HP Inc. – Positioned for Growth
HP Inc. held its Power of Print analyst briefing on June 15th at its headquarters in Palo Alto, Calif., to update the printing industry on its strategy and key initiatives. While there was essentially no new news, what was clear is that HP is building momentum as a leaner and more focused company nearly a year after its separation.
Consumer Imaging — Photos, Mobility, Convenience
HP’s home printing strategy is focused on photos, mobility, and convenience. In other words, encourage more printing of high value (i.e. high coverage) jobs from phones and apps with automated supplies replenishment.
HP’s promotional videos and messaging were centered on the highly emotive value of printed photos in the mobile life of the modern consumer. Anneliese Olson, Global Head of Home Printing Solutions, stated “click what you like, print what you love” in recognition of the mobile social world we live in.
HP highlighted its recently introduced Sprocket personal printer that is based on the Zink thermal photo paper, as well as their line of home printers that come in a variety of colors, are mobile-print enabled, and easily print photos from the big three photo repositories of Instagram, Facebook, and Snapchat.
HP continues to promote its Instant Ink Web-based subscription consumables program citing high Net Promoter Scores, high retention rates, and higher usage levels, though they did not indicate what the connection rate is.
HP is enabling speech-based printing with Google Assistant and, soon, Microsoft Cortana (no mention of Apple’s Siri). Finally, HP told the audience to expect some Augmented Reality announcements in the coming months tied to its acquisition of Aurasma.
Office – Gain Share with Security, A3, MPS
HP is laser focused (no pun intended) on driving its Office print business back to growth. The company is raising awareness of office printer security threats (and HP solutions) with its “The Wolf” series of videos. HP believes that security is a compliance issue that is accelerating customer buying decisions and the normal RFP/upgrade cycle.
The company has increased its security advisors by 10X and is offering dealers a $15,000 security care pack (two-day on-site assessment by HP experts) that the dealer can mark-up and sell. HP has a training program for dealers that includes a five-step process for how sales reps can talk with customers about security issues. HP indicated the security pack has been successful with large mid-market customers, and that HP will be announcing a new security offering for small customers at its Global Partner Conference on September 11 to 13 in Chicago.
On the A3 front, Tuan Tran, Global Head, Office Printing Solutions, ticked through the benefits of its PageWide business products (fast, low cost for color, high reliability) and Samsung acquisition with little additional detail other than HP expects to close the deal in second half of the year.
Tran indicated that HP has authorized around 500 independent office equipment dealers for its A3 line around the world. The company is not actively recruiting new dealers in the U.S., and has shifted its efforts to dealer training and sales launches. HP estimates it will likely plateau around 600 dealers worldwide. HP stated its A3 funnel is very big and the company is supply constrained with its direct business exceeding initial forecasts.
HP also highlighted its Smart Device Services initiative that it believes will help transform the economics of the industry. The company is focused on working with existing “ecosystem” players such as BEI Services, Compass Solutions, ECi, EKM, Print Audit, and others to provide data-driven maintenance and supplies replenishment. HP believes the service operations for dealers will shift from reactive today to predictive in the future powered by smart devices that essentially never fail.
Graphics – Digitize Analog Pages
HP touched lightly on its Graphics Solutions Business with Global Head Santi Morera noting some interesting customer examples in the commercial, sign graphics, and packaging markets. Customers noted included:
- Colruyt (Belgium) a food retailer that sends out two million unique direct mail pieces every two weeks tied to customer buying behavior.
- University of Chicago (USA) that experienced a 74% lift in response rate from a personalized direct mail promotion.
- Amurula (South Africa) a spirits company that created a program for consumers to sponsor protecting elephants and printing 400,000 unique labels with a different elephant.
- Champion Labs (USA) that saved $750,000 on inventory costs and $500,000 on print obsolescence by moving folded cartons of 2,500 SKUs to digital printing.
3D Printing – Global Commercialization
Tim Weber, General Manager 3D Printers, briefed the analysts on HP’s technology and strategy for the 3D printing business. The company has been building out its distribution channel in North America and Europe over the last six months, and announced earlier in the week that the Jet Fusion 3D printer line is commercially available across the Asia Pacific region beginning in Greater China, Japan, South Korea, Singapore, and Australia. Related announcements included:
- Hangzhou Shining 3D ePrint Tech Co. Ltd., a leading 3D printing services provider with more than 10,000 customers worldwide, plans to collaborate with HP to deploy customized 3D printing innovations in more than 50 locations across China
- Sinopec Yanshan Petrochemical Company has joined HP’s material development program
- Thirteen new resellers across the Asia Pacific region including Aurora, AM Korea, ECSS, evok3d, Eye2Eye, Infinite 3D Printing, FormX, Huxen, Hyunwoo Data, Shining 3D ePrint, Trustworthy, Wenpoo, and 3D Pro
Coming off a good second quarter with growth in PCs and printing (both shipments and supplies revenue), HP appears to be building momentum. The company has largely completed major organizational changes and cost cutting, product line refreshes and launches, and channel re-alignment and development. While HP has plenty of items on its to-do list topped by closing the Samsung deal and integrating the operations, the industry should expect a more muscular, agile, and active HP Inc. going forward that is well positioned to take market share and expand in new categories.
Jeff Hayes, managing director, leads the InfoTrends analyst team and works directly with clients on strategy assignments in the production printing, office technology, and imaging industries. Prior to co-founding InfoTrends in 1992, Hayes was the director of Electronic Imaging Consulting at BIS Strategic Decisions. He has provided research and analysis for Adobe Systems, Canon, Hewlett Packard, International Paper, Ricoh, Sony, Xerox and other industry leaders. Hayes has extensive experience conducting primary research on customer requirements, determining the market potential for new printing and imaging products, and managing large, research-intensive projects.