HP: We're taking on commercial printing
Published: 26 Mar 2002 15:57 GMT
Now that it has closed its acquisition of high-end printer company Indigo, Hewlett-Packard is aiming at grabbing a larger share of the commercial printing business.
Although HP remains on top of the market for home and office printers, the company will now try to move deeply into the market for providing software, services and hardware to the industrial printing houses that churn out colour brochures, annual reports, forms and other marketing materials.
"Only 4 percent of printed materials right now go through our printers. Ninety-six percent is the opportunity," said Vyomesh Joshi, president of HP Imaging and Printing Systems, in a conference call on Monday. "Digital printing is the way to get access to that."
To that end, HP signed a deal to acquire Indigo, which specialises in high-resolution commercial printers, for $882m last September. The deal closed on Monday. These printers aren't like your typical laser jet. They measure more than 6 feet, can weigh a ton and cost anywhere from $200,000 to $400,000.
In April, HP will provide details on a contract with a "major financial company" under which HP has installed a printing system that will let the company send out customised materials to its customers. Through the Indigo acquisition, HP is also working on a multimillion-dollar contract with a Japanese company for printing customizable forms for a higher-education institution.
In an indirect jab at dissident HP director Walter Hewlett, Joshi also emphasised that this printing effort, to succeed, needs to be tightly integrated with the rest of HP. Most of these contracts require substantial amounts of consulting and technology from outside the printing realm. The Japanese project, for instance, mostly revolved around services and software.
HP executives have made the argument that it would be impractical to spin the printing business off into its own unit. By contrast, Hewlett said the company could benefit by spinning off printing and imaging.
Overall, the opportunity could be fairly large, HP and Indigo executives said. Approximately $300bn of advertising collateral gets published every year and, although virtually all of these mailers get created digitally, commercial printing houses still rely on analogue-era printers that aren't adequately linked into networks. By replacing these with digital printers, companies can not only cut costs but also customise brochures, Joshi said.
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