HP, Inc. (HPQ) Presents at Deutsche Bank Virtual Technology Broker Conference Call – (Transcript)


HP, Inc. (NYSE:HPQ) Deutsche Bank Virtual Technology Conference September 14, 2020 1:00 PM ET

Company Participants

Kevin Frost – GM, Consumer Business

Conference Call Participants

Kanghui Ong – Deutsche Bank

Kanghui Ong

Hi, everybody, and thank you for attending the Deutsche Bank Technology conference today and tomorrow. Here with us, we have HP Inc. And HP is a manufacturer of PC and printing solutions. And with us today here at the conference, we have Kevin Frost, who is the GM of the consumer business, specifically within the Personal Systems segment of HP. I’m Jeriel Ong, the IT hardware analyst here at Deutsche Bank. And I guess, with that, let us jump right into the questions if you guys don’t mind.

Question-and-Answer Session

Q – Kanghui Ong

And I’m going to start high level too as well. So I guess, starting with a bigger view of the PC TAM, I guess about a month or two ago, Lenovo commented on their earnings call that they expect the PC TAM to expand north of 300 million units over the next 1 to 2 years. And just for investors, you largely would anchor this against a PC TAM that’s presently 260 million to 270 million units for discussion sake. I guess, what is your view on those comments on the PC TAM expansion? And said another way, do you forecast, PC demand has been strong in a COVID environment. Post-COVID, you forecast the demand to stay strong or do you believe it kind of returns to the prior environment before the COVID pandemic hit earlier this year?

Kevin Frost

First, Jeriel, thank you so much for having us here and giving us the opportunity to talk about HP and the PC business. So thank you very much. I have responsibility for the consumer PC business, and let me just say for that piece of the business and the overall TAM, we have this concept of the PC being essential. And the core growth drivers, the core growth demand drivers we see right now work from home, learn from home, educate your kids from home, telemedicine from home. These growth drivers are strong, and we see them absolutely extending into next year calendar 2021.

We said a year ago at SAM, there’s an installed base of PCs of approximately 700 million, 700 million PCs that are greater than 4 years old. And so what this new world that we live in now is, to some extent, accelerating the refresh cycle of PCs because people are needing to do things that are just harder to do with all PCS, whether it’s Zoom or streaming or creative or gaming, and so we’re pretty optimistic about the consumer piece of demand heading into next year.

Kanghui Ong

Got it. I really appreciate that. And I guess within that PC, obviously, there’s different subsegments of PCs. And I think there’s a view in the investor community that the demand for PCs right now is primarily low-end notebooks. And perhaps it’s possible that there were some CPU constraints in 2019 and even early 2020. And so maybe there’s some pent-up demand from that. I guess how long do you think this low-end PC demand lasts and like I said, is there a fundamental change in PC consumption at the low end given work-from-home and learn-from-home trends?

Kevin Frost

What’s interesting, Jeriel, again, I don’t really see that in the consumer. The “demand” is shifting to the low end. We don’t see that in consumer as much. And if you look at our Q3 average selling price for computers, they were actually up year-over-year, and they’re up quarter-over-quarter. And it’s interesting. Like I mentioned a little bit earlier, if you look at what you want to use a computer for, you want to use a computer for video conference, you want to use computer for streaming video. If you look at working from home, if you look at some of these huge cases, they’re really not low end-use cases.

And so I think our CFO mentioned when talking about our Q3 results, he said that broadly, the mix shift from commercial to consumer and because our Chromebooks playing a large role, he said that might have a slight negative effect on margins. In general, there’s premium areas that we’re focused on like computing over $700. That area has grown very strong double-digit for us. Gaming is growing very strong for us. And so there’s a lot of growth drivers we see, quite frankly, that help balance out these mix shifts. So we’re pretty confident in the — let’s say, the steadiness of the mix, at least from the consumer perspective, that it’s not going to be this aggregate shift down.

Kanghui Ong

Understand, I just understand that. So I guess I want to focus a little bit on the gaming portion of the business there because you mentioned something about that continuing to be strong. I guess, from my perspective, and gaming has always been a big DIY business, right? You kind of — a lot of gamers love the effort of putting together their own PCs. I guess, what are you doing to encourage your consumers to buy a prebuilt gaming PC? And what would be enticing by your offerings as you kind of continue to try to grow that portion of your business, given its more attractive profit margins and higher average selling prices, et cetera?

