HP ANNUAL MEGATRENDS 2019

SIGGRAPH 2019

Barbara Marshall

HP Confidential

2

HP ANNUAL MEGATRENDS 2019

SIGGRAPH 2019

Barbara Marshall

HP Confidential

RECAPPING MEGATRENDS

Megatrends are transformative, global forces that define the future world with their far-reaching impacts on businesses, societies, economies, cultures and personal lives

PEOPLE, TALENT, WORKFORCE & CULTURE

TOOLS, PROCESSES & OPERATIONS

PRODUCTS ANDCUSTOMERS

GTM & BUSINESS MODELS

IMPACT AREAS

RAPID URBANIZATION

CHANGING DEMOGRAPHICS

HYPER GLOBALIZATION

ACCELERATED INNOVATION

AGENDA FOR TODAY*

ECONOMIC SEGMENTATION

Have & Have-Nots

Rise of Asia

Labor, Jobs & Wages

Automation

Education & Reskilling

ENERGY & DATA

ULTRA-EFFICIENT COMPUTE ARCHITECTURES

SOFTWARE 2.0

VIRTUAL MACHINES

RAPID URBANIZATION

CHANGING DEMOGRAPHICS

HYPER GLOBALIZATION

ACCELERATED INNOVATION

MEG

ATR

END

STEC

H TR

END

S• People Moving to Larger cities• Smaller, Shared spaces• New Business Models• Constraints drive Sustainability

• Aging Population• Shrinking & Aging Workforce• Gen Z & Silver Spenders• Healthcare Problem • Government Pressure

• Everything Connected• Digital platforms & ecosystems• Disrupt or be disrupted• Security paramount

• Everything Smarter• Automated & Personalized • Cheaper, More Accessible, Faster• Nature Inspired Manufacturing• Theranostics• Frictionless Business

NEW TRENDS CONSIDERED

Future of Anonymity and Privacy

The Technology Dopamine Effect

Rise of Asia

Anti Globalization

Tech-Lash

AI & Automation

The Rise of Authenticity

Energy Sustainability

Climate Change

Economic Segmentation and Inequality

Education & Reskilling

Labor, Jobs & Wages

Virtual Machines

Education 10X Technologies

Cyber Physical Biological Security

Net Zero Factories

Software 2.0

Networking 2.0

Ultra-Efficient Compute Architectures

Approximate Compute

Quantum Information Science

INCOME & PERSONAL CONSUMPTION DRIVES THE ECONOMY

COMMERCIAL SPENDING

CONSUMERCONSUMPTION

COMMERCIALINVESTMENT

Upwards of 2/3rds of GDP is driven by consumer spending, largely driven by income

DISPOSABLE INCOME – LEADING METRIC OF WHERE THE MONEY IS AND WILL BE

CONSUMER DISPOSABLE INCOME & SPENDING

HP Confidential

HAVE & HAVE-NOTSWhere is the money and where will it be?

Have & Have-Nots

HP Confidential

PURCHASING POWER (PPP) PROVIDES APPLES-TO-APPLES COMPARISON ACROSS MARKETS

$USD EquivalentIn Purchasing Power Parity

(PPP)

$35k

SEPARATED GROWTH INTO “HAVES” & “HAVE-NOTS”

Sources: Oxford Economics with HP Analysis; Numbeo.com; California Association of Realtors

Different amounts of money have the same Purchase Power Parity or PPP in different places around the world

HAVES

HAVE NOTS

$6.54

$5.58

$5.51

$4.74

$4.52

$4.40

$4.28

$4.23

$3.74

$3.51

$3.10

$2.50

$2.32

$2.19

$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00

Switzerland

Sweden

USA

Germany

Australia

Brazil

Singapore

Britain

Poland

Japan

China

India

South Africa

Indonesia

Sources: Statista

THE ECONOMIST: BIG MAC INDEX

HP Confidential

USA

How Much Local Currency?$ 45.1K Iceland$ 31.9K Japan$ 19.9K Indonesia$ 9.5K India

RISE OF ASIADramatic income growth with some wild cards

Rise of Asia

HP Confidential

8% 10%

43% 38%

33%32%

16% 20%

1980 2016

RISING INCOMES FOR NEARLY ALL

RISING INCOMES SHOULD DRIVE TAM OPPORTUNITIES ACROSS THE WORLD

Source: World Inequality Database; Oxford Economics; HP Analysis

GLOBAL SHARE OF DISPOSABLE INCOME BY INCOME BRACKET

Incomes are rising throughout the world

Top 2-10%

Top 1%

Middle 40%

Bottom 50%

+4%

-1%

-5%

+2%

$71K

$17K

$62K

$37K

$56K

$82K

$46K

$39K

APJ

$32K

AMS

EMEA

2001 2018 2035

AVERAGE HOUSEHOLD DISPOSABLE INCOME, BY REGIONThousands, US$ PPP, Constant 2015 prices

