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March 11, 2024

How HP Was Able to Leapfrog Other PC/Workstation OEMs to Launch its AI Solution

Rob Enderle

(MUNGKHOOD STUDIO/Shutterstock)

This month, HP stunned the market with the most powerful line of AI-enabled PCs and workstations yet to be created, catching the other OEMs, which have been more tentative and less complete, by surprise. I was at the launch. This was only possible due to a unique relationship between Jensen Huang, NVIDIA’s CEO, and HP, since much of the solution was built because of NVIDIA’s direct guidance. This may forever change how companies like NVIDIA and even Microsoft work with OEMs in the future.

Let me explain.

Traditional OEM Partner Relationships

The typical way companies like AMD, Intel and NVIDIA work is at arm’s length and without the deep direction of the partner, particularly hardware partners like NVIDIA. The OEM specs a piece of hardware, then looks at what the partner has, then selects the part that best fits the specification and target price profile. Both entities will often meet and listen to each other but often complain that they aren’t heard, resulting in an aggravating and less than optimized result. This is something Apple worked around by vertically integrating.

This demonstrated integration at Apple where inferior parts are better integrated leading to a superior solution due to the waste that results on the Windows PC side has caused substantial problems over time. While Microsoft’s Surface effort attempted to correct this at a software layer, that too was suboptimized due to conflicts between the players. You often see this happen in sports teams with too many independent stars and on projects with too many who think they are the smartest people in the room. The lack of singular leadership and focus results in sub-optimal results.

The NVIDIA/HP Partnership

What was presented at HP Amplify this month was unique in that HP’s leadership asked NVIDIA to help with the product strategy, so the leadership for the announced effort came from that company, not HP, and led not only to a more executable vision but a more complete offering that includes well-thought-through support elements. These elements include heavy HP partner integration with integrated training and certification programs for both partners and customers so that, unlike its peers, HP isn’t tossing out parts and letting the customer figure out how to put them together. Instead, it’s delivering a solution that includes all the elements Huang believes will make the result successful.

Jensen Huang is the longest-serving tech CEO in history, and it was his vision and drive for execution that turned NVIDIA into the massive powerhouse in AI that it has become, spanning traditional computing, robotics, metaverse training (Omniverse) and the most complete AI toolset from any single vendor. However, there was a gap in that toolset, and he prevailed on HP to create AI Studio, a hardware-independent (HP is building a software company in a company) toolset uniquely useful to data scientists building Large Language Models (LLMs) and their related generative AI solutions.

It is through this unique depth of relationship and NVIDIA’s leadership that HP was able to create a solution that any other OEM using a similar process could have done but didn’t because of the historical lack of inter-company cooperation preventing this level of outside company influence and collaboration.

However, I expect that once the other OEMs see the result, they too will try to come to NVIDIA, hats in hand, not realizing that it is their own practices, biases and desire for unfettered project leadership that will lead to less ideal or competitive results.

What Makes HP Unique

What makes HP uniquely able to create a deep partnership like this is its prior pivot from direct sales to a unique partner-driven sales ecosystem. Eighty-five per cent of HP’s sales is channel related. And its partners on the sales side are often more deeply integrated into HP’s development, sales and strategy processes than a direct sale typically is, largely because due to the natural inefficiencies in this model (redundant leadership and structures), they must be able to make this model successful. In many ways, this is the opposite of companies like Apple which partner poorly and make it unlikely that even Apple can match HP’s initial success.

Wrapping Up:

NVIDIA is unique not just in its AI leadership, but in the uniquely consistent vision that only exists when CEOs aren’t changed out. Leaving CEOs in place for decades (had Steve Jobs lived, I expect he would have lasted as long) showcases that perhaps the best job to replace or supplement with AI is that of a CEO. AIs are internal, while people aren’t, and successes like NVIDIA can only be assured if the goals and related vision remain consistent through the decades it takes to execute. IBM’s Thomas Watson Jr. also saw this opportunity, but his vision was hobbled by his mortality and the smaller changes made by the IBM-trained CEOs (other than Louis Gerstner) that followed him and critically eroded his vision.

It makes me wonder whether, at some point, IBM will be run by a future version of watsonx. AI is in play, quantum computing is next, and right now only IBM and HP are positioned well with this technology, making me wonder what would happen if HP and IBM partnered deeply or merged. Stranger things have happened. For now, as Huang said at the event, we are observing Windows 95-level disruption that is only slowed because it doesn’t yet enjoy a Windows 95-level of marketing support and execution which will, unfortunately, reduce the immediate magnitude of this event. But should that change, the level of market impact could significantly exceed that result.

About the author: As President and Principal Analyst of the Enderle Group, Rob Enderle provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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