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HP abandons “expensive printer ink” model

by on10 October 2019

Moves to “expensive printer” model instead

The maker of expensive printer ink HP has decided that its model has run out of steam.

For decades HP has made a fortune flogging cheap printers in the confidence that users would have to spend a fortune on hugely expensive ink cartridges.

However now rival makers luring customers with cheaper ink and toner cartridges, the outfit has finally admitted it is not working any more.

HP's incoming printer president, Tuan Tran, told the Securities Analysts Meeting the company needed to "rebalance the system profitability, capturing more profit up front" from the printer hardware.

One of the ways HP is attempting to safeguard its supplies revenues is by shifting to Smart Tank and Neverstop printers that come fully loaded with an estimated two years' worth of ink or toner.

This is for customers that want to buy the printer and supplies from HP exclusively.

"The customers will get a model that delivers a more secure, more reliable, higher quality and sustainable print experience", said Tran.

Another thing HP is thinking of is to make customers can pay for the full value of HP printers upfront, gaining the flexibility for supplies.

“This is like buying an unlocked mobile phone and then choosing your wireless carrier. In these cases, customers can enjoy HP's superior printing hardware but take a risk if they choose alternative suppliers.

"We rebalance the system profitability by monetising our innovation through increased hardware prices. This hardware profit rebalancing is not new for us. We've been doing it for years in China, where half of the mono laser printer comes from HP. Even though China is a super price-sensitive market, we can command a 50 percent price premium for hardware alone."

HP has more than 150 million printers installed in the field and continues to lead the home and office printing market, worth roughly $155 billion annually.

Tran added HP was continuing to take steps to protect its IP and has taken down 50,000 online listings that "infringe" its copyright and trademarks. He also said HP is trying to get close to the legion of channel sellers that flog its hardware and supplies to customers through a "centralised pricing process and a disciplined channel partner programme".

This, he claimed, will give HP "tighter visibility of inventory" and allow the company to "manage it much more robustly". HP is also putting more cash into tools, including analytics, to "help us track, verify cartridges from our factories through our multi-tier distribution channel and to our end customer".

Last modified on 10 October 2019
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