We used to talk about the workforce having multiple different generations in the workforce or ones who have different literacy on technology. That's now changed. If you think about the workforce as a whole, a lot of those are priorities. And some of them are doing a great job, and some of them are not. But that balance in the work is what we're hearing. The other is distancing from colleagues and culture, this sort of feeling of am I alone or am I connected to the core of the corporation. And so what we're trying to do here is make sure that people have the right PC setup to be able to stay connected and very, very close even if it's a virtual not a physical, but they want to be close and they want to feel connected with their colleagues and the people that they work with around the world. And then the last but definitely not the least is this whole thing of finding balance in terms of well-being. And well-being comes in many, many different shapes and forms. And I'll show you some of the innovations as we go through this. But well-being could be just like take the stress out of the technology. If technology goes wrong for an end user, it creates an inherent level of stress. And that's what we're trying to take away through better systems, better ability to collaborate, better cameras, better audio, better uptime in the environment so things don't go wrong. And if they do, having the right services and processes to get our end users up and running as quickly as we possibly can. So what's our strategy? How do we help at HP? And one is I think what we found is that the IT decision-maker, the IT department in large companies or the person that's sort of nominated as the IT in those small or micro businesses, they're now the hero. They're at the center of this sort of evolution of the move to work from home over the last 9 months. They absolutely are the heroes. And I think there's 2 things that we really are helping them with and will continue to invest to help them even more. One is this whole management of this distributed workforce: how do you manage the PC life cycle, from understanding what a specific user needs, all the way through deploying it to their home if that's where they need it deployed to managing it through the life cycle when things go wrong; if things go wrong, keep it updated, patched, et cetera. And then the other is to continue to make it a super, super secure environment. As I said, threats are continuing to rise. So that's what we think about from an IT perspective. From the end user, it's really about 2 things: it's being up and making sure that people are as productive as they possibly can be. And we know productivity and collaboration sort of birds of a feather right now. So it's this whole seamless productivity. As I move from space to space, how do I remain productive? And how would I do that whilst collaborating with my peers and my ecosystem of people I have to work with? And then the second is, you cannot do that anymore unless you're uberconnected, unless you have great WiFi, unless you have great wireless, LAN, 4G, 5G SIM-connected for resilience in terms of connectivity. And then what we're finding is that when I look at modern solutions for the future of work, what I mean by that is the way that customers are wanting that delivered right now more and more as a service as we sort of go through this. So let me -- I think on the IT side, when we talk about resilience against threats, we made an acquisition last year of Bromium on the security side. And so it's really about developing our security solutions. Everything from within the PC itself, which people get when they buy it, all the way through to advanced features using isolation technology to protect and then managing that whole customer life cycle from a security perspective. And then I talked about managing distributed workforce at home. So how do you have manageability services? One of those that we have is a tool called TechPulse, which really provides IT decision-makers with a huge base of telemetry so they can do 2 things. One, they know exactly what their users are trying to do with their machines so they can rightsize them if they have to upgrade. But the other is a lot more proactive maintenance. We can see if a potential problem is going to occur through predictive analytics so we can go fix that, change things out before those issues arise. And then on the end user side, it's [ what ] great antennas in the device. How do you ensure that you can stay connected with things like WiFi 6? How do you ensure that we have privacy still even in the home or as they start to go back into the office? So privacy panels are a huge issue. And then quality. Quality is still a massive key for the end user to keep them up and running. And then the other one is this sort of seamless productivity. So how do we create a curated ecosystem? What do I mean by that? Big words. What I mean is having the right displays, the right peripherals, making sure that when you dock, that docking experience is very seamless and worked. And then really ensuring that we have great cameras, great audio, whether it's inside the devices themselves or whether it's those peripherals added on. And we're seeing things like screen sizes becoming more and more prevalent. People are really, really going off and adopting larger screen sizes just because they want more real estate of the digital world inside of their new environments. So jumping into a couple of these. And so if you think about all of these insights, we call it insights to innovation, one of the ones we've really centered on is how do we think about new design centers for the PC. We really use the Office. Even the modern Office, which was more open, had different areas for people to work. But we used to think about the Office as the primary design point for our PCs and on the go as well for laptops. But we had -- PC is