In one of the articles of San Diego Business Journal there is an interesting overview and analysis about the activity and plans of the imaging and printing group of the US. printer manufacturer, the world known Hewlett-Packard. Here are some excerpts from the article. The full-text article is available here. The company that built an empire selling a printer with every computer is struggling to reinvent itself as environmentally minded consumers eschew paper.
Hewlett-Packard, 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.
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 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.
HP has identified other areas that require printing — like photo printer kiosks at retail outlets, outdoor signage and even aspirin. “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.”
HP has made huge investments in its Edgeline Technology to handle high-volume, commercial printing to compete against analog presses.
“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.
“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. 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.
Transforming into IBM
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 dominates, says Peterson.
“What we’ve seen from (CEO) Mark Hurd is that he’s very interested in infrastructure services. He wants to slowly evolve HP into IBM.” And they’re using IPG profits to power 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 market.”
For example, when IBM approaches a huge company like General Motors, it can give them high-level customized server, software, hardware and support.
“That’s what HP wants to do,” Peterson said.
Source: San Diego Business Journal
Key words: HP, new strategy, environment, business opportunities.
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