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AnonymousInactivehttp://www.newsfactor.com/news/HP-Taps-New-Printing-Markets/story.xhtml?story_id=13100DF9TXI7&full_skip=1
HP Taps Nontraditional Printing Markets
Where
HP could once count on pairing a printer with 70 percent of personal
computer purchases, the conversion rate is much lower with laptops. HP
has identified new areas that require printing — like photo printer
kiosks at retail outlets, outdoor signage and even aspirin. HP also now
owns Snapfish. com, a popular photo service.
New Printing Markets Focus for HP
The
company that built an empire selling a printer Relevant
Products/Services with every computer is struggling to reinvent itself
as environmentally minded consumers eschew paper.Hewlett-Packard
Relevant Products/Services, whose $23 billion Imaging and Printing
Group is based in San Diego, has been working to identify
nontraditional printing markets — essentially seeking to be the
solution wherever words and graphics are printed.The Palo Alto-based
company once employed 2,000 people at its Rancho Bernardo [San Diego]
campus.It doesn’t say how many people work there now, and analysts have
pointed to layoffs in IPG in order to cuts costs and fund the
integration of the $13 billion purchase of Electronic Data Systems in
August.On the quarter that ended Jan. 31, IPG’s net revenues fell 18
percent to $5.98 billion, compared to the year before. Unit sales in
commercial hardware Relevant Products/Services fell 39 percent and
sales in consumer hardware fell 31 percent on the quarter; and net
revenue in commercial hardware fell 34 percent, consumer hardware fell
37 percent and supplies fell 7 percent.HP said it would decrease
operating expenses and boost printer supply sales — essentially
increase the life cycle of products and use ink and toner sales to
augment revenues, says Gary Peterson, a principal analyst with Gap
Intelligence in San Diego.”That’s the profit driver for them. A third
of HP’s overall profits come from its inks and toner,” he said.Where HP
could once count on pairing a printer with 70 percent of personal
computer purchases, the conversion rate is much lower with laptops,
said Darrell Simek, local HP operations manager.So, HP has identified
other areas that require printing — like photo printer kiosks at
retail outlets, outdoor signage and even aspirin. HP owns Snapfish.
com, a popular photo service, and recently purchased Logoworks, an
online commercial publishing service for small businesses.”I think HP’s
biggest challenge is to get people to print, regardless if they’re
buying printers or not,” said Peterson. “HP launched a number of
efforts to drive print volumes.”Digital Printing
IPG
General Manager Glen Hopkins said the recession has hurt the company’s
bottom line.”When consumer spending slows, we’re going to feel it,”
says Hopkins. “That’s the bad news. But recessions are accelerators.
They accelerate the bad business models quicker, and the good business
models quicker.”To that end, HP has made huge investments in its
Edgeline Technology to handle high-volume, commercial printing to
compete against analog presse “There are 59 trillion pages of print.
Digital is only 10 percent of the market,” said spokeswoman Alison
Graves.Most printing is still dominated by analog presses. HP only
commands 2 percent of the worldwide printing market.Imagine going to
Home Depot and designing your own wallpaper or carpet pattern from a
monitor or a scanned photo and having the pattern printed within
minutes.”The future is not far,” Hopkins said. “The point is that
printed material is all around us.”Employees in San Diego are
testing environmentally friendly pigments and equipment that use less
energy Relevant Products/Services. IPG is partnering with
pharmaceutical companies to print anti-piracy protected logos onto
medical pills. And IPG this quarter rolled out the commercial Inkjet
Web Press for small to medium-size publishers.With it, publishers could
theoretically print a book on demand long out of print, or print a
personalized magazine or newspaper.The Web Press is being tested by
three publishers on a trial basis: O’Neil Data Systems, a Los
Angeles-based financial services firm; CPI, a European book
manufacturer that had $600 million in sales in 2007; and The Taylor
Corp., a gift card and commercial printer.It prints in full color at
400 feet per minute at 600-by-600 dots per inch, or 3,200 pages per
minute.”You can convert it 10,000 different ways,” Hopkins said. “We
send the information to the bank of ink jet print heads, every page can
be all the same or every page can be different. Now the ability for me
and you to have a separate newspaper is possible.”He declined to say
what the price tag of the printer is, except that it’s in excess of $1
million.Mature Industry
Yet the printing industry is
a mature one, and there is a movement within HP to use IPG’s 18.5
percent profit margin not to grow the printing segment, but move it
into IT services, where IBM Relevant Products/Services dominates, says
Peterson.”What we’ve seen from (CEO) Mark Hurd is that he’s very
interested in infrastructure Relevant Products/Services services. He
wants to slowly evolve HP into IBM.”And they’re using IPG profits to
power Relevant Products/Services that transition, he said.”It’s really
a matter of IPG funding the transitional costs of acquiring EDS and
funding how that division of HP grows and succeeds,” he said. “They
purchased EDS to get a better foothold in the enterprise Relevant
Products/Services market.”For example, when IBM approaches a huge
company like General Motors, it can give them high-level customized
server Relevant Products/Services, software, hardware and
support.”That’s what HP wants to do,” Peterson said. -
AuthorMay 6, 2009 at 12:21 PM
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