HP extends colour printing strategy into SMB market

SAN DIEGO — Hewlett-Packard opened its annual imaging and printing conference here by revealing a low-priced colour laser printer and a sales package with Microsoft it hopes will help expand colour into small and mid-sized businesses.


making the announcements Vyomesh Joshi noted that SMBs in the U.S. spend some $17,000 a year on outsourced marketing materials instead of printing them in-house. “”We believe we can take that down 50 per cent,”” he said.

About 100 industry reporters and analysts are here to listen HP talk about new strategies and products — some under temporary non-disclosure agreements until cameras and printers are released — to expand digital printing in markets ranging from the home to fine arts.

In his opening remarks Joshi repeated HP’s recent themes of wanting to make colour printing easily affordable for consumers and corporations.

Among the product announcements was the US$499 LaserJet 2550 desktop printer, a price which IDC vice-president and imaging analyst Angele Boyd called “”remarkable.””

It’s a device that will appeal to home office and small businesses, she said in an interview.

However, she added it’s a printer that IT managers of large corporations will shy away from because they are trying to manage colour printing costs, which are higher than monochrome documents.

To further help SMBs use colour, HP has struck a deal to offer discounts on Microsoft Office Small Business Edition with sales of HP colour printers, as well as a marketing toolkit for creating documents for buyers of the LaserJet 2550.

Office SMB is a version of the suite that comes with Microsoft Publisher, an application smaller companies often use to create brochures and newsletters.

While a Microsoft executive here said the deal is non-exclusive to other printer manufacturers, he said it’s “”not one that I expect to replicate with another partner.””

That impressed Boyd, who noted HP faces heavy competition in printers from Dell.

“”Clearly HP has a leg up in that they’re partnering with Microsoft,”” she said.

HP also announced the immediate availability of the Colour LaserJet 4650, which will print up to 22 pages a minute and sell for US$1,799, and the HP OfficeJet 4215 all-in-one desk printer, which will sell for US$149. The company also said that in the fall it will release a new line of colour ink jet printers, inks and papers for consumers and professionals. No details were give out, but Pradeep Jotwani, HP’s senior vice-president of imaging and printing supplies, said the machines will be faster than current models, with inks and paper offering better resistance to fading.

HP also hopes to encourage businesses to use its colour printers by releasing new paper stock for brochures and other marketing material.

HP’s imaging group, of course, is vital to the company: According to Keith Kmetz, program director for hardcopy peripherals at IDC in Framingham, Mass., “”their profits are supporting a lot of HP’s other activities that are not as profitable.”” Jotwani said 55 per cent of the division’s revenues comes from the sale of consumables. The group includes everything from inkjet printers and scanners aimed at consumers to LaserJets for business.

“”They’re in an enviable position,”” Kmetz said in a pre-conference interview. “”They’re the defacto standard in the printing industry”” with “”huge market share in all printing segments.”” Its revenues are aided by the sale of consumables from ink, toner and paper. However, the company is still struggling to get its name known in the multifunction and copier markets, where competitors such as Xerox, Lexmark and Canon lead.

“”They haven’t been able to crack the copier nut”” yet, said Kmetz, in part because the copier channel for sales and support differs from the printer channel, which HP knows well.

“”They’ve struggled,”” agreed Ken Weilerstein, vice-president of Gartner Inc.’s digital document imaging group. “”They’ve made a lot of progress, but it’s still something they’re engaged with.””

Among the strategies HP is using to push its multifunction devices deeper into enterprises are alliances with VARs like Ikon Office Supplies, a world-wide reseller which specializes in assembling document management hardware and software solutions.

Another was last year’s partnership deal with Konica-Minolta to bring that company’s copier engine technologies into HP devices.

All printer-copier manufacturers are eagerly trying to get businesses to invest more in colour and less in monochrome devices, arguing colour in reports, brochures and the like will help staff inside the company understand charts and graphs, and boost sales to customers with brightly-illustrated documents.

Many companies use colour now, but only in spots: Some have expensive combination monochrome and laser copiers, but many have a dedicated colour laser or ink jet which they use to print special colour pages for hand insertion into monochrome documents. This manufacturers argue, is inefficient and expensive.

Of course, manufacturers aren’t altruistic: They like the revenues the colour-enabled hardware (on which there is a premium) and consumables bring in. Industry analysts warn, however, that those prices will have to come closer to monochrome before businesses bite.

Part of this conference’s purpose, said Ralph McNeil, vice-president of marketing for HP Canada’s imaging and printing group, is to convince industry reporters and analysts that the costs have come down enough for business to look seriously at using colour more in-house.

If runs are big enough, McNeil said, companies can take advantage of their ability to personalize documents and save money.

Among HP’s ammunition will be a case study of baseball’s Toronto Blue Jays, who used to outsource the printing of tens of thousands of tickets before the season until HP convinced it to use one of its 9500 series copiers to do the job. Now tickets can be printed as needed, with add-ons like bar codes for security.

That solution was done through HP VARs NexInnovations Inc. and Compugen Inc.

The example also illustrates HP’s push into managed imaging services, in which it offers to go into companies, analyze their needs and offer consolidation and other services to bring their printing costs down.

While HP has touted a multi-million dollar deal with Ford Motor Co. in the U.S., McNeil said channel partners here shouldn’t fear being pushed out of market share. Direct sales revenue in Canada is “”insignificant”” and there are no plans to expand it, he said.

Still, industry analysts note that more enterprises are looking at outsourcing their imaging and output infrastructure.

On the consumer side, HP is using its name in printers to make big strides in inkjet photo printers, but its foray into digital cameras — which will be discussed here — also faces obstacles.

According to IDC, HP ranked sixth in digital camera sales last year in the U.S., behind Sony, Kodak, Olympus, Canon and Fujitsu. “”They’re really known as a PC-peripheral provider,”” observed Ron Glaz, an IDC digital photography analyst.

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including ITBusiness.ca. Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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