HP bets on AI personal computers to drive revenue, eyes Asia for growth

[SINGAPORE] The lockdowns stemming from the Covid-19 pandemic drove the revenues of many tech companies, as people who were forced to remain at home rushed to upgrade their tech, be it for work or for leisure.

Then, the unveiling of OpenAI’s ChatGPT in November 2022 helped drive growth for tech companies again.

Much of that artificial intelligence (AI)-fuelled growth, though, has benefited companies involved with making the chips that power AI applications. However, there are now signs the generative AI-led boom is also driving revenues of companies making products used by the general population.

HP, the US-based PC and printer maker, said in an earnings presentation for its third quarter that it now sells at least one AI personal computer for every four PCs it sells, and these more advanced computers are arguably helping drive revenue growth.

“We have grown our business the last five quarters in a row,” HP’s chief commercial officer Dave McQuarrie told The Business Times on the sidelines of an event celebrating the company’s 55th anniversary in Singapore on Monday (Oct 6). “We have been able to grow revenue again, and (PCs are) a large contributor to that.”

The company’s revenue reached US$13.9 billion for Q3 ended Jul 31, up 3.1 per cent from the same period a year earlier.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign Up

Sign Up

Revenue for its personal systems segment, which includes a range of computing devices for both consumer and commercial markets, rose 6 per cent year on year to reach US$9.9 billion. HP’s financial year ends on Oct 31, 2025.

Yet, McQuarrie is optimistic there is more growth to come, making the argument for AI PCs, and how newer technology could unlock productivity gains and change the way we work.

AI PCs are personal computers built using advanced hardware that are designed to run AI applications and tasks locally; the term has been used by PC makers to promote what they see as a new era of personal computing.

SEE ALSO

AI adoption fuels growth of Singapore’s digital economy, growing to 18.6% of 2024 GDP

HP’s profit forecast suggests it can withstand tariff hit

AI’s path to profits is being driven by consumers

These AI PCs are able to run certain tasks such as generating images or live translations without having to go through the cloud, meaning these tasks can be completed at a faster rate.

McQuarrie said the “job” HP has now is to explain to people the benefits of buying an AI PC. 

A sustained growth in the PC segment for HP would also help offset declining printing revenue, which currently accounts for 29 per cent of the company’s takings. 

Business in Asia

HP’s “job” comes at a time when the PC market is expected to enter an upgrade cycle, due to the end of support for Windows 10 that is happening this month, and following the last upgrade cycle that happened during the pandemic.

And McQuarrie is excited about the potential from the Asia-Pacific region.

“In Asia, we have a significantly growing set of new customers who are emerging middle classes, emerging users of tech and education funded by governments. That’s leading to an adoption of technology at a rate that other countries can only dream of,” he said. 

Revenue from Asia-Pacific made up 24 per cent of HP’s earnings for Q3, lower than the 44 per cent from the Americas and the 32 per cent from Europe, the Middle East and Africa (EMEA). Yet, revenue in Asia-Pacific has been trending upwards for HP, while revenues in those other regions have been flat. 

The growth in Asia-Pacific can also arguably be attributed to optimism surrounding several economies in the region.

The Asian Development Bank’s latest forecast released at the end of September projected that economies in the region are expected to grow 4.8 per cent this year and 4.5 per cent next year. This marked a reduction of just 0.1 and 0.2 percentage point, respectively, after accounting for the new global trade environment that is being shaped by tariffs and updated trade agreements.

“We see a growing group of professionals. Asia-Pacific and Japan (APJ) has long been a hub and a generator of entrepreneurial innovation,” McQuarrie said. “Wherever in APJ you look, you find growth of market, but you also find innovation and entrepreneurial spirit, which is right for the things we sell.”

HP also launched Garage 2.0, an innovation platform, at its event on Monday. Through this initiative, it will back selected startups to try to accelerate growth, spearhead AI breakthroughs and strengthen Singapore’s position as a global innovation hub.

The programme is aimed at building on HP’s legacy of invention; its name is an homage to the company’s beginnings. HP’s founders Bill Hewlett and Dave Packard worked out of a garage in Palo Alto, California, in the company’s early days, and that garage served as a research lab, development workshop and manufacturing facility for early products.

McQuarrie said Singapore has long been an innovation hub for HP. Its factory in the Republic is a member of the World Economic Forum’s Global Lighthouse Network, which recognises the most advanced operational sites globally.

“Five-and-a-half decades of innovating from Singapore makes it obvious,” he said. “The Singapore government is committed to continuing to fuel and fund that sort of innovation, and we have a terrific partnership with them to do it.”