, BUT ALSO GREATER INEQUALITYHP Confidential

Change in Have & Have-Nots from 2010 to 2035HAVES GROWING EVERYWHERE, MIXED HAVE-NOTS PICTURE

Source: Oxford Economics and HP Analysis

NA

+66M

-8M

LARGEST GROWTH OPPORTUNITIES OVER THE NEXT DECADE POINT TO ASIA

+34%

-4%

LATAM

+39M

+24M

+21%

+13%

EUR

+67M

-3M

APJ

+585M

-141M

+42%

-10%

MEA

+78M

+167M

+18%

+38%

+18%

-1%

Change in have households # Change in have-not households #% %

HP Confidential

2035

SHOULD WE RE-EVALUATE GROWTH ACROSS SELECT APJ SUB-REGIONS & CITIES?

20182010

AUSTRALIA & NEW ZEALAND

Have Have nots

AVG DISPOSABLE INCOME

Circle size represents population size

CITIES ACROSS KEY PARTS OF ASIA - DRIVING THE GROWTHHP Confidential

Belt & Road Initiative (BRI) Commitments to 69 countries (more $ than from the World Bank)

Source: UN, Oxford Economics, Center for Global Development, and HP Analysis

China’s continued growth is a key influencer & question on broader economic growth in Asia and parts of EMEA

Globally in VC funding to start-ups in Q2’18

$8T

2ND

#1Highest number of middle class households globally by 2030

Highest number of affluent households globally by 2030

#1

<3YRSFor world’s fastest growing start-up ecosystem – ex. Pinduoduo (PDD) passed JD in active users in 2017

THE CHINA FACTOR

Of Asia’s household disposable income by 203044%

CHINA’S CHANGING POSITION HAS IMPLICATIONS IN CHINA, ASIA AND BEYOND

HP Confidential

LABOR, JOBS &WAGES

Labor, Jobs & Wages

HP Confidential

GLOBAL SHORTAGES IN HIGH-SKILL LABOR APPEAR BY 2025

HP OPERATES TODAY IN RANGE OF MARKETS AT RISK AROUND LABOR AND WAGES

GAP driven by combo of changing demographics, growing economies & tightening immigration

16%Est. Gap in High-skilled workers within Tech, Media & Telco Sector

By 2030 . . .

India - only major economy with a high-skilled labor surplus est.

Surplus

DeficitLess than 0.6M

Significant Deficit0.6M to 1.2M

Acute DeficitOver 1.2M

GLOBAL HIGH SKILL LABOR DEFICIT BY ECONOMY (2030)Tech, Media & Telcom Sector - top 20 markets evaluated to date

Est. $ Annual Wage Premium by 2030 driven by Labor Gap

Source: Korn Ferry (2018), HP Analysis

$29.1k (Singapore)

HP CONFIDENTIAL

HP Confidential

AUTOMATION / EDUCATION & RESKILLING

Automation

HP Confidential

AUTOMATION ALONG WITH EDUCATION & RESKILLING WILL BECOME AN INCREASINGLY IMPORTANT TO OFFSET LABOR GAPS

AUTOMATION CAN ADDRESS LABOR GAP BUT REQUIRES EDUCATION & RESKILLING

AUTOMATION POTENTIAL DIRECTLY LINKED TO TYPE OF HUMAN TASK – CROSS INDUSTRY

PROFILE

19%

16%

17%

12%

16%

14%

6%

81.0%

69.0%

64.0%

26.0%

20.0%

17.0%

18.0%

0% 20% 40% 60% 80% 100%

Predictable physical work

Data processing

Data collection

Unpredictable physical work

Stakeholder interactions

Applying expertise

Managing others

Automation Potential, % of Time

Time Spent By Activity

Source: World Economic Forum, Bain, McKinsey

HP Confidential

THANK YOU

Find Megatrend videos (English) here:• Megatrends Overall – https://youtu.be/oJCBBL1FBw0

• Rapid Urbanization – https://youtu.be/VLdlu6z8P1A• Changing Demographics – https://youtu.be/TpBGqPF9j3M• Hyper-Globalization – https://youtu.be/K-y_37TwOaE• Accelerated Innovation - https://youtu.be/IcqlN-kA-7s

barbara.marshall@hp.com