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 user 2010-04-05 at 10:25:36 am Views: 52
  • #23496

    death of a (printer) salesman,In the near future, most
    big businesses won’t actually buy printers. The shocker: HP is looking
    forward to that.Bruce Dahlgren’s job at Hewlett-Packard is to sell
    printers to big customers. Well, sort of. During a recent huddle in a
    conference room at Hewlett-Packard headquarters in Palo Alto, he was
    talking about what will happen when big customers stop actually buying
    printers.Sound unthinkable? It’s not. Rather than purchase equipment
    that gets old and breaks down, these days a growing number of companies
    would rather let someone else own and manage the office copiers and
    printers — make sure they’re up-to-date, stocked with supplies and
    arranged in the most efficient way — and instead just pay for the work
    the equipment does. The model is called managed print services, and it’s
    all the rage.

    In fact, it’s a big part of the reason Dahlgren is
    at HP in the first place.
    Soon after HP CEO Mark Hurd arrived at the
    company five years ago, he recognized that the vaunted imaging and
    printing group wasn’t doing a great job with large businesses. Part of
    the problem: IPG executives were used to marketing to consumers, and
    lacked deep experience in enterprise sales.

    Vyomesh Joshi, the
    printing group’s executive vice president, once told me that it was
    humbling, but he realized he needed Hurd’s help to turn things around.

    a controversial move, Hurd brought in Dahlgren, a former colleague at
    NCR (NCR), to lead the enterprise printing business and spearhead
    managed print services. (Because of a legal dustup with previous
    employer Lexmark (LXK) regarding a non-compete agreement, he had to take
    some time overseeing Europe before settling into the role.) Since then,
    Dahlgren has been scrapping with the likes of Xerox (XRX) for share in
    the market.

    So far the services business has grown to the point
    where HP manages 19 billion pages per year. The total value of all
    managed print services contracts stands at about $5.5 billion. Revenues
    have recently gotten large enough that HP executives review it
    separately from the other printing operations.

    A race to print

    The spoils of the managed print services war should be
    considerable. Photizo Group, a research firm, estimates that by 2013 it
    will more than double into a $60 billion global market, and more than
    half of all enterprise printing devices will be under a services
    contract. Dahlgren says that today, only about a third of HP’s
    enterprise customers have begun using managed print services at all, and
    another third are evaluating it. “So I don’t shy away from a $1 million
    contract,” Dahlgren says. “Because I know that once we get in there,
    this thing really expands.”In this environment, the company that locks
    up the most market share could eventually wield decisive influence over
    which enterprise printer and copier brands thrive. If HP wins, it gets
    to eat a big piece of Xerox’s business. If Xerox wins, it gets to do the
    same to HP.

    So it makes sense for the printing giants to jockey
    for market share grab now, especially since businesses don’t want to buy
    equipment anyway and companies like HP can promise coveted cost savings
    from switching to the services model. But what happens when that stage
    is over, and investors still want profit growth in the imaging and
    printing segment?

    Dahlgren has an idea of how it might work. He
    offers a customer as an example: HP had begun managing most printers and
    copiers for a hospital when someone noticed that the station for
    printing the hospital’s ID wristbands was located right near the
    admissions station. That would make it possible to print each patient’s
    picture, in color, right on the wristband.Not only would it make it
    easier for hospital staff to check them, it would add a valuable layer
    of security. And in the print services contract, HP can charge more for
    the new wristband-printing service — similar to the way the cable
    company charges more for premium channels. Says Dahlgren: “Wouldn’t it
    be cool — we’re not there yet — but wouldn’t it be cool if when a doctor
    printed out a patient’s information, there was actually a picture
    there?”It would be cool. And apparently profitable for HP, too.