Biggest Gain for Printer Biz: Customers

 
 
By Michael R. Zimmerman  |  Posted 2002-05-27 Email Print this article Print
 
 
 
 
 
 
 

Though it's the biggest corporate buyout in IT history, Hewlett-Packard Co.'s acquisition of Compaq Computer Corp. for roughly $19 billion will effect little change within HP's most profitable business unit: Imaging and Printing Services.

Though its the biggest corporate buyout in IT history, Hewlett-Packard Co.s acquisition of Compaq Computer Corp. for roughly $19 billion will effect little change within HPs most profitable business unit: Imaging and Printing Services.

Thats because the unit, renamed Imaging and Printing Group with the buyout, gains very little in the way of direct products or technology from Compaq.

Indeed, unlike other HP business units that must integrate whole manufacturing plants of products ranging from storage devices to PCs to servers, IPG has but four digital projectors to absorb and three printers—which Compaq resold on an OEM basis from Lexmark International Inc. —to kill.

In fact, very little has changed in the $20 billion units road map as a result of the Compaq acquisition. That road map in large part places a heavy emphasis on driving digital imaging, digital publishing, low-end printing, multifunction printers and mobile printing.

"The six growth strategies have not changed at all," said Vyomesh Joshi, executive vice president of IPG and IPS former president, in an interview with eWeek following the close of the Compaq deal. Rather, what IPG is counting on from Compaq is acceleration of the divisions existing strategies. That—and customers.

Indeed, Joshi said the closing of the deal alone will push IPGs annual growth rate from its current level of 4 to 6 percent into double digits by next year.

To help get there, the group is counting on heavy support from the Palo Alto, Calif., companys newly infused PC and server businesses. The more PCs and servers the company ships, the theory goes, the greater its opportunity for printer sales.

At least one industry observer, however, was skeptical. "We believe [Joshi is] very ambitious with that growth rate in the short term," said Peter Grant, an analyst with Gartner Dataquest, in San Jose, Calif. "Its really hard to see" how it will move to double-digit growth, Grant said.

But Grant agreed that IPG stands to gain much from mining Compaq customers and converting them into users of HP printers and consumables. IPG would also benefit from knocking out Compaq customers existing Lexmark machines and their consumables at the same time, he said.

"In my mind, its customers," Joshi said. "The key thing for us is the connecting of Compaq computing and Hewlett-Packard printing. I think thats where the synergies are."

IPG is also looking toward the future to create what it calls business transformation technologies with its Compaq brethren.

For example, Joshi has already been in touch with Howard Elias, former head of storage at Compaq and now senior vice president of network storage solutions at HP to discuss the development of a new architecture that would enable customers to write data on one type of media and transfer it across multiple other systems, from storage devices to the Web to hard copy.

Although Compaq had a brief stint as a laser printer manufacturer 11 years ago, with a separate business unit to manufacture its PageMarq line of home-grown printers, Joshi said HP is not interested in the Houston companys printing patents.

On the organizational front, as part of the Compaq shift, HPs former Consumer Business Organization has been melded into IPG.

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  • Flexing Its Server Market Muscle
  • HP Banks on PCs to Foster Growth, Greater Profitability
  • Challenges Abound for HP Services, Like Lagging Sales
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