designed for people that were moving from corridor to corridor, team room to team room, those that were also on the go. But now we're also focused on the home. And so we study the home. We study how homes are set up, how people move in the home, how they do their work. And we study the problems that the home creates. It could be the dog barking as the sort of mail person, UPS or FedEx shows up. It could be this sort of competition for focus areas, 41% of people competing for the couch. And so it comes in many, many different forms. And so I want to talk quickly about 4 technologies of innovation [indiscernible] we're exploring many, many. So just to kind of show you how innovation is going to change -- help with a lot of these problems. So the first is this issue of noise and distraction. And I heard one stat that it takes 23 minutes to refocus once you get interrupted, not all the time but many times. And one of those is noise, babies crying, dogs barking. Even in normal times, you hear a lot of people typing on the keyboard or eating a bag of chips, and that creates lots of distractions. And it also leads to the stress that I talked about. We're now using AI, deep learning that understands what those noises are, those ambient noises, and blocks them out. And so you might hear them in your home, but you don't have to worry that other people will hear them on the other end of the conference call. Huge, huge benefit to both the person to reduce stress, but also the end users of that interaction because they don't have to sort of deal with this noise in the background. The other is HP Presence Aware, and this is about logging in/logging out. And 2 major benefits here: the first is security. And the second comes back to how do I quickly get back to my task, how do I quickly get productivity up and running for me? So if you think about it, maybe your child is needing help with their education from home. You got to go set them up in the next classroom. You walk away. Your system will automatically lock. Now why is that important? Well, if you're sharing your home with a sibling that works with competitor, you don't want him to see your screen. If you're now back in a coffee shop, the same thing. If you sort of turn away, maybe you go and get a milk or cream for your coffee, you don't want people to look at your screen. So it'll lock instantly. The other one is when you return, you don't have to be able to hit the Control button to wake your system up again. It will wake up automatically. And saving these seconds throughout the day really, really helps with productivity. Another great one is blue light. As we spend more time in front of our PCs, blue light is an issue. It can cause fatigue. 68% of millennials reporting digital eyestrain, although [indiscernible] because I'm getting old, not because I have eyestrain. But people are buying glasses and things like that. And so we now created the first real ergonomic monitor that has Eye Ease built into it. So you can help with that eyestrain, help with being able to work whole day and still be productive. And then the last one, I'm going to talk about is 360 conferencing. As people move around the home, to stop that burnout, to fight for different places throughout the day or just for a change of scenery, get up, stand out, move around, then they want to be able to continue their conference calls uninterrupted. And so Voice360 really sort of tracks using okay -- facing microphones, really, really allows you to be not just facing your PC but have it open and be anywhere near that PC and you still get the great voice quality. It also allows you to use it almost like a sound card if you -- when you do go back to the office. And so if you're in a conference room that doesn't have audio equipment set up, no problem, you can still go off and use this and be sound in the knowledge that you'll be well heard. I talked about teachers. So the big problem that we have right now is -- and in Texas, this is absolutely the case, is that many teachers are teaching in what we call hybrid teaching environments, i.e., some kids are in the classroom and some are still at home. It's elective in Texas whether you want to send your kids into a classroom or not. So we've developed solutions, which are really a mix of our conferencing solutions, our HP Slice with Zoom or Teams -- Team Rooms. But then we also have a product called HP Classroom Manager that allows people -- the teachers to stay connected with their students. They can raise their hand. They can see which -- who is online. They [ stations ] running in the background. And they can do that in the classroom, and they can do it in these remote environments. And they can be connected through collaboration suite. So really, really helping in this hybrid world. And then I'm going to sort of jump now -- as I sort of conclude, I'm going to jump to Q&A. I really wanted to end on one thought. I often call -- we've talked about this notion of sustainability for a long time, and now I sort of changed hats, so just catching on clean and green. We're seeing that sanitization of the portfolio is becoming a much, much more prevalent thought from our customers. How do I make sure that I can wipe these things down without affecting the look, finish, feel or invalidating the warranty? So we've worked hard on making sure we have the most sanitizable portfolio there in the industry. And then on the sustainable side, I really believe this is a journey that's never done. And so we continue to see a huge amount of demand from our customers to ensure that our portfolio is continuing to be sustainable, that our practices get better and better on the sustainability side. I feel great about that. It's a personal passion of mine, but also it's great business now as more and more customers demand that to happen. And with that, I'm going to hand back to Daniel, and let's go into Q&A.

