IS HP USING HARDBALL TACTICS …..?

[Anonymous]

Rivals Say HP Is Using Hardball Tactics
Printer
industry and retailing executives contend the company has offered chain
stores incentives to stop selling store-brand cartridgesCheaper
store-brand inkjet printer cartridges have come on strong recently and
now make up about a quarter of the market for replacement cartridges in
the U.S. That poses a serious threat to Hewlett-Packard (HPQ), the
worldwide leader in consumer printers. Now, according to printer
industry and retailing executives, HP is fighting back.Those executives
say the company has approached chain stores that sell store-brand
cartridges compatible with its printers and offered them incentives if
they end the practice. Since those replacement cartridges typically
sell for 10% to 15% less than HP’s, consumers could be the big losers
if a lot of retailers take the printer giant up on its offer, they say.
“HP has a huge share and market power. By limiting the alternatives a
consumer has, it’s a tough strategy,” says one executive in the ink
cartridge remanufacturing business. (The independent and store brands
sell recycled cartridges that they refill.) None of BusinessWeek’s
sources would allow their names to be used because they didn’t want to
damage their relationships with the industry leader.

“Best Customer Experience”
Asked
to respond to the complaints, an executive for HP says it provides
incentives to retailers so they will aggressively market its products.
But the executive, Pradeep Jotwani, head of supplies for the HP Imaging
& Printing Group, wouldn’t provide details of those marketing
programs. “We don’t try to stop the availability of non-HP supplies,”
Jotwani says. He adds that the Palo Alto (Calif.) company has the
customers’ interests in mind, and purchasers will get the best results
if they use all HP-original technology and supplies. “We want to
provide the best customer experience,” he says.Staples (SPLS), the
country’s largest seller of replacement ink, confirmed to BusinessWeek
it plans on phasing out sales of store-brand inks for HP printers, but
won’t say whether the electronics giant asked it to make the move. It
says HP has invested heavily in optimizing its printers, ink, and
paper, so the two work well together. “We’ll focus on HP-original
technology,” says Scott Rankin, vice-president for technology
merchandising at Staples. “Selling that system is going to enable us to
offer our customers the best solution.”Yet Staples will continue to
sell store-brand replacements for cartridges from Epson, Canon , and
Lexmark International . Rankin says customers still have opportunities
to save on HP-compatible ink purchases by buying multicartridge
packages and getting $3 each for recycling cartridges.

Workers Feel the Pain
Jotwani
says he’s experimenting with programs that would make for more
efficient cartridge recycling and would also boost the volume of
returns. HP takes the cartridges and separates the materials for
recycling, rather than refilling them like remanufacturers do. He
denied the company is trying to deprive remanufacturers of the
cartridges they need to do business.Industry analysts are watching the
action closely. “The speculation is that [Staples] reached a deal with
HP and got increased margin and soft money for marketing,” says Charles
Brewer, managing editor of The Hard Copy Supplies Journal, a trade
publication that first wrote about Staples’ move. “That line is selling
very well for Staples. They wouldn’t drop it without
compensation.”Staples’ move has already had reverberations. InkCycle, a
Lexena (Kan.) company known to supply ink cartridges that Staples sells
under its store brand, has reduced its workforce from nearly 800 last
summer to 400 today. InkCycle officials would not comment on HP or
their relationship with Staples.

Not Black and White
Other
retailers, including Best Buy (BBY) and Office Depot (ODP), say they
will continue to sell store-brand HP-compatible ink. “We carry what the
customers ask for,” says Scott Koerner, senior vice-president for
merchandising at Office Depot. “As long as the customers continue to
ask for it, we intend to continue to carry it. This is about providing
customer choice.” Asked if the industry behemoth approached Office
Depot and asked it to stop carrying store-brand ink, Koerner said: “I
can’t comment on any conversations with HP one way or the
other.”Executives in the ink cartridge remanufacturing industry say
they are discussing whether to complain to regulators about the moves,
which the executives say may harm consumers. Do these alleged tactics
raise antitrust questions? “Antitrust law would only be violated if HP
does something that significantly eliminates alternatives from the
market and gives it enhanced market power as a result,” according to
Steven C. Salop, professor of economics and law at Georgetown
University Law Center. “Right now, there are alternatives being sold at
other office superstores, and other printer brands are being sold at
Staples.”

   
*   JB  Feb 11, 2007 7:20 PM GMT I work at Staples and in a recent
store meeting the general manager of the store said that the ONLY
reason we were going to stop carrying HP compatible ink was due to the
microchip technology on the new 02 series of inks. But of course that
is silly when you consider how many of the 45, 78, 56, 57 & 58
cartridges we sold on a weekly basis. We could have continued to sell
those ink cartridges for years to come. And let’s not ignore the HP
compatible laser toner cartridges that we no longer carry. My opinion?
HP is buying us out. There has GOT to be cash or margin involved.

   
* workaholicz Feb 11, 2007 8:57 AM GMT Please, HP, you are one of
biggest companies in the world. So help the small-medium enterprises
make some business with your printers (refill, recycle cartridge). This
requires some social corporate responsibility (for comparing, you
should read Fortune Magazine tells about ‘social business enterprises’
the next big thing idea from Muhammad Yunus, Nobel prize winner). So
economy will develop, ok? Especially in my country, Indonesia. Your
enterprises should not care just for profitability, but sustainability
with your social effort, for us, for the better world, and make trade
fair.

    * Kevin Feb 10, 2007 5:40 PM GMT HP’s dirty secret
(reporters: wake up!) is that its “technology leadership” in printing
is mostly a fallacy. HP has been reselling Canon’s printer engines
since the very first HP LaserJet!

[Author]

February 14, 2007 at 11:13 AM