HP Looks to Expand Printing Business
Hewlett-Packard Co.s printer division will seek to boost revenue by winning over customers of recently acquired Compaq Computer Corp. and expanding into new markets, such as digital products, the units head announced on Tuesday.
HP Imaging and Printing Systems, which generated more than $19 billion in revenue last year, is the computer makers most profitable business, having established itself as the market leader in sales of ink and laser printers, scanners, and print servers. The unit also draws significant review through highly profitable sales of related supplies, such as ink cartridges.
Vyomesh Joshi, president of the business unit, said he wants to expand his business units sales, in part by trying to migrate former Compaq customers to HP products.
"Now that we are the new HP, we are not going to use Lexmark or Xerox," Joshi said during a conference call with reporters. "We will go and talk to the current Compaq customers and see if we can switch their printers."
But the largest source of new revenue could come from expanding into new business areas, he said, such as digital publishing, digital projection and imaging, digital copier, and Internet-enabled printing services.
Digital printing, in particular, offers significant opportunity, Joshi said, noting that digital printing accounts for only 4 percent of all pages printed today, including such items as newspapers, magazines and books.
Just capturing another 4 percent share of the digital publishing business would double HPs printing revenues, he said. Overall, sales of digital publishing hardware is expected to total $35 billion by 2004, according to HP.
Last month, HP introduced its first digital projectors, the xb32 and sb21, hoping to tap into a forecasted surge in sales of lightweight systems. In the next couple of years, the sub-three-pound projection market is forecasted to grow about 130 percent annually between 2001 and 2004, according to research company iSuppli/Stanford Resources Inc.
Digital imaging products such as cameras and photo printers will also remain a major focus for HP, Joshi said, as the company seeks to further solidify its position as the No. 3 retailer in the digital camera market. Going forward, the company plans to offer mobile printers designed to wireless interact with its digital cameras.
HP will also seek to "capture more fax and copier pages" through increased sales of digital copiers, many of which can be connected to the Internet for remote printing capabilities, Joshi said. Currently, most copiers sold use analog-based systems, but thats forecasted to change as digital copiers gain momentum. HP is predicting that customers will adopt digital-based copiers at the rate of 20 percent a year going forward, giving the company an opportunity to increase its share of the $16 billion market.
As it has for the past two years, HP once again heralded Net-based printing services as offering significant potential for growing hardware and service revenue.
Touting one example of "his vision," Joshi described a scenario in which a business traveler could print out documents transmitted from his wireless handheld devices to a publicly available printer located in a coffee shop. More specifically, the handheld user would transmit the file to the IP address of the printer to get a hard copy of the document.
While such a scenario is already feasible, Joshi said the company has yet to determine how to design and profit from the idea.
"The technology is there right now, we just need to figure out the business model," he said.
The potential opportunity to develop Net-based printing services highlights HPs efforts to "leverage its core competencies," Joshi said, that will assure the imaging and printing businesss future success.
"We are going to generate products and technologies that extend printing possibilities," he said, "and apply our strengths to new products and markets."