HP exec says supplies, services to boost print business

IDG News Service - As printer prices decline, consumers will continue to pay for supplies like cartridges and for services like digital photo prints, which will ultimately generate larger revenues than units shipped, a Hewlett-Packard Co. executive said today.

"It's about the end, which is the print, not the means, which is the printer," Vyomesh Joshi, executive vice president of HP's imaging and printing group, said during a speech at the Morgan Stanley Technology Conference in Dana Point, Calif.

HP is going after high-usage customers -- those who not only buy printers but also purchase ink, toner and media, Joshi said. HP generated revenue of $28 billion from its imaging and printing business in fiscal 2007, and the supplies and services revenues continue to grow. "We are moving from printer to printing and moving from units to pages," Joshi said.

HP ships 45 million printers annually, but around 49.3 trillion pages are printed each year by consumers, small and midsize businesses, and enterprises, Joshi said. HP has about a 1.8% share in the pages-printed segment; doubling that will double HP's printing revenue, Joshi said.

Of the trillions of pages printed, about 9% are digital and 91% are analog, Joshi said. The first thing HP wants to do is move more pages to digital, which expands printing opportunities for different business segments. For example, by capturing pages in a digital format, users will be able to print images at home, over the Internet or directly through retailers, Joshi said.

To illustrate the point, HP has introduced an ink-jet minilab that can rapidly print tens of thousands of digital images in just an hour, Joshi said. Instead of printing a simple 4-in.-by-6-in. photo or a shoebox-worth of photos, users will be able to create a photo book, Joshi said. That service will be available in the next five years, he noted.

HP is also trying to move costs out of declining product segments such as mono laser printers and apply them to products like color LaserJets and multifunction printers that deliver better revenue and profitability, Joshi said. On another front, the company is trying to improve its logistics to improve profitability in the printer segment, Joshi said. HP currently sells products in 179 countries.

The vendor has acquired multiple companies to promote its Print 2.0 strategy, which is aimed at boosting HP's print management services, online photo services and tools for digital content creation. In January HP acquired Exstream Software, a company that manages the creation and delivery of communication materials. In 2005 it acquired Snapfish, an online photo services provider.

Last year, HP abandoned the digital camera business to reinvest in the Print 2.0 strategy. The camera business wasn't profitable enough for HP, Joshi said, and the shift allows the company to focus on its printing and digital imaging business.