HP refreshes its printer strategy

In an effort to slow drastic drops in printer sales, HP is rolling out both printers and expanded support and application software for enterprise and consumer use

Hewlett-Packard (HP)  introduced its revamped print strategy on Tuesday in an effort to bolster the company's lucrative printing business by giving users creative tools and Web-linked capabilities.

The product rollout included consumer printers, office printers for SMBs, and the Designjet T1100 MFP for graphic arts professionals. At the high end, HP introduced the Scitex XL2200 Industrial Wide-Format Printer for high-volume commercial printing businesses.

HP is also offering a range of software tools for digital content creation and for printing content directly from the Web. The products all aim to give users more creativity in sharing and publishing content, said the executive vice president of HP's imaging and printing group, Vyomesh Joshi, during a press conference in New York.

In the past, most users stored content on their PCs and used printers to generate copies of photos and documents. But for customers who now archive their photos online, HP has the Tabblo Print Toolkit software that lets users of the Flickr photo Web site create personalized albums by combining photos and text.

Other products include templates for printing business cards and letterhead, and -- coming in October -- a tool called HP Print Studio that will provide free designs for creating greeting cards and party invitations. HP also announced wiki sites for consumers and small businesses.

The company is launching these services in an effort to slow a sales decline in certain types of printers, one analyst said. Printer vendors make nearly all their profit through sales of ink and other consumables, so they need to preserve hardware sales to ensure that demand continues, said Ian Hamilton, an analyst with Current Analysis West.

"They're in a situation where they need to find ways to make their customers print more. If you see what's going on in the industry, there are pretty massive declines in the single-function ink sector, and as a whole, the industry is having a lot of struggle," Hamilton said.

The growth of global unit shipments of inkjet MFPs (multifunction printers) has slowed from 35.3 percent in 2004 to 30.5 percent in 2005 and 19.2 percent in 2006, according to figures from IDC. Sales of laser MFPs and laser single-function printers showed similar trends, while single-function inkjet printers have suffered worst of all, with annual global shipments shrinking by 8.4 percent in 2004, 9.6 percent in 2005 and 21.6 percent in 2006, IDC said.

That slump has also put a dent in HP's earnings, as the company reported on Aug. 16 that its imaging and printing group had slower growth than any other corporate division, rising 8 percent year-over-year with revenue of $6.7 billion for the third quarter. In comparison, the revenue for HP's software group grew by 74 percent over the same period, and the personal systems group, the division that sells PCs, grew by 29 percent.

Despite sluggish growth, the printer division is crucial for HP's financial success. The division generated 26.6 percent of HP's total quarterly revenue of $25.4 billion for the quarter, more than any other segment except the PC group.

This story was updated on August 29, 2007