May 13, 2002 - According to Gartner analysts, Ken Weilerstein, James Lundy and Don Dixon, companies should pay close attention to Hitachi plans to combine its various printer operations into a separate company. They offered Gartner’s first take on the subject. “On 23 April 2002, Hitachi Koki announced that it would spin off its printer business as a separate company. The parent company, Hitachi, will then merge its own printer business with the new company. If shareholders approve the plan at their meeting on 26 June 2002, Hitachi expects to complete the spinoff on 1 October 2002. “Hitachi Koki is one of only two major vendors worldwide that make continuous-feed engines for high-speed production printers. The largest banks and utilities use them to print millions of pages per month (e.g., bills and reports). However, Hitachi supplies its engines through major printer vendors such as IBM and Xerox, so many enterprises may not realize that Hitachi technology lies at the heart of their printing operations. A production printer typically costs $250,000 to $500,000 -- and much more than that in parts and supplies over its operating life of five years or longer. Thus, after making the initial investment, enterprises have difficulty switching vendors. “Hitachi made this move for sound business reasons -- to shed noncore operations during a recession. Hitachi has prepared for such a move since late 2000 when it ceased to sell copiers and cut the copier staff. Consolidating the different printing operations of the Hitachi group will enable more efficient development and marketing. “However, spinning off the printer business could eventually change the comfortable relationship between enterprises and their production printer vendors. The risks include: * Hitachi has not established a strong brand name in the United States and Europe, and the new company will need one to succeed on its own. * Whether the printer company has enough R&D resources to continue to innovate remains unclear. * IBM, Xerox or another printer vendor might acquire the new company and then deny Hitachi's continuous-feed technology to rivals. * Hitachi could sell the printer subsidiary to a vendor that will keep one or two key technologies and sell off the rest piecemeal. “Gartner believes that the printer customers of Hitachi and Hitachi Koki do not have to do anything for now. They will likely see modest improvements in service and speed to market from the new unit. However, Gartner believes that the spinoff will eventually bring a further major change to the printer business. In particular, enterprises using high-speed printers with Hitachi technology should pay more attention to the new printer subsidiary and should ask Hitachi what it plans to do with the unit.” Gartner, Inc. is a research and advisory firm that helps more than 11,000 clients understand technology and drive business growth. Gartner's divisions consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and consists of 4,300 associates, including 1,200 research analysts and consultants in more than 90 locations worldwide. The company achieved fiscal 2001 revenue of $952 million.