*NEWS*HP CTGS:MORE THAN MEETS THE EYE

HP printer cartridges: More than meets the eye(ALL THE WAY TO THE BANK)
SAN
DIEGO, CA – Like you, I get a bit ticked whenever I have to part with
north of $30 for a new inkjet printer cartridge at the local Best Buy
store.
They just seem to cost more than they should.
Furthermore,
you get the uneasy feeling you’ve been conned because the initial
printer cost was so low. Clearly, the company who sold this to you is
making an obscene profit on all this because hey, just how complicated
can it be to put some ink in a cartridge?
Well, the answer is: Very. Complicated, that is.
One
of the messages companies such as Hewlett-Packard try desperately to
convey to us whiny, cost-conscious consumers is exactly how and why
printer cartridges cost what they do. It’s not an easy sell, mainly
because it is difficult to explain all the technicalities and
intricacies of patents, print heads, silicon wafers, cartridges, ink,
colour and paper.
Last week, I had a chance to tour one of HP’s
printer lab facilities located just north of here in Rancho Bernardo,
CA. While I’ve been on several HP media trips over the years, this one
was refreshing as it featured presentations and PowerPoints by company
product development managers as opposed to marketing types. This means
you get answers in blunt sentences from engineers and scientists who
are able to cut to the heart of an issue by using the fewest words
possible. For example:
“We like International Paper because they make good paper,” says Nils Miller, Ink/Media Senior Scientist.
See what I mean?
That
comment related to HP and International Papers new “ColorLok”
technology; a process that means paper dries three times faster and
produces up to 40% darker blacks for sharper images.
Printers, ink,
cartridges and paper represent the some of the major components of the
Imaging and Printing Group at HP. IPG, headed up by the personable
Vyomesh (VJ) Yoshi, makes the lions share of the profits of HP’s
approximately (US) $85 billion annual global revenues. The success of
IPG didn’t simply happen just because people started to print more. It
took a while to develop this market.
Often, a successful printer
begins years earlier when HP takes out certain patents in order to make
the product proprietary. Then, it can take 3 to 4 years and 50,000
engineering and scientist hours to develop and manufacture just one
line of ink such as HP’s Vivera or its newly released Colorsphere line.
About 1,000 ink variations are tried before HP settles on a specific
formula.
The ink, by the way, is the only moving part of a thermal
inkjet cartridge. Just after you click the Print button on your screen,
the ink quickly heats to 300 degrees C and creates an expanding vapor
bubble that ejects a tiny ink droplet. As the bubble collapses the ink
chamber is refilled. The ink droplet travels toward the paper at about
50 KM per hour. The HP inject cartridge houses an integrated circuit
that routes signals to up to 408 ink nozzles; each one finer than a
human hair. If the nozzle is exposed to air for a few seconds the
nozzle becomes plugged from crusted ink.
A tiny wiper blade cleans
the nozzle plate and in some cases, the print cartridge ejects a small
amount of ink on the wiper and “wet-wipes” the cartridge and dislodges
ink crusts. This might explain why those low cost, no name refillable
ink cartridges don’t work that well and always seem to cause more
problems than they solve. By the way, did you know ink cartridges will
dry out faster here in dry Alberta as opposed to muggy old Toronto? Of
course you did.
In the last year, HP has seen its once huge market
share shrink, due mostly to competition. Still they are strong in most
sectors and maintain a 41% share of the color laser market, according
to IDC.
Now, they are eyeing other areas, including large format
printing and reprints of classical “masterpiece” fine art paintings.
Fans of this type of art generally love the reproductions; even if it
is in the form of a simple print or card.
Business will fill this
demand by printing the reproductions and since quality is so critical
here, HP has a decided advantage. Better yet, these buyers aren’t quite
as price sensitive as normal in a market that HP feels is over $1
billion annually.
The strategy here is simple: Anything that uses
ink represents a big market opportunity for the company. This includes
printing on different types of material such as cloth used in quilting
and scrap booking. Home-based hobbies like this are also big targets
for the gang at IPG. “Home photo printing experiences a 19 to22 percent
growth rate per year,” says Bill Smith, VP of HP’s Imaging and Printing
Group (IPG).
Like many big, Silicon Valley companies,
Hewlett-Packard had its ups and downs and has recently undergone a
series of cost cutting moves under the guidance of new CEO Mark Hurd.
While the Q4 2005 financial picture will be released on November 17,
you get the feeling the company is getting back on track and poised to
be pull away from the rest of the printer industry by leveraging its
huge investment in printer related R&D.
In every area it
operates in, Hewlett-Packard has always stressed quality in a big, big
way. Its printer cartridges and paper may not always be the least
costly but they seem to feel if you provide the absolute best quality
printed photos and printed documents, everything else takes care of
itself. Personally, I relate HP printer cartridges to a good bottle of
wine. And where I come from, you get what you pay for