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HP Sees Many New Uses for Shrinking Inkjets
SAN FRANCISCO,Oct. 04- Vyomesh Joshi, the executive who runs Hewlett-Packard's $22.6-billion-a-year printer business, likes to compare the thumb-size inkjet print heads his company produces to silicon chips.
Whereas most people look at Hewlett-Packard's printers and see only a ruthless low-end commodity business, Mr. Joshi sees new business potential. And, like the constantly shrinking transistor at the heart of the chip industry, the ever more Lilliputian inkjet nozzle is poised to evolve into a new generation, with more than 3,000 tiny jets crammed onto the surface of each print head.
The company, which is based in Palo Alto, Calif., plans to use the technology for inkjet printing to aggressively enter a range of new markets beyond printing, including television and computer displays, printed electronic circuits, automotive fuel-injection systems and even drug delivery for treatment of diseases like diabetes.
"A lot of competitors don't have the capabilities we have built in the last few years," Mr. Joshi said.
The bet on inkjet technology builds on the success of Mr. Joshi's Imaging and Printing Group – the largest among the company's businesses, and a bright spot, too. Its success could also make Mr. Joshi, a 50-year-old, India-born engineer, a formidable candidate to become the leader of the computer maker, should Carleton S. Fiorina, the current chief executive, leave.
"H.P. has done some serious innovation, and they are looking for a payback," said Crawford Del Prete, a technology analyst for the International Data Corporation, a computer industry market research firm. "I don't know if he's being groomed to be C.E.O., but the performance sure speaks for itself."
The diversification strategy is also one reason that Hewlett-Packard is able to sustain the threat of an entry by Dell Inc. into the printer business.
Dell, which entered the printer market last year in partnership with Lexmark International Inc., is clearly having an effect on sales. Dell increased its share of the United States inkjet market to 11 percent from 2 percent in the last year.
Hewlett-Packard's share dropped to 48 percent from 53 percent in the period, according to an I.D.C. survey. At the same time, however, Hewlett-Packard's revenue and margins in the business grew markedly. The division grew 10 percent in 2003, up from 4 percent the previous year, and operating profits as a percentage of revenue have stayed above 15 percent for the last two years and the first three quarters of 2004.
For Mr. Joshi, who arrived at the company fresh out of graduate school during the same year the inkjet printer was introduced, the printing technology is still at the heart of the company.
As an engineer, he invented the foam used in the company's ink cartridges to keep the ink stable as the inkjet head races back and forth. He also found a material, tantalum, that extended the life span of the microscopic resistors that heat rapidly, causing the explosions that push the ink out of the inkjet nozzles.
But he makes a surprising admission. The business model underlying the company's remarkably lucrative inkjet printer business – low-cost printers and profitable ink – is something the company stumbled upon by accident.
"We didn't understand the business model," said Mr. Joshi, who has been with the company for 20 years. "We had no clue the business would be this big."
Inkjet printing is based on a manufacturing technology that is a close cousin to semiconductor chip-making known as MEMS, for microelectromechanical systems. MEMS equipment is used to etch the microscopic pyramid-shaped chambers that spit patterns of ink onto paper as the inkjet head moves back and forth in a printer.
Mr. Joshi predicts that he will be able to expand far beyond the printer business as inkjet-printing technology advances at the pace the chip industry refers to as Moore's Law.
So far he is on track. Measured in drops of ink per second, Hewlett-Packard's inkjet performance has doubled every 18 months for the last 17 years.
Although inkjet head assemblies are already the highest volume MEMS devices, the manufacturing technology has many other applications, including Texas Instruments' Digital Light Processor, an array of more than a million ultrasmall movable mirrors now used in projection televisions.
Last month, on a visit to the company's Corvallis, Ore., campus, Mr. Joshi demonstrated the company's Instant Cinema product. A front projection DVD player based on the Texas Instruments D.L.P. chip, Instant Cinema is able to display a wall-size HDTV image. Designed by a small group of engineers in Corvallis, the $2,000 product is the company's bet that it will be able to enter the television market by setting a price well below the rest of the industry, where high-resolution television now generally costs $3,000 to $10,000.
Moreover, in a hint about where it intends to drive the technology, Hewlett-Packard announced earlier this year that it had found a way both to improve the resolution and lower the cost of Texas Instruments' technology. "People see us in projectors, but they haven't connected the dots," Mr. Joshi said.
The technology, known as wobulation, works by using a MEMS device to constantly shift a portion of an image slightly in two directions. That can create an image of higher resolution than the original image. When it is introduced, the technology could be used either to lower the cost of projection systems or to produce higher- resolution products.
In making MEMS-based technology an important component of the company's consumer electronics strategy, Mr. Joshi is taking a lesson the company learned in the laser and inkjet printer wars: not to try to introduce technology first and then defend higher-end markets. Instead, he is investing from the bottom up.
"In technology, manufacturing learning curves are everything," he said. "So we start with the low end of the market and move upwards."
Hewlett-Packard is currently refining its fourth-generation inkjet technology, known as TIJ-4, scheduled for introduction next year. TIJ-4 will double the speed of inkjet printing, while lowering the cost and improving print quality. As the technology reaches the market next year, it could have a broad impact.
One unlikely industry that could be transformed by new inkjet technology is the United States textile business. The industry is beginning to use inkjet systems to print colored patterns on all kinds of fabrics, including clothing and carpets. The technology will make possible highly customized textiles made in shorter production runs.
"This might revitalize parts of the American textile industry," said David Brookstein, dean of the school of textiles and materials technology at Philadelphia University. "A lot of designers like the technology because they can try out new ideas without making large capital commitments."
Beyond printing, Hewlett-Packard has been actively exploring the use of inkjet technology for drug sprays used to treat diseases. Using inkjet systems offers advantages in particle size and dosage control, the company argues. Although the company has made working prototypes, no products or business alliances have been announced.
Another promising area is "printing" electronic circuits. In April, the company announced that it had successfully printed a fully functional transistor, but it acknowledged that there was still significant development work yet to be done to create products.
So far, Mr. Joshi is coy about what other new products the company might have on tap, saying only that it will begin to apply inkjet technology next year in the display market.
There are, however, a number of early indications about the company's strategy. This year, Hewlett-Packard has introduced a number of television and projector products and made clear that it intends to have a bigger role in the consumer electronics industry.
On a recent factory tour on the 11-building campus in Corvallis, where 4,300 employees work, it is clear that Mr. Joshi enjoys a close bond with both his managers and their employees. He walks through an inkjet cartridge manufacturing line and gives an employee a high-five when he learns that the line is running close to 100 percent yield.
"In a lot of ways the original H.P. culture is a printing culture," he said.
* Post was edited: 2004-10-13 10:46:00
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