This Month's Spectrum Summary:

(The following is an excerpt from the March 2008 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2008)

The Interesting Company
A look at HP and its grand plan for leading the industry

Hewlett-Packard is at once the most interesting company in the printing industry today. It is also harder to define because of its endeavors in areas other than print, such as information technology, and HP tries to leverage its IT relationships with companies to increase sales of its print engines. This has met with only modest success.

HP has a vision called Print 2.0 that it says changes many of the traditional processes for putting text and images on pages. There are real questions as to whether the Print 2.0 concept when combined with some of the other elements of HP's Imaging and Printing Group (IPG), is one that can help the company meet its growth objectives.

Vyomesh Joshi, executive vice president of IPG, who identifies three key areas of the Print 2.0 strategy:

• Make it easier to print from websites
• Extend the company's digital content creation and publishing platforms
• Provide a digital printing platform with increased print speeds while lowering the cost of printing for high-volume commercial markets.

Joshi believes Print 2.0 can help HP capture a significant share of the 53 trillion digital pages the company estimate will be printed in 2010 --an opportunity valued at more than $296 billion. According to his vision, many of those pages will be printed in people's homes.

HP plans on adapting the print enabling tools it acquired in the purchases of Tabblo and Logoworks to facilitate home and small business printing and grow HP's revenue stream from consumables for millions inkjet and small laser printers.

HP also sees photo printing as a highly lucrative market, both in terms of increased in-home printing but also using walk-up kiosks, mini-labs, and through web-driven ordering of photos, posters and photo books through the Shutterfly website. Photo books are seen as being very strong applications for Indigo digital presses.

A larger and more critical market for HP is the enterprise--companies with more than 1,000 employees and multiple locations-a market that's worth about $40 billion USD. These companies rely on electrophotographic workgroup copiers, printers and MFPs (Multi-Function Printers) that can copy, scan, fax and print. These machines come primarily from Japanese copier vendors and Xerox.

HP does not have a presence in this market, although it hopes to gain a foothold with its new thermal inkjet technology called Edgeline. However, Edgeline is at a disadvantage in the enterprise as companies have a decided preference for EP.

While HP insists that Edgeline offers a clear operating cost advantage over EP, it is not clear whether companies consider print cost an important factor when deciding which systems to buy.

I.T. Strategies believes HP is specifically employing more than 300 sales people to sell directly into the enterprise space. This is a major shift for HP in terms of selling printers, for it has never had a direct sales organization for its mainstream printer business.

HP is also offering Managed Print Services (MPS), a mix of hardware, software and services that span print planning, deployment, management, support, and supplies. This type of service is new to HP and there are questions as to whether it will be of value to the enterprise. While HP apparently plans to sell the service though its relationships in IT departments, there is little evidence that IT places sufficient importance on printing for MPS to offer a real value.

HP is also seeking to expand its share (presently just under one third) of the large format printing market and to increase the number of jobs reaching its Indigo digital presses. It has a business development program called Capture that is proving successful in this area, but the program needs wider adoption to be truly successful.

HP has some very strong offerings and there are even some strengths within Print 2.0 that could well prove to be a compelling proposition for choosing HP over competitors. Over the past five or six years HP has shown it has tremendous power to surprise the market and expectations fro the company are high. One of HP's greatest virtues in printing is its ability to think beyond the box, to see richer possibilities and greater potential. And that could well be their trump card.