HP analyzes global megatrends to understand forces that will shape the future. It has identified four key megatrends - rapid urbanization, changing demographics, hyperglobalization, and accelerated innovation. Analysis of economic data shows incomes rising fastest in Asian cities, with Jakarta's income exceeding some developed cities. To sustain growth, technology will help address labor shortages and assist reskilling as demand for skilled workers outpaces supply. Rising incomes increase energy usage, so technological advances in areas like additive manufacturing and edge computing will be needed to maximize efficiency.

1. HP has formalized our analysis and forecasting process into a body of work, released annually, we call Megatrends, a
systematic effort to identify the global technological, economic and social currents that are influencing how people will live and
work around the world for years to come.

2. Why HP looks at Megatrends
The amount of change happening in the world today is accelerating, creating a continuous challenge for how companies stay
ahead of it all, decide where to invest, think about the future, and innovate in ways that enable them to do the disrupting,
instead of being the ones disrupted. How we manage all this change in an effort to stay ahead requires a keen understanding of
the global forces that will shape our human experiences and our business decisions long into the future. At HP we call these
megatrends. Megatrends in combination with extensive research into disruptive technologies on the rise give us a clearer view
of what potentially lies ahead, and new opportunities for HP, our customers, and our partners.

3. What are megatrends?
Megatrends are major socioeconomic, demographic and technological shifts that will have a sustained, transformative impact
on the world in the years ahead—on businesses, societies, economies, cultures and our personal lives. They will impact our
experience at home, work and on the go. At HP, we’ve identified four major megatrends—Rapid Urbanization, Changing
Demographics, Hyper Globalization, and Accelerated Innovation—that we believe will have the greatest long-term impact on
our customers, partners, and our own business.

4. How does HP use megatrends?
Our vision at HP is to create technology that makes life better for everyone, everywhere. To engineer experiences that amaze.
Not just for today, but for years to come. Megatrends offer us insights into where the future is heading, helping us to create new
experiences and solutions for our customers and partners that are representative of the rapidly changing world they live and
work in. Each year we put a variety of lenses on our four key megatrends, evaluating global political, economic, environmental,
and social influences; new disruptive technologies on the horizon; as well as core assumptions around market outlooks,
industry directions and emergent customer needs.

5. This year’s report [what’s new]
The 2019 HP Megatrends Report explores global, regional and metro income trends, urbanization’s impact on these trends, the
resulting rise of new metro-based economic powerhouses, and the role of automation and education in meeting labor market
challenges driving changing demographics and growing economies. Additional research explores how increasing incomes are
putting a strain on our energy resources and what role technologies such as 3D printing, Software 2.0 and Edge Computing
could play in helping to drive to greater efficiencies benefiting customers, industries, and the planet.

6. We started this year by looking at socioeconomic data and consulted with leading economists to uncover trends that our
society is most likely to encounter in coming years. Looking at economic data from rural areas to large megacities across the
globe, we were able to understand where disposable incomes were expected to rise over the coming decades and what that
could mean to markets and labor forces of the future.

7. As more and more people move to cities we are seeing a direct correlation to economic growth and rising average household
incomes and spending. Cities of all sizes, especially large and megacities—populations of 10M or more—are seeing some of
the steepest rise in income and global domestic product (GDP) growth.
Source: https://www.brookings.edu/wp-content/uploads/2018/06/Brookings-Metro_Global-Metro-Monitor-2018.pdf

8. Cities in both developed and emerging markets are projected to see rapid growth. With cities in the Asia region expected to see
some of the sharpest increases in household income by 2035. Our analysis finds that Asian workers, on average, will have seen
their average household disposable income more than triple from 2001 to 2035 in constant 2015 dollars.

9. Some cities are becoming markets in and of themselves. Jakarta, for example is expected to grow its average household
income to a level exceeding many developed and western cities.

10. Cities in many emerging economies are starting to look like cities in developed economies. This isn’t limited to megacities,
Indonesia’s 16th largest city, Ujung Pandang will start to have an economy that will look very similar to developed western cities
like Chicago and Kansas City.

12. Incomes are rising especially fast throughout much of Asia, which is expected to drive two thirds of total global growth in
income from now to 2035. Growth will come from many cities of many sizes, with an outsized share coming from China, India,
and Indonesia where the aggregate amount of incremental income will grow by roughly 2x by 2035.