Thank you Andy. So we're going to move now to the Q&A session. [Operator Instructions] As we wait for the questions to start coming in, I will start out kind of to the first question that we got ahead of time. So the question is, "How do you see the demand for PCs post-COVID? Do you think that the demand of PCs has fundamentally changed now due to COVID? So basically, what is the environment for PCs?"

Yes. Great question. I appreciate whoever sent that in. I think a number of things and just -- again, just to repeat myself a little bit. Number one, I think the demand drivers that we're seeing, a multiyear secular trends. I don't think it's just a one-off. I think that as people realize that the PC is essential, as I talked about, whether it's for entertainment in the home, learning in the home, this work from everywhere, I think people are going to realize that having not just a PC, but having a PC that can cope with the new world order in terms of remote collaboration or everywhere collaboration. So ensuring that the camera is great, so you can actually see the facial expressions on these faces, know how they're feeling, not just what they're saying, I think is going to be critical. And that's going to really make sure that what we're seeing right now is going to continue into the future. I'll just use one example here, Daniel. We sold a huge amount of PCs post-COVID with integrated cameras. And then you went around offices, and you'd often see people had stickers. Like they'd get little stickers from their kids, and they put them over the camera because they didn't want to -- that they had -- it was a privacy issue. Well, you don't see that anymore because people will need that camera all the time. And so there's just a huge, huge base of PCs out there. In fact, there's about 700 million PCs that are greater than 4 years old still in the installed base. And you can just think, they are not set up for this modern world of always connected, always collaborating, always online, always on collaboration and conference calls. So yes, I think it's a multiyear trend that we're seeing here as people -- as customers go and refresh because of the absolute need to do that.

Great. So the next question is, "Given the movement away from office, is there an opportunity to restart desktop sales? Or do you anticipate that the segment will be deemphasized in the future?" And I think that's a follow-up to our recent results, where we've seen obviously year-over-year decline in desktop.

Yes. We call them desktop loyalists. So I think that there will be a permanent shift for sure. A lot more of the market will remain on notebooks because of the benefits it gives you; for mobility, as more people do work from home permanently or in this hybrid world that allows them to move from multiple places. But I still think there's a huge amount of desktop use cases that will continue as customers come back to the office. And it's where fixed compute is still advantageous. So a couple of them that are really obvious. We sell a lot of PCs into fixed compute models like kiosks, stationary kiosks, whether it's in airports or shopping malls. And sure, there's going to definitely be a reduction in some of those, but there's still absolutely a need. And then there's a lot of customers that still just demand absolute raw performance or expandability in those machines. And in those environments, we definitely see our customers telling us that they will go back and continue to buy that form factor. What we are seeing in the form factor is 2 areas that we're seeing growth. One is an all-in-ones. All-in-ones is just you get a huge amount of real estate. You get great tidy desk. You get cameras integrated, built in. Very, very easy for IT support because there's not a bunch of peripherals that you have to connect. And so we're seeing definitely a growth in the all-in-one market. And then the other is the mini form factor, so very, very small mini-PCs. And why is that? Well, you still get great performance, but if you do need to sort of -- because of a second wave of pandemics or any other reason, pretty easy to pick that thing up and move it versus a big, big tower that has lots of expandability. So yes, I think we're going to see this steady out as we move next year. We've obviously seen a big drop in that form factor this year. But into next year, we think it will stabilize because of these desktop loyalists. And we do see growth in all-in-ones and the mini form factor.

Great. So the next question is, "How did the expiration of Windows 7 support impact commercial demand? So -- and is there a risk to downstream demand because of it?" So I guess the impact of Windows 7.

