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Commentary & Analysis

HP's Inkjet Gambit

By Ed Crowley,

By WhatTheyThink Staff
Published: August 9, 2005

By Ed Crowley, Photizo Group Business users share a deeply ingrained belief that laser printers are more reliable, more durable, and less expensive to operate. August 9, 2005 -- Okay, let's imagine you are the largest manufacturer of laser printers for business use. And let's also suppose that you have a dominant share position world-wide of monochrome laser printers. This dominant share position has created a steady and comfortable stream of highly profitable toner sales (yes, there is a healthy set of remanufacturing companies swimming in this pool, but, it's a big enough pool for everyone). Like any good corporation, you want to drive continued growth in revenue and profitability in order to make your share holders happy, reap bonuses for executives, and in general make life good for everyone. Everything is good until one day, customers begin asking for color. "My Wall Street Journal is printed in color, my TV is in color, the magazines I read are in color, so why can't I have color?" they ask. Never one to miss an opportunity, you are happy to provide your customers with a color alternative to your monochrome laser printers. But alas, you find that these customers are actually considering competitor's color laser printers. While you are 'the name' in monochrome laser printers, you have been a little slow to market with color lasers. Meanwhile, competitors such as Konica Minolta, Okidata, and Xerox have captured a significant portion of the market. So your massive installed base of monochrome laser printers begins transitioning to color laser printers. The only problem is it's not your color laser printers, it's your competitors'. And now, there is a new threat. A company from the great state of Texas (i.e. Dell) is now offering a workgroup color laser printer that provides even better performance and affordability than your mainstream monochrome laser printer. What is one to do? The Gambit Being the brilliant marketing company that you are, you offer the customer a new alternative (well, kind of new, or at least wrapped in a new package). You offer customers a high performance color printer with a very low operating cost. Oh, and there is one little catch. It's not a laser printer--It's an inkjet printer. HP has just announced the new OfficeJet Pro K550. This product is meant to offer customers an alternative to color and mono laser printers. The claimed speed of 37 pages per minute (ppm) in monochrome and 33 ppm in color sounds astounding. And the price point is poised to be below even the lowest cost color laser printers. Additionally, it offers a significantly lower color cost per page relative to most entry color laser printers. So why the heck wouldn't everybody want to buy this gem (which, by the way, is based on technology HP owns unlike laser printers which are acquired from Canon)? Laser Bias Inkjets and network printing applications have been 'oil and water', they simply didn't mix in the customers mind. The answer may be pretty simple and can be summed up in two words, "laser bias". For most business users there is a deeply ingrained belief that laser printers are more reliable and durable, offer better quality, provide better performance along with a lower cost of operations relative to inkjet printers. Despite HP's numerous attempts to drive 'business class' inkjets into network printing environments, they have been, at best, marginally successful. The laser bias is simply too deep and ingrained to move easily. While HP has been successful in selling inkjets into business as 'affordable personal color' devices, the raft of sub $350 color laser devices is quickly making this a less appealing option. Inkjets and network printing applications have been 'oil and water', they simply didn't mix in the customers mind. Will the OfficeJet Pro K550 change this? HP's marketing prowess is never to be underestimated. They clearly have impressive financial and marketing resources at their disposal. However, changing customer perceptions is a tremendous challenge. And while the K550 has many of the specs which would (on the surface) address the bias, by digging deeper one can quickly see some weaknesses for business class users. For example, the stellar 37/33 ppm rating can only be achieved in 'draft' mode. In reality, the 'laser quality' mode is only 12 ppm in black and 10 ppm in color. This is competitive, but not earth shattering. Paper handling is adequate, but certainly not robust by network printing standards. And the 'high capacity' ink cartridges only offer 2,350 page capacity for black and 1,200 page capacity for color. This relatively low capacity will drive a relatively high number of interventions. So, is the OfficeJet Pro K550 a 'killer product' that will sweep away the laser bias? Or will it be HP's Waterloo for business inkjet printing. Only time will tell!

 

 

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