For HP, Copiers May Not Be A Cinch

Gregory (Guest)

infoImaging, Forbes.com
Printing
For HP, Copiers May Not Be A Cinch
Penelope Patsuris, 11.19.03, 8:00 AM ET

NEW YORK - These days, office workers don't necessarily have to print documents using a printer, since new networked office copiers can print as well as reproduce documents.

Hewlett-Packard (nyse: HPQ - news - people ) responded to this phenomenon Nov. 18 by unveiling plans to sell the very same high-end multifunction copiers in addition to its extensive line of printers.

The paperless office may have failed to emerge, but the flow of paper in offices has in fact shifted. "The volume of copies being made is flat," says IDC analyst Riley McNulty, "but the volume that's printed is increasing, which is why copy machine makers have added printing capabilities."

It would be a stretch to call this a defensive move on the part of HP, but the computer and printer giant is certainly responding to a threat that it sees from copier outfits like Xerox (nyse: XRX - news - people ), Canon (nyse: CAJ - news - people ) and Ricoh. With its recent push into digital cameras and a ubiquitous ad campaign it's clear that HP intends to put itself at the center of all things imaging in the home and office.

HP also announced a copier distribution deal with Ikon Office Solutions (nyse: IKN - news - people ), the world's largest independent channel for document management systems, and introduced new customers Best Buy (nyse: BBY - news - people ), National Semiconductor (nyse: NSM - news - people ) and Subway.

For business clients its latest pitch is this: Let us come in and analyze your document printing and copying systems and show you how to streamline them to save money. But without high-end copiers in its line it would be tough to take on formidable competitors-- such as Xerox, Pitney Bowes (nyse: PBI - news - people ), Oce (nasdaq: OCENY - news - people )-owned Archer Management and Ikon--in this space.

The new strategy won't necessarily be a cinch for the $57 billion (2002 sales) company.

Even with a high-end copier line, HP's copier efforts will depend on its ability to assemble the kind of services operation that these copiers require, and that will take HP some time, according to IDC analyst Angele Boyd. As is the case with most hardware, selling these machines is more a play to supply the high-margin services, support and supplies like toner that they require.

Multifunction copiers need a high level of support that HP hasn't had to provide for its printers, which are usually serviced by the dealers that sell them or by corporate information technology departments, says Boyd. Ikon will probably service the copiers that it sells, but Boyd says HP expects to sell about half of its copiers via its direct sales team, and those will likely have to be serviced by HP itself.

"They're going to need to train their own services organization," she says, "and my understanding is that HP's services infrastructure is not totally ready. HP won't sell to any company that they can't support so they're going to have to move slowly." That should give outfits like Canon and Ricoh time to respond by getting more products on the market.

"Everyone's assumption seems to be that HP will come into this market and clean up," says Boyd. "But it has the kind of entrenched players that HP didn't face in the printer market. These guys have a lot to lose, and they're going to fight."

12/3/039:20 PM

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bmiller (Guest)

this is very intersting, just a note of recent personal experience. I just had a deal signed for a branch campus of a university. Until this month, this satellite has been a client with me. When we came to upgrade, everything was fine, until the higher powers said anything connected to the network, no matter what had to be HP. Simple fix right! Remove the print controller from the paper work and the unit. NO NO NO. I found out. Deal turned south. This HP copier is thing is going to be large obsticle to overcome. I know that I haven't been doing this as long as everyone else out there; but it seems to be the majority of people who control the network are going towards the name brands such as HP or Lexmark, or even XErOX for that matter.

I would be very interested in learning sucsess stroies from people who have overcome issues like these. If HP copiers prove to be reliable and service is good, they could easliy become a major player without much effort.

Now with IKON involved; in all of the areas i