Kevin Frost

We know, Jeriel, the biggest thing we’re doing is frankly, shifting people toward mobile. I mean, there is a segment of people who want to build their own DIY gaming notebook, but there’s a very large segment that, frankly, want a game in a mobile computer. And we see that, frankly, huge growth in China. We see there — if you look at Southeast Asia, there’s just not enough room to put a gaming DIY desktop in their house. And so we’re trying to really shift people toward mobile gaming and that’s, frankly, the single biggest thing we’re doing.

And I think that works to HP’s favor because we have a lot of smart engineers who’re trying to get great gaming technology in a mobile form factor. And if you look at companies like NVIDIA, they basically advance some of the silicon graphics performance. So then you now have like RTX Graphics performance in a mobile form factor. So the biggest trend we have — and by the way, this is a secular trend that is in our favor for many years to come is this whole trend toward mobile compute. And part of it, what’s interesting is what we call gaming is gaming.

But a lot of people are buying are gaming PCs, and they’re using them to game occasionally, but they’re also using them for this emerging need of just creative. Everybody is creative. We’re going to great stuff. I’m going to create a blog. I’m going to create videos. I’m going to do this and do that. So we see a little bit of this mix between gaming, which is good and creative, which is good. And so gaming is a trend that we’re super excited about.

Kanghui Ong

Yes. I think that all makes sense, especially in the context of the idea that people aren’t DIY in your own laptops.

Kevin Frost

No, it’s absolutely. Absolutely.

Kanghui Ong

So shift in mobile is going to be, I think, at least within gaming, it’s going to definitely be positive for capturing more of that gaming mind share and unit share. I guess, I’d love to talk a little bit about the competitive landscape because I’m sure you see what other competitors are doing and what’s out there in the market. Have you observed any differences in how competitors are attacking the market this kind of time of market dislocation?

Kevin Frost

Not really. I mean, the supply constraints that we are seeing on things like processors and panels, our perception is that’s industry-wide. And quite frankly, Jeriel, our demand is just so strong. I’m quite pleased just to trying to focus on our customers, our retailers and just getting them products and fulfilling demand but no, we haven’t seen any significant change in the competitiveness or competitive moves or anything like that at all.

Kanghui Ong

All right. I appreciate that. I guess because you mentioned it, I want to jump to that supply comment because I guess from sitting from my shoes, in 2020 so far, I think early on, we heard HP mentioned some supply issues. Given the presence of manufacturing in Wuhan, China, which was kind of the birthplace in some ways of the broader pandemic. And so I think that was kind of rational articulation of supply issues. And I think some other competitors also, to an extent, also talked about supply issues. But I guess I was a little surprised, I think investors were as well to hear about maybe more supply issues going forward. And so I guess, number one, is it a broad-based issue or HP-specific issue? And I think you called out maybe low-end CPU cores in display, but can you give me a little more nuanced about what you supply issues are?

Kevin Frost

Sure, sure, sure. I think as you saw in Q3, we grew our revenue something like 42%. And so part of it, Jeriel, is we didn’t expect demand to be this strong. I mean, demand is stronger than we thought. And so the supply issue is really a demand issue, where demand is strong and it’s strong heading into the holiday season. And so if you look at those two components, CPUs and panels, they’re long lead time components. Both of these components come out of fabs and there’s long lead times and in general, the supply challenges are really just demand at levels much higher than we expected, much, much higher than we expected. And quite frankly, if you look at processors, it’s not just low end.

We have sort of spot shortage on processors across the board, even on the panel. So our shortages on processors in panels covers like AMD and Intel and a variety of panel suppliers. And so it’s broad, but I’m confident we’re improving every day. And frankly, we have a lot of smart engineers who are trying to just qual more components and help alleviate the shortage just bringing on new suppliers and things like that, but it’s a nice problem to have because demand isn’t strong.

Kanghui Ong

Got it. But to clarify that last comment, it sounds like your general stance it’s on a — it’s kind of — the worst is behind the company and supply issues and it’s improving from here?

Kevin Frost

Well, on that, let me just say — let me clarify that. The challenge is, I don’t know how to pick demand. That’s the catch. That’s the catch. I think we are get — sure, we’re getting caught up, but the uncertainty with the strong demand is what makes it harder for me to be specific in terms of the future supply impact and things like that. But for sure, we’re producing more and more PCs and our factories are running at full capacity and things like that. And so I’m optimistic, but it really — the demand picture has been, frankly, a pleasant surprise for us.

