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AnonymousInactivehttp://brainstormtech.blogs.fortune.cnn.com/2010/03/30/the-death-of-a-printer-salesman/HP’s
HP’s RACE TO PRINT MONEY
The
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.In
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
money
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. -
AuthorApril 5, 2010 at 10:25 AM
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