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 user 2009-05-06 at 12:21:41 pm Views: 109
  • #21913
    HP Taps Nontraditional Printing Markets
    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
    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
    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

    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.