13. All three regions are expected to experience growth in average household income. By 2035 global income growth is forecast to
add $23.2T just from cities with over 1M people. About $15.6T of this will come from cities in Asia.

14. From 2010 to today, we see the rise of India and China. This continues towards 2035, but we also see the surge of growth in
Southeast Asia, and places like Indonesia. Jakarta, the large blue bubble at the bottom, is forecast to have the largest
household income in all of Asia.

16. Across the globe most individual income comes from salaries and wages related to jobs. And there is a very close relation
between education, labor supply, wages and this personal income, which drive GDP across the world.
Source: Oxford Economics, The World Bank, Bruce Blonigen – Philipp H. Knight Professor of Economics & Social Sciences, and Dean – University of Oregon

17. To sustain this growth, we will need more economic productivity from everyone in the workforce. Technology advancements
will help to combat labor shortages and assist in the education and reskilling of new workers.

18. By 2030, demand for skilled workers will outstrip supply in nearly all major parts of the world – to an estimated 85M person
talent gap.
Source: Korn Ferry, Future of Work: The Global Talent Crunch (2018)

19. The labor gap may accelerate the pace of automation and automation may in some ways in some places change the
composition of the labor force and nature of gap itself. On a global level today, across all industries, machines perform about
29% of all work task hours, a figure expected to rise to 42% by 2022. The more routine the work task, the more addressable it
is by automation. Automation is critical to helping not just fill the labor gap, but shift labor from performing routine tasks to
performing more high-skilled, higher wage tasks.

20. There are examples of automation being used already to increase productivity and free up labor in high skill jobs. One example
is how HP Customer Support is offering chat support for the HP Instant Ink products. A virtual agent was developed to manage
inbound customer chat sessions. This has resulted in a 95% savings per chat event and increases in solving customer problems

21. Economists have long recognized that education levels matter quite a bit for income and economies. Reengineering business
processes with automation requires reskilling and education of the associated workforce as new types of skills and potentially
higher-wage jobs are required to capture the full benefits from automation.
Source: Bruce Blonigen, Philip H. Knight Professor of Economics & Social Sciences & Dean, University of Oregon

23. People, machines, data, and energy are now so deeply connected to each other that creating a better future will require finding
the balance between them all

24. Rising incomes drive increasing consumption which in turn results in growing energy usage. India is a great example, where it’s
300 mils strong middle class or “haves” are expected to rise to 700 mils by 2035, and their air conditioning needs alone are
expected to require 300 new power plants, or 2x India’s current energy supply.

25. As energy use surges so do emissions, driving significant growth in greenhouse gas emissions, against a backdrop of
increasingly dire climate science predictions.
Source: https://www.eia.gov/todayinenergy/detail.php?id=33772

27. Technological advancements like additive manufacturing, edge computing, and 5G networks will maximize energy efficiency
and meet the growing demands of tomorrow’s society.

28. This energy strain is not just from more devices but from the data they collect by sensing their operations and environment. By
2025, the energy cost of transmitting data from these devices, that sit at the edge out in the everyday world, to the cloud will
be unsustainable .Based on current electricity rates, it would take 113% of total global GDP to pay for transmitting the data and
32x the world’s current electricity production. Keeping computational processing at the local device limits demand and drives
more energy efficiency.

29. Consider Pratt & Whitney’s Geared Turbo Fan (GTF) jet engines. Each achieves a 16% improvement in fuel efficiency and 75%
reduction in noise by using 5,000 on-device sensors to produce 10 GB of feedback data per second. This data is used to
monitor, maintain and improve engine safety and performance.

31. And finally, as we are faced with increased consumption from rising incomes, manufacturing must also become more energy
efficient as it currently makes up 1/3rd of the world’s energy use. Shifting from traditional design, manufacturing and use
models to integrated 3D-enabled design-to-print leveraging additive manufacturing and Industry 4.0 processes could drive up
to 25% in global energy savings.

33. Megatrends will impact industries and business in a variety of ways:
• Impacting people, workforces, labor availability and supply, and the geographic or locational nature of it all
• Impacting the Tools and Processes used to run operations competitively and efficiently
• Impacting current and future Customers, as well as the Products developed to meet their needs
• Impacting how and where you Go-to-Market, as well as the changing nature of Business Models available and effective to
deliver value that resonates with customers.

34. While we can’t predict the future, megatrends can help show us the way.