Yes. So we did see -- in the lead up to the finishing of support, we definitely saw a lot of buying as people continue to upgrade as they shifted from Windows 7 to Windows 10. We saw that really 2017, '18 and last year. So we saw a lot of buying, a lot of refresh for that. And we always do. The ramp of that refresh was actually a lot less steep than it was in transitioning to Windows 7. But Windows 10 has been around now for quite a while, and a lot of the early Windows devices -- Windows 10 devices, sorry, were still built with Windows 7 in mind. A lot of customers have systems out there that don't 100% take advantage of Windows 10. So that's number one. So we still see a lot of customers talking about refresh so that they can take advantage of all of the benefits of Windows 10, whether that's touch, pen, easier management, better cameras, better audio. And so I think that, number one, we're starting to see that first wave of Windows 10 buying start to come to the end of its life. And number two, as everything we've talked about, the need to stay competitive by buying competitive PC hardware given the PC is essential into people's hands. I think we'll see this continued buoyancy of the market as we move into '21 and beyond.

Great. So the next question is, "Is 5G more of an opportunity or a threat to PCs? Where is it most impactful from the HP perspective? Is it bigger, more on the commercial business or the consumers?"

Yes. It's a great question. I'll start with a quick stat that as we got into COVID in March and April, we expected a big decline in our 4G SIM attach rate. So we attached a lot of SIM cards into PCs. And we expect it because in that period of time, the world was probably the least mobile it's been in decades. We thought that we would see a decline in attach rates as people went -- worked from home. In fact, we didn't. We saw it very, very stable. And so we started to speak to a lot of our customers about it, asked them why. And it was really because they felt that 2 things. One is, didn't know how long the lockdowns would last; and two, it was really about network resiliency. So if you think about it, home networks are pretty unstable. And they're not controlled by the IT department. And so a lot of people will still buy it -- or bought SIM cards and cellular connectivity in the PC for resiliency. I think moving forward with 5G, we're going to see exactly the same thing. In fact, it's a great way to get ultimate resiliency. It's also a great way to get better security because you're not going through a home router. And with modern applications requiring everything in the cloud, you're going to need the bandwidth if you go that route. So yes, I see a very promising future for 5G. These trends take a little bit of -- awhile, as everybody knows, to catch on and actually take hold. So I don't see it as 5G specifically, but I think about why WAN technology been on the rise across all of our segments, but especially in commercial as more and more IT decision-makers realize that connectivity is an absolute key. And I talked about that as one of the big drivers right now. And so it's just part and parcel of being able to provide great bandwidth, keep people up and running, whether it's for the bandwidth or for the resiliency of staying up and running. I would say this that in a modern future, even now, you can be at home, you can have an incredible PC; but if you don't have connectivity, you're really, really not working in a modern way. So yes, I think it's definitely something that a lot of IT are looking at, and we definitely see consumers as well eyeing it up and seeing what it can do for them as consumers.

So as you look at 2021, next year, can you double click deeper and highlight the few points of the catalyst for PC growth for 2021?

Yes. I think it's still mainly how do I get people -- in the commercial space, how do I get people as productive as possible in these multi-environments? And so we're going to see, again, a lot of IT staff realize that the PCs that they have just don't do the job. It could be 2, 3 years old, but they -- 4 years old, maybe those older ones I talked about, and they're just not capable of managing the performance, the connectivity for this modern world of collaborative cloud-based applications. And I always get the question a lot of, "Hey, in a cloud-based world, does the end point need to be as powerful? And will it be more -- much more of a thin client?" And the reality is what we see is that as people use cloud suites and they want all of these great experiences, AI, sound, cameras that follow them around, then the end point device actually needs to be more powerful, not less powerful. And that helps us in terms of our ASPs. And it -- also this sort of ecosystem of what if I'm working from home, I need to be productive, I need to have dual monitors. It's just amazing how much more productive you can be on certain workflows if you have multi-monitors at home, which then means that you need a docking station. So that's all good news for us at HP. And -- but I think the primary reason is, as people shift to this work-from-everywhere world, even if working from everywhere is predominantly at home for many, then they have to modernize their PC fleets even if they've gone through that Windows 10 transition, as I talked about. So I think that it's a very, very different world in terms of what apps people are using and how they're using them, and that requires a very, very different system. And again, I would argue that if you just look at the need for having a camera, it's almost critical, like a lot of us just cannot continue to work without cameras embedded in our systems. And so that's one great reason. Same for education. If you look at teachers now -- and I like to focus on the teachers because I think the more productive a teacher can be, then the better outcomes you have in classrooms. Same thing. They've got to now do all of their lessons online. They've got to be seen and heard. They've got to have modern devices to go off and do that. So I hope that answered your question, Daniel.

