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 user 2007-02-14 at 11:13:00 am Views: 97
  • #17771

    Rivals Say HP Is Using Hardball Tactics
    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”
    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
    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
    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

    *   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

        * 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!