Kanghui Ong

Got it. Yes. We’ll see and we’ll hope that it kind of continues to improve. I want to hop back to one of the comments that you’ve made briefly, too, about the PC TAM. So there — you guys have talked in the past about a $700 million PC TAM that is greater than 4 years old. And you just made a recent comments as well that said, “Hey, you know, some of that PC TAM is kind of refreshing because these PCs aren’t equipped in a Zoom and whatever else productivity world”. Is that — I guess, is that — how has that changed so far? And is this kind of an acceleration of a renewal of the TAM that at some point, might actually take the opposite stands where it kind of slows? Or what’s your view on how that’s refreshing?

Kevin Frost

Well, I think you’ve got a mixture of 2 things. Like I said, there’s a lot of things people are trying to do, whether it’s Zoom calls or video calls, where they just need technology. You need — it’s — if I’m working from home, I need a bigger display. If I’m working from home, 8 hours a day, I might need a display that’s got some features that are better on my eyes. And if I’m working from home, I might need a PC that’s got WiFi 6, that’s got faster bandwidth to share the bandwidth with my kids and other family members. Frankly, I could see a future where people might say, look, I need embedded LTE or embedded 5G because bandwidth is the new commodity to share at home.

So for sure, there’s these new use cases that it’s a little bit like — it’s a little bit of both. Are we refreshing the old PCS? Absolutely. But the key driver, the key driver of these things is this PC is a central concept that a working from home requires a more robust PC. In the past, you just needed one PC in your house, now your kids need computers to learn from home. So there’s multiple things of refreshing current PC to the latest technology, but it’s also, you know what, I don’t need one PC per home, I need one PC for every family. And so I think that’s a mix of refresh and just incrementally use cases that, again, is a significant tailwind at our back moving forward.

Kanghui Ong

Got it. I appreciate that. I guess I’d like to talk a little bit about how — as a whole, the Personal Systems group has talked about services and solutions, maybe PC as a service, how big is that as a percentage of personal systems revenues? And can you — could you contextualize it? Because it seems like that comment in general, more solutions would be more like an enterprise idea. But I’d love to understand your perspective whether how it impacts consumer and how you expect that to grow over time?

Kevin Frost

Sure. Let me give you a very solid example, and it goes back to the gaming discussion that we were having and why gaming is so important. Because we view gaming as an ecosystem. And so we’re going to leverage our strength providing gaming PCs. And you’ll see actually tomorrow, we’re announcing a new gaming headset, new gaming keyboard, new gaming mice. And so we have this ecosystem of the PC plus the peripherals around it, and then we have a software platform, a direct-to-consumer software platform called OMEN Command Center. And on top of that, we’re going to build gaming services. We’ll build gaming services on top of that, and we’re doing this today.

We’re doing this today. We’re experimenting today with some gaming services like game coaching, like actually some targeted awards, rebundle some advertising with some promotions and things like that. We’re actually also looking at gaming services where we offer customers free games. And so in the future, we may offer them a free game, and we may try to monetize games in various ways with customers. So basically by having a gaming ecosystem with PCs, peripherals, services like — that allow all these things to work better together, I think that will be a fantastic opportunity for us to offer gaming services, gaming services to customers.

Secondly, let me talk — just give you one example. If you look at the success that our printer business is having with Instant Ink, I think that where they basically transitioned some customers from buying a printer to Printing as a Service, we think there is absolutely an opportunity over time, long-term trend for Computing as a Service so that we could offer customers and to the VA. We could offer customers instant computing, we can offer customers. Bundles or various services along those lines. So I think we view services in the consumer context in a very broad way from kind of focused gaming stuff to more broader as a service offerings. And again, a lot of — like I said, a lot of the gaming services, quite frankly, we’re in experimentation. We’re trying to see our customers value, but we have a long-term horizon here that this is — that gaming is a secular growth trend and that people are going to want to gain. We view it as like the gamification of PCs. It’s not just gaming PCs. It’s every one of our PC’s customers will be able to game on and have these types of service offerings.

Kanghui Ong

Got it. Got it. Yes. I think it will be an interesting trend to kind of observe over time because the PC is definitely, to your point, especially on the gaming front, more of an ecosystem and then some consumers looking to maybe game on the go and their kind of laptops don’t support that. So it will be interesting to see how you guys continue to innovate in that regard.

I want to jump into understanding how maybe you work in the broader picture because I think you mentioned a little bit about Instant Ink and the print portfolio and some of the success there with getting people a little more recurring, I guess, and buying HP Inc. As well, which is a very important strategy for the company. I guess, PCs and print, in some ways, have almost been treated as separate ideas, at least from an investor perspective, sometimes they can be subject to different trends. And especially right now, the trends have been just so disparate in some ways. Could you talk a little bit about your perspective from how being paired with a print business has enhanced your ability to operate on the Personal Systems business because many of your competitors, just while all of them, frankly, don’t have a print business alongside them?

