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HP's Francis McMahon on the transformation of printing and the growth of digital

Published on March 16, 2010

Cary Sherburne:  Hi, I'm Cary Sherburne, Senior Editor at WhatTheyThink.com and I'm here with Frances McMahon who’s Director of Marketing for HP's Graphic Solutions Business.  Can I shake your hand?

Frances McMahon:  You may, Cary, how are you? 

Cary Sherburne:  And welcome you.

Frances McMahon:  Thanks for being here.

Cary Sherburne:  Yes, thank you.  It's obvious that the commercial printing industry has been under serious transformation and HP has really been a leader in helping that transformation come about.  Maybe you could talk to us a little bit about what you see happening in terms of the move from analogue to digital?  What applications are leading that move, etc?  Moving ahead?

Frances McMahon:  Yes, it's been an interesting couple of years for our industry in general I think and when you look at commercial print in general a lot of transformation has occurred and quite frankly the economy in 2009 I think has really helped us in that its helped commercial printers recognize the opportunity to do things differently. 

To look at things that are more important maybe to their end customers, like a higher return on marketing investment or new applications that could potentially do different things to help their customers grow.  So in 2009, a lot of the shift occurred I think mentally and really charged all of us to think about our market in a new way and I know we've all talked around or about photo, specifically photo applications, and that has been I think the number one area of growth that we've seen in 2009 and certainly moving into 2010.

In fact, we saw in 2009, a 38 percent growth just in the market around applications like calendars and greeting cards, all types of different applications that many have not thought about prior to maybe 2009.

Cary Sherburne:  So when you say a 38 percent growth is that in paved volume or are there some other metrics?

Frances McMahon:  Revenue.

Cary Sherburne:  Revenue, okay.

Frances McMahon:  Total 38 percent revenue growth.

Cary Sherburne:  Wow, and that was in a bad year.

Frances McMahon:  Which equates to about $1.2 billion and…

Cary Sherburne:  Wow.

Frances McMahon:  …so its pretty significant growth I think that we saw.

Cary Sherburne:  Yes, very significant.

Frances McMahon:  And Photo Books generated probably the highest growth for us and in 2008 it was about a $1.3 billion business and we've seen a compounded annual growth rate of about 22 percent going into 2009.  We, right now, have over 150 HP Indigo presses installed doing photo applications across the world.

Cary Sherburne:  Worldwide, wow.

Frances McMahon:  And we have about a 71 percent share in that market so we continually talk about photo applications but I think we all recognize that this is an area that still has a lot of opportunity for growth. 

We also have introductions around the WS6000 and our applications there for photos, specifically portrait applications.  And, then, also the 7200 and what we're doing with the 7200 for Photo Books and other specialty applications.  So it's a big time for Photo in general.

Cary Sherburne:  And, so, for an app, for a normal commercial printer who really hasn’t thought -- they typically say, okay, give me this job I'm a printer and they send it out they hadn't really thought about maybe specializing in -- how hard is it for them to get into that photo business?

I mean, what do they need besides a press?  I mean, the press is the heart of it but what do they need besides that?

Frances McMahon:  I think customer education is key.  Customer education in forms like what we see with D-Scoop but, also, what we do within our capture programs.  So not just the photo market, we just highlighted that as one of the key opportunities but when you look at publishing, for example, when you look at labels and packaging, very important for us to be able to provide these business developments, services and tools, and training and education to get into these markets.

Not only that though, but also the products, so being able to have the products, the expertise and the solutions, not only through HP, but the partners we work for to enable these solutions has been key to the success.

Cary Sherburne:  And are you finding that the sales cycle is longer than it used to be?  Shorter, I mean are people more aware now?  I mean you're not having to go in and explain why digital so much anymore right are you?

Frances McMahon:  No, and again, going back to the economic discussion we had a moment ago, I think people really got it last year.  They really understood that they had to do things differently.  Marketing people like myself, even though I'm with HP, and represent the graphics portfolio, I had to change the way in which I managed my marketing mix.

And I've counterparts at Frito Lay and Coca-Cola and other large enterprise companies that were faced with the same thing.  But the good news is we managed our marketing mix better than we ever have before and our results went up and if we weren't forced to have that change that may not have occurred and a lot of that led to new areas of significance in digital printing.

Cary Sherburne:  I think, also, I think it also goes to the whole customization and versioning but, also, to personalizing more relevant content and in the integrated marketing mix right, which drives down run lengths on print but hopefully can increase overall digital print volume.

Frances McMahon:  Absolutely and we're also seeing agencies more accepting of digital print capabilities today and a lot of education going out today for advertising agencies and we're still doing a lot of work to help our customers understand, through our smart planner portfolio, to understand how to maximize what they're doing with operations and what they're doing with printing on their press.

We recently just introduced White Ink and…

Cary Sherburne:  All right, yes.

Frances McMahon:  …if you just take a look at this for example.

Cary Sherburne:  ****

Frances McMahon:  This is a greeting card and this is something that we're sending out to our customers right now and shows you the benefits of looking at different applications, for White Ink, for point of purchase, display, as well as the greeting card industry. 

And we have to continually as an organization look at new applications to give to our customers, to grow the print market.

Cary Sherburne:  And that's a really stunning piece so the White Ink on there I mean is just amazing.

Frances McMahon:  It is beautiful and it's a first ever for digital press to be able to have this White Ink capability.  We also carry a lot of investments around server technology, what we're doing with servers to enable new applications, like what we're doing with Smart Stream as well and being able to do label production now on the 5500, another great example of just extending the application base for the current set of presses that we have out there.

Print Care, our customers talk a lot about uptime of their presses and about how important it is for them to have that uptime and Print Care really allowing them to maximize the efficiency of the press and certainly, last but not least, everything that we're doing with Extreme.

And what we're doing there to really collaborate the entire system from data entry, building pages, building documents, managing that information from start to end and a lot happening, not again, just in the photo space but everything that we're doing at HP to help our customers grow, be successful, and move ahead in 2010.

Cary Sherburne:  That's great.  Thank you.

Frances McMahon:  Thanks, Cary.  Great seeing you. 

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