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Analysis

HP Revamps Print Strategy
Louella Fernandes By: Louella Fernandes, Principal Analyst, Quocirca
Published: 3rd December 2012
Copyright Quocirca © 2012
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HP held its Fall printing event in Barcelona last week, where it announced the largest upgrade to its commercial printer line in almost a decade. HP’s print division (previously called IPG) is now merged with its PC group to create a new Printing and Personal Systems Group (PPSG). Printing remains a somewhat bright spot in the struggling company, generating close to a fifth of its total revenue and around two thirds of HP’s annual profit. However, for the full fiscal year 2012, HP’s printing revenue of $24,487m was down 6% from the previous year.

The market for printing is undoubtedly shrinking and characterised by intense competition and falling margins. This is compounded by growing user mobility, with the proliferation of mobile devices such as tablets, set to accelerate a decline in the printed page in favour of the electronic page.  Consequently many vendors are turning to services to minimise the damage, offering a wider document workflow portfolio that supports the general move from paper to digital business processes.

HP’s expanded portfolio of hardware and software certainly help address this new print environment. HP’s new range of HP Officejet Pro and HP LaserJet printers and multifunction printers (MFPs) provide new workflow and content management capabilities with some of the new inkjet models featuring a new print head designed to achieve higher printing speeds. 

Expanded business inkjet portfolio
Since 2005, HP has sold 10 million inkjet products, with a CAGR of 30%. HP is now expanding its office portfolio with the launch of its Officejet Pro X series. Set to rival laser printers, this new class of devices feature HP PageWide Technology, based on HP Scalable Printing Technology, using new pigmented inks and a print head unit that spans the width of a page.

With more than 40 thousand tiny nozzles on a stationary print head that spans the width of a page, PageWide technology delivers four colours of HP pigment ink onto a moving sheet of paper. According to HP, as the paper moves and the print head does not, its new HP Officejet Pro X Series printers are quiet and offer laser-fast print speeds and a rapid first page out.

HP is targeting the new HP Officejet X Pro series at unmanaged small businesses with 5–49 employees, as well as managed small and medium-sized businesses (SMB). HP claims that its Officejet Pro X Series inkjet desktop printers and multifunction printers (MFPs) deliver up to twice the speed at half the printing cost compared with color laser printers in the same class. According to HP, their PageWide Technology offers users the performance traditionally associated with lasers while outperforming low- and mid-range colour laser printers in cost, speed, and energy efficiency.

Although HP’s PageWide technology could certainly appeal to SMBs, this sector has traditionally been dominated by laser-based technology as customers are often reluctant to consider inkjet printing technology due to concerns related to ink costs, device speed, and paper handling capabilities. With a monthly duty cycle of 75,000 pages, the X-series would need to evolve to offer more enterprise-focused features, advanced finishing options and higher monthly duty cycle before it can compete with the Laserjet range in the enterprise.

So given a vast range of laser-based printers and MFPs, why is HP now focusing on extending its business inkjet offerings? Certainly the margins are higher for inkjet products, particularly as HP owns the intellectual property and development of its inkjet technology, whereas it sources toner and LaserJet technology from Canon. However, HP is not the only vendor with page-wide inkjet products—it also faces competition from Memjet who are licensing their technology to other OEMs. Xerox also offers solid ink printers and MFPs targeted at the same market sector.

The workflow optimised MFP—handling big data
Although HP is dominant in the single function laser printer market, it has a much lower share of the MFP market, overshadowed by Xerox, Canon and Ricoh. HP’s new workflow optimised MFPs aim to change this, increasing collaboration and productivity by easily capturing, indexing, storing, searching and retrieving documents. Devices feature advanced document processing, a range of security management features, two sided scanning and a pull-out keyboard for fast and accurate data entry. These devices are designed to meet the needs of the 'Big-data' challenge for many businesses—as much of this data still resides on paper.

The HP workflow MFPs can be integrated with HP’s new Flow CM Professional content management capability based on software from its 2011 Autonomy acquisition, which can run either on-premise or in the cloud. HP Flow CM Professional enables enterprises to access information in paper/electronic documents, audio, video, email, and web pages.

HP’s MFP portfolio has long been due an overhaul, and HP is recognising that with print volumes on the decline, MFPs need to be more fully utilised as tools for document capture, routing and archival.  Nevertheless, HP is not first to market with these capabilities. Some competitors are already actively offering document workflow integrated MFPs—for instance Lexmark has recently announced a range of MFPs that integrate with its Perceptive ECM software portfolio. HP’s workflow MFPs certainly offer a comprehensive and sophisticated set of capabilities. For now it remains to be seen what, if any, impact the saga currently raging at HP with regard to the Autonomy acquisition will have on this product portfolio.

Conclusion
HP has had a turbulent 2012, and is operating in a market with mixed fortunes. HP still has some work to do to increase the penetration of business inkjets and helping businesses overcome the negative perceptions that they have about inkjet technology in the office. In the enterprise, MFPs are becoming more widespread and HP’s competitors are already working with existing customers to leverage their existing MFP investments and deploy document workflow.

HP clearly intends to hold its ground and revive its once lucrative jewel in the crown. The competitive landscape is only set to intensify, but HP’s IT reputation, breadth and depth of products and vast distribution network will be key to it driving innovation in its product portfolio that accommodates the new trends of big data, cloud and mobility. 

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Published by: IT Analysis Communications Ltd.
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