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Last September, Hewlett-Packard named David Murphy to head a new Web Services and Software unit within the company’s Imaging and Printing Group. Murphy, who previously served as chief financial officer of the enterprise software maker Mercury Interactive (which has since been acquired by HP) as well as CEO of Asera, recently spoke with eWEEK about the ways the company’s printing business is increasingly a services and software business.
Why the need for a Web Services and Software unit within HP’s printing business?
We’ve been very successful in office and consumer printing, and enjoyed the wave of demand driven by client server and desktop and laptop computing. But our view is that if all we do is serve the technology to the market as opposed to participate in the creation of printing applications, we would not be fulfilling the leadership role we want to have. Now we are going out into the marketplace and talking about our Print 2.0 strategy, to get at some of the new printing opportunities resulting from Web 2.0. There are a lot of opportunities to create more publications from all of the digital content that exists online today. It has provoked new ways of communicating and interacting.
Is this opportunity more in the consumer or the enterprise market?
Both. Many of these new printing opportunities have been created as a result of consumer photo sharing software such as Snapfish [HP acquired Snapfish in 2005], which has led to new ways to create more personalized memorabilia. Exstream Software [HP acquired Exstream Software earlier this year] is a company that is working with enterprises to help them better interact with their customers.
Give some examples of the new applications for printing you describe.
I was at a photo industry event recently and I spent a lot of time with retailers discussing the retail photo category, which of course is on the decline as more people opt to share photos digitally rather than just create a photo print for a shoebox.
In that arena, the next generation of technology that will go into retail stores will allow consumers to publish all kinds of products: photo books, personalized calendars, greeting cards, event-oriented correspondence. It will allow consumers to mix personalized and professional content. More importantly, when you think about people in community groups and schools or any group where they create material to communicate, I think you can go across a lot of different things that people do every day and create new printing opportunities. We did work with Disney on a Hannah Montana concert series to create a memory book that was promoted during the concert. It was something you could print out at home or at retail stores. This is the kind of product that you used to have to go into a toy store, or some other place, to access.
In the enterprise space it is equally interesting. If you look at Exstream Software, which is working with companies to print personalized financial and insurance statements, it helps them pick up information at the most current point before printing. One of the challenges of the insurance industry, for example, is that they go through a rate approvals process that is so lengthy that the data can end up being stale by the time it is ready to print. But if you can manage printing and publishing real time content, you can reinvent how you think about a claim and claims processing.
HP After Growth Acquisitions, Not Consolidating Acquisitions
Talk a little bit more about why HP decided to buy Exstream.
Exstream is very powerful in enterprise printing. It had already invested in Dialogue Live, a more interactive way for business people to communicate. We want to accelerate that agenda because that is where the sweet spot is. Exstream will push us more into content management. I don’t want to be a Documentum or an IBM, but I want to be able to access their environments. I view Exstream as a very strategic acquisition. They have created over the last 10 years a very sound product base and a very influential set of customers in the financial services space. It would take me forever to replicate the market momentum that they have achieved.
Do you plan more acquisitions?
I don’t want to do “consolidating acquisitions.” I do want to do growth acquisitions. I am a huge fan of Exstream, which is small relative to HP, but still established. It is an established market leader in an immature space that we can help accelerate. Very large software companies would be much harder to integrate than Exstream, and if I buy anything much larger, it tends to bring some less interesting assets with it. But I will also use HP Labs and my own creative capabilities to do innovation work. It will be a combination of acquisitions and organic growth. I would say that in three years, two-thirds of our growth will be organic growth.
How do you see today’s competitive landscape in the printing business?
There are a lot of ways to measure this, but because of the focus I have, I am really trying to drive where analog content becomes digital. I stay focused on the area that I am responsible for, and the growth that I am most interested in is the growth that comes from Web-based applications.
The competitors have all moved into “work flow automation” and they all have made investments in being able to help a company reengineer printing-intensive activities: [for example,] if you have 10 different forms to be created, making that process more automated and efficient.
I am not focused on workflow but on what it is that you are trying to create. I am trying to create new products that can exist only because you can publish digitally. You can now mesh together personal and other content more easily than before. I don’t think our competitors are as focused on this. Most talk about photos but they don’t always get that digital publishing in retail is not about photos but about the other things incorporating photos that customers want to have professionally printed, like personalized materials and maybe signage. I don’t think most of our competitors have the forward-leaning agenda that we do.
Digitals Footprint Is Bigger than Its Foot
Why is digital printing so big a focus when it is still such a small part of the printing business?
Today less than 10 percent of the entire printing business is digital. But digital printing enables printing on demand. About 40 percent of books and magazines that are published today ultimately get thrown away. The greeting card industry, at the end of every occasion, destroys most of its merchandise and cards.
What are some of your green initiatives?
One of the things we are doing is promoting digital, on-demand printing. When printed materials are produced at the point of purchase, there is no waste.
Digital technology also offers the ability to print with dry ink as opposed to liquid ink, which produces less hazardous waste. A lot of retailers like Wal-Mart are getting very enthusiastic about being able to replace their photo printing processes with a dry ink.
Is it challenging to comply with environmental regulations?
When you talk about being more efficient with the use of paper and printing, these are things that our products have been supporting for a long time. Many of these concepts, like printing marketing materials on two-sided paper, are not laid out in hard regulations, but they make good sense. To me, the regulations always trail behind the state of the art. The answer is not to force everyone to print in a certain way, but to offer technologies that provide more efficient ways to print.
You describe many new printing applications, but it seems like many consumers still use their printers in a traditional way.
It is not all about what consumers can do from their homes. Today, a consumer can go to Snapfish and create calendars or memory books, or posters to promote events, but it may be more convenient for them to order these prints and pick them up at a nearby drug store or retail store. The equipment to print books and calendars is not necessarily the equipment a consumer would own, but our applications are creating the ability for people to do more things.
Are you focusing more on managed services for the enterprise?
The managed service model is a very important priority for HP. As I build a set of sophisticated business applications and solutions, there is a set of customers that say they’d rather HP manage it all rather than run it themselves. Part of my growth agenda will be driving more managed services for customers who want to do more complex things.