Yes. And that's a good segue to kind of the next question is, like "What is the average life of a PC today compared to 5 to 10 years ago? What do you think of the outlook now of PCs? Is it going to be shorter or longer compared to what it used to be?"

I think we're starting to come into an era where, at the very least, the IT staff have the tools and the understanding to make choices based not on just blanket policies but on how people actually use their systems. So I'm not dodging the question, but I want to answer it in a slightly different way. Many of our customers have policies like saying, "Hey, we'll have a 3-year refresh or a 4-year refresh cycle." That doesn't take into account what someone's role is in the company, might change multiple times. We're seeing a much faster pace of change inside of corporations. And so someone actually might change roles within that period, and their role will require them to have a more powerful or a less powerful system. Their role might require them to be doing all of their work online with video or their work might not. And so tools that I talked about earlier, like TechPulse, give very, very rich telemetry data to IT decision-makers to be -- to allow them more to see what exactly is going on with an individual user. And they can then say, "Hey, this system is fine for this person over here. We can sweat that asset possibly for another X period of months." But I have other parts of my organization where the system is struggling to cope now after 1 year, 2 years, 3 years with the activities that they've got, so I need to replace that specific system. And by having telemetry-based -- and we use a lot of AI in suggesting therefore what devices specific people need. And we found that a lot of customers can now move devices around and get new devices to the people that need them, can sweat assets a little bit longer when they don't. So I think it's more around getting the right device so that the end users love the experience, can be productive and can be very, very engaged in the environment. The pace of technology doesn't change. And the pace of these cloud apps, I think, is not changing. The pace of the need for better experiences, whether it's audio, whether it's sound, whether it's battery life -- that's another one I haven't talked about today. But the reality is that even in a from-home environment, what's up there still on a lot of the research we do is a need for long battery lives. As people move around the home, they don't want to have to fight for power cables. So yes, I think with all of that said, Daniel, then we're seeing a lot of customers really look into what is the right life cycle of a PC, very, very dependent on specific different users. And I think now more and more IT have the tools in their hands and the bidder to be able to make great choices.

Great. So we have time for one last question here. And the question is, "What is the opportunity to accelerate branded accessories attach? And how important is attach to margins?" So the question is basically about accessories, which we've discussed in the past.

Yes. So very quickly, 2 things. One is, I actually don't like the word attach for accessories just personally because it feels like it's accessory is something I don't need, but it's a nice to have. And attach says, "Hey, we focus on one device and then bolt these things on in the end." And number one, that's not how we design. We design as a system -- as an ecosystem. And number two, I think they're all essential. So let's call them essentials. But I think that the reality is that as people move to these different environments and try and stay productive, IT has absolutely realized and are doing lots of research. We hear that through our sales reps as they get polled by our end-user customers that they want to know what the best and ideal setup here is for these multiple environments. And if you think about a hybrid world, someone might need a setup at home. And if they're in the office, they might need a set up in the office as well. So I think that's one of the reasons we're seeing big growth in monitors right now; big growth in docking stations; big growth in peripherals, whether it's auxiliary cameras or microphones or other devices. So I think the opportunity is huge. I think it's because, one, people realize that productivity is the key. And so a lot of these are there to enhance productivity. And two is people have one workstation or one workplace. And so there's ample opportunities to go a quick-out more places than they were before.

Great. Thank you so much. So we're kind of out of time. So I wanted to thank everybody for listening to the webinar this morning, and I wanted to thank Andy for joining us today. Hopefully, you learned about why we believe PC is essential and that HP is well positioned to take advantage of this trend. We look forward to seeing or speaking to you in the next webinar series session. And thank you, and have a great day. And thank you, Andy, for joining us.

Yes. Absolutely. Thank you very much.

Thank you.