Kevin Frost

Well, it’s interesting. I think it’s frankly a hidden and underestimated competitive advantage that HP has and that’s the shared go to market. Think about the distribution of ink cartridges all over the world or the distribution of printers. And so we have this monster huge retail consumer go-to-market ecosystem, infrastructure, salespeople all over the world that can go in and sell….

Kanghui Ong

I think we might have lost Kevin for a second. Is that just me here?

Unidentified Company Representative

Yes. That seems to be the case.

Kanghui Ong

All right. How about — should we just down — continue while we see we can get back, Kevin, with Daniel?

Unidentified Company Representative

Absolutely. Let’s go ahead. Sure.

Kanghui Ong

All right. So I guess, while we try to get Kevin back, I guess, on this print versus PC concept, could you talk about how it’s synergistic, I guess, especially between having these two businesses under the same roof?

Unidentified Company Representative

Yes, absolutely. And I apologize that Kevin has some technical difficulties here. Hopefully, he’ll dive back in. So in terms of how we look at both of the businesses, so both print and personal systems does give us kind of leverage in the retail channel because in the consumer PC business, right, a lot of it all goes through retail. And there’s significant synergies between the print and the PC business, particularly when you’re looking at kind of go-to-market assets, so if you walk into any of the big retail stores that we sell our PCs, you will see also printers, our printers there as well.

So it gives us also an opportunity not only in the retail space, right, meaning leverage the same sales teams, but also with e-tailers as well, right? Today, more and more of the PCs are moving towards selling online and selling into e-tailer capacity, and that gives us an opportunity there as well. The other thing that we’re looking at is it does give us opportunities for PC and Print as a Service. As Kevin mentioned, kind of in the — one of the couple of previous questions, that is being — becoming a bigger, bigger focus for us, both on the print side as services like Instant Ink and on the PC side, as we expand kind of in the PC as a Service. So that gives us also an opportunity to leverage kind of both of them together.

And then finally, when you look at the portion of PCs and printers with many of these retailers, it is actually — these categories are a significant portion of some of these retailers’ business. So if you walk into any of the big box stores in America or Europe, things like desktops, notebooks, displays, printers. I mean, this is something that is a significant portion of their sales. So it really gives us the ability to kind of have the executive-level discussion with these retailers and to create kind of an opportunity to kind of a win-win situation for us, given that we have kind of this broader offering. Finally, in terms of kind of the innovation, and then we can pass it back to Kevin. I’m just finishing, Kevin, kind of the questionnaire. It’s…

Kevin Frost

I’m so sorry, I’m just sitting here and then all of sudden boom, it goes blank. I’m in a hotel in Florida. I’m so sorry.

Unidentified Company Representative

Yes, that’s fine. So just in terms of the innovation around print and PCs is that both have collaboration to incorporate voice. They both kind of work very well together. We can do design in leverage design of printers with design of PCs and vice versa. So there’s a lot of leverage across R&D teams. And of course, finally, as we’ve talked about kind of the Printing as a Service and PCs as a Service as well, which is something that we can leverage innovation to?

Kevin Frost

Yes. And again, I apologize for whatever happen. But Jeriel, now, leveraging the go-to-market asset is huge. So we show up to Walmart or Best Buy or JD or Dixon’s or car phone warehouse. And we get meetings with their executives about how to grow, about how to innovate, about how to communicate because it’s like, look, we have desktops, notebooks, printers, ink, accessories. And so that we are a very, very large share of our key retailers business. And so we’re strategic. They want to partner with us, and we want to collaborate to win. So number one asset, and I can’t stress this enough.

And like I said it, my biased view, it is an unrecognized hidden asset of HP, which is a go-to-market strength and the leverage from the category to the salespeople calls on these customers worldwide. The second thing is really more along the lines of sharing like with innovation. 5 years ago, HP on the consumer PC side, I think we, frankly, were leading with design and colors and the aesthetic of some of our PCs. The printer folks leverage some of that. And as I gave you the example of Instant Ink, where the print has been leading their and frankly developing infrastructure and evolving that strategy. And at some point, if HP were to pursue that on the PC side, we would have quite a bit of learnings to leverage.

So there is — I mean, right now, we’re both evolving data strategies, so how do we build data from customers, how do we develop AI algorithms to understand the data, to give customers a better experience to improve the business. So there’s an awful lot of leverage between the two businesses, more than perhaps would be DI, so…

Kanghui Ong

Yes. Appreciate all that. I’d like to pivot the top a little bit the Chromebooks. I mean, not something I would have even brought up last year or a couple of years ago, frankly. But Chromebooks are an ever-increasing presence in the PC market. I guess, do you believe the Chromebook demand profile is secular or cyclical in nature? And I guess, anchor discussion, maybe you can start off by saying how much are Chromebooks as a percentage of the total PC TAM for both HP and maybe for the broader industry, so we can kind of contextualize the comments.

Kevin Frost

Yes. Let me give you some background for context, first of all. And when you talk about Chromebooks at HP, there’s really 3 broad segments we serve with Chromebox. There’s the commercial customer segment, which frankly, is quite small now. There’s the education channel, which is like school district, things like that and then there is the consumer segment, which is really Chromebooks through retail channel, things like that. And so for the consumer segment, it’s helpful to keep in mind, Chromebook is not a product strategy. Chromebook is a broader cloud strategy. We know that our customers are going to be moving to the cloud. We know that, as I alluded to earlier, and long term, there’s going to be data and servers that’s going to stream, whether it’s gaming or video, entertainment, and so Chromebook is a cloud strategy for consumer, first of all. And so that’s why if you’re thinking about cloud strategy, Google is a fantastic partner there. Google is a fantastic partner.

And so Chromebooks is part of this broader cloud strategy. And one other comment about Chromebooks Google to their credit has been very — has had a kind of very purposeful approach of going country by country by country with Chromebook. So to answer your question, right now, for the past 3 or 4 months, for the past 3, 4 months here in the United States, chrome share of sales out has been about 17%. So United States, chrome share of sales out has been about 17%. And that’s up about 3% roughly year-over-year. And 17% is frankly a pretty large number considered, like you said, Jeriel, they’re kind of not too strong, 3, 4, 5 years ago. And if you look at countries where Google and HP partner together, partner together to grow this cloud Chromebook business, companies like U.K., countries and regions like the Nordics, countries like Japan, you’re actually seeing similar growth trends for the sales out, the acceptance of chrome is growing. And so to answer your original question, we think it’s absolutely a secular growth trend, like cloud computing, a secular growth trend.

And from an HP consumer perspective, we — as I said, it’s part of our cloud strategy. And our — we absolutely believe we can maintain the right balance between customer satisfaction, profitability, innovation and driving this cloud strategy. And so if you look at our road map, like today, chrome ASPs are lower than windows ASPs. But if you look at our road map, our ASPs are today up year-over-year, but we have a very robust road map of chrome products that we’ll be introducing through next year that we think will give — that move up the ADP stack, and we see no reason chrome can’t move up the stack in terms of giving customers great experiences.

And we’ll partner, we will look for ways to partner with Google on services around the Chromebook as well as peripherals around the Chromebook. So — and the other — you have to remember about Chromebook is like the second-largest PC market in the world for us is China and there are no Chromebooks, right, for obvious reasons involving the China system. And so Chromebooks, when you talk about, it’s okay to talk about averages, but I find in terms of the context, you really got to look at the specific customer segments and by countries and things like that. But the long answer to your question is, it is a secular growth trend. It’s a cloud trend and we think HP can participate and have it be a win-win for everybody.

Kanghui Ong

Got it. I appreciate that nuance about Chromebooks. I think that was great. I’m going to pause real quick, just in the last 5 minutes that we have. If anybody has any questions, there’s a portal system that you can submit it, and I can make sure the question can be asked to the presenters here. So please go ahead and do that if you’re so interested and would like to do that. I guess moving to next question on margins, and you mentioned it a little bit earlier, was discontextualized for the audience, Personal System’s operating margin targets were initially 3% to 5%. They’ve since been raised back a couple — 6 months ago to 3.5% to 5.5%. But frankly, I’m not really sure any investors even expect the lower end of that range, 3.5% to 4.5% because you guys have just done so well in the last couple of years at the high end or maybe even in the recent quarters above that 5.5% range.

So I guess, what are the scenarios — and so I guess I want to be able to kind of contextualize this going to happen going forward. What are scenarios that maybe which could drive margins to that midpoint or below that? Or what can maybe enable margins to sustain in the upper end or even above the range as well?

Kevin Frost

I think, frankly, we’re just focused on executing our strategy and there is so much demand on the consumer side. And as you know, we’ve talked about there’s weakness on the commercial side. And so it’s just balancing of these 2 kind of customer segments and how that moves forward is one of the things that we’re managing through. But I’m pretty optimistic that we have a great team. We’ve got innovative products. Our product pipeline that we’ll launch between now and the holidays is quite strong. The retailer feedback we’re hearing from Black Friday is quite strong, Black Friday selling. And so I’m pretty optimistic that if we just execute our strategy, we’ll be able to deliver between the 3.5% and 5% — 5.5% margin targets you mentioned. But there’s also lots of dependencies, like commodity cost basket and things like that. So there’s this whole mix that I think we’re executing pretty well through, and I’m pretty optimistic as I look at least into the holiday season.

Kanghui Ong

Got it. And I think there’s a broad understanding there as well, just so I focus a little lot of consumer here that consumer could be, on average, a little bit lower than the commercial margins. I guess, can you give investors may be a sense of magnitude or delta? Obviously, in the recent past, maybe it’s been a little more exacerbated because of the dislocations, but I’d love to kind of contextualize as these commercial and consumer trends differ how the margins may change?

Kevin Frost

Well, I don’t know, Daniel, have we commented in terms of specifics on commercial versus consumer margins?

Unidentified Company Representative

No. We haven’t specifically. And I think maybe just to clarify that, the points here in terms of operating margins are really around — if we would be on the lower end or mid-range is around 3 things, really. It’s the product mix. So it’s the mix of commercial consumer mix within the commercial consumer, desktops, workstations versus notebooks. So the whole mix aspect of it. So as the mix changes, your margins could change accordingly. The second biggest impact is commodities, largely around DRAM and SSDs that has the biggest impact. CPU pricing doesn’t fluctuate, I guess, as much as the commodity pricing does.

And third is FX, right? Foreign exchange, that there’s been quarters that the dollars helped us. There’s been the quarters that the dollar has negatively impacted us. So the only thing we can say about the margin is just when you’re looking at the Chromebooks, not all Chromebooks margins are bad, right? So the perception that there’s margins in Chromebooks that are very good and there’s margins in Chromebooks that are below our average. So to categorize even the low end, which you can say as Chromebooks, even that has its different aspects to it.

Kevin Frost

Yes. That’s sort of why I made the comment of Chromebooks. It’s really 3 different customer segments each for Chromebooks, each for the different kind of business and profit dynamic.

Kanghui Ong

Got it. Okay. Thanks so much for that comment. I guess I’d like to wrap up the discussion specifically on accessories. Year-to-date, accessories have been really strong, 22% year-on-year, but it’s small. It’s 4% of the segment as a whole, and I think probably even less as a percent of total revenues. So what’s the drivers of that growth can it sustain? How are you continuing to innovate and drive a higher accessories mix as you guys have indicated in the past that you’d like to do?

Kevin Frost

Accessories or as I would call them peripherals is super, super important to us. And it’s super important to give customers value, and I would break it into 2 areas. One is displays, right? If you think about it, when you’re working from home and this whole concept that the PC is essential, the single most important thing anybody could do, frankly, is probably buy a bigger or nicer display. So displays is important in this whole area of what I call visual computing. You could be streaming, you could have a workstation at home, you can be gaming at home. You can be — you don’t want your child in front of a smaller little notebook, you want your child to see big information on a bigger screen.

So there’s a display piece, visual computing piece, obviously important for gaming. And then there’s the peripheral piece and we really view that around. It’s not like I said, this whole ecosystem. What are areas where we can — HP can make better together experiences with mice with keyboards, frankly, if you look at microphones and audio AV moving forward, there’s going to be a lot of new opportunities there? If you look at what people are doing, what creatives are doing, what about Penn computing? So we’re really focused on these experiences and ecosystems like with gaming, like with creating, like with work at home. Those 3 areas, gaming, creating, work at home. How we can have, let’s say, a more focused display and accessory and peripheral experience around those 3 areas. So it is better together. It’s software as part of the solution. It’s cloud as part of the solution and its displays and peripheral. So we’re — our revenue growth has been very strong in these areas, very, very strong and consumer, and we’re expecting that to continue as well near term.

Kanghui Ong

Got it. I really appreciate that. We are out of time, but thank you so much for attending our conference, and we look forward to hearing more about the strength in PCs going forward. Thank you so much.

Kevin Frost

Thank you so much for your time. It’s nice meeting you, Jeriel.

Unidentified Company Representative

Thank you, Jeriel. Thank you.

Kevin Frost

Bye.

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