A surge in competitive products and a lack of standards to guide IT purchases are pushing Hewlett-Packard Co.s $20 billion Imaging and Printing Group away from its traditional technology focus and toward offerings that combine services and hardware.
"We are not about printers; we are about printing. What that means is that we really look at the whole experience in terms of printing, and our solutions," said Vyomesh Joshi, executive vice president of IPG.
"Our business models are still predominately focusing on the printers and consumables space, but were getting more into the services and solutions," agreed Cathy Lyons, who, as senior vice president of IPG, reports directly to Joshi.
One place the strategy is paying off is in the enterprise, according to HP officials. The Palo Alto, Calif., company has made strides with enterprise services featuring its Total Print Management strategy. Since the initiatives launch last year, HP has announced some $600 million in contracts.
"It is more about the IT buyer wanting control, cost savings and productivity per employee," Lyons said. "We show customers how to get the most out of every printing device, and we also show them specifically where to place printers [and] what types of capabilities you need on those printers, given those particular workgroups youre trying to service," said Lyons.
Joshi said HPs solutions and services strategy does not, however, involve diving deeper into the applications business but, rather, integrating with existing applications.
"For us, software is a business enabler. We are not trying to be in the software side of the business," said Joshi. "Think about the document workflow software we have thats really to enable companies to connect with any kind of input and any kind of output. You could [merge documents] into your applications—your [Microsoft Corp.] Outlook or whatever application you have—and then manage the document."
"People want to keep track of information. Our document workflow software integrates into any application—a Windows application or ERP [enterprise resource planning] or CRM [customer resource management]. We integrate them and output them on InkJet, LaserJet or Indigo press," said Joshi. "We dont want to be in the applications business; we want to integrate our imaging and printing solutions for the business processes [users] have."
The push to provide packaged solutions comes as IPG faces increased competition from the likes of Xerox Corp. and Lexmark International Inc. For smaller customers, HP relies heavily on its partners for SMB (small and midsize business) services, but IPG is increasing its own efforts in that arena as well.
For example, HP is providing financing services and some Web-based applications, such as its Expertise Chat Center, a Web-based chat room where customers can ask questions about hardware.
"Its not just hardware, but how we integrate that hardware with the common solution, with the common look and feel you can have with HP," Joshi said. "For example, the Expertise Center—which is a Web-based center where customers can say what problems they have and find out how HP can help. Its a very powerful way of connecting with the small to midsize business and helping them with real problems they have today."
One SMB user found the application helpful. "I had a problem once with my printer, and I got on the Web chat and got all my questions answered. I had to reboot my machine a few times, but when I rebooted, I was in the same place on the online chat and with the same person," said Mike Johnston, owner of The Home Specialists, a small real estate business in Pocatello, Idaho. "They then sent someone out to fix my printer, and I wasnt charged."
To a lesser degree, HP is also extending services to vertical markets.
The company has developed a Web-based application specific to the retail vertical market and is looking into other industry-specific applications, such as quilting and scrapbooking, said Lyons. But she acknowledged that HP is moving slowly into vertical-specific software. "To be cost-effective with that, its really something you have to have an integrator or VAR go after," Lyons said.
As for the performance of IPG itself, the group has been "on course" despite supply chain migration problems that hit HPs Enterprise Storage and Servers Group, Joshi said.
"For the last eight quarters, we [have been] profitably growing our business, adding $2 billion a year, and [making] between 13 and 15 percent operating profits," he said.
Despite calls from analysts, HP officials said the company has no plans to split off the lucrative IPG unit and that the group banks on tapping into the resources of HPs computing business to provide customers with end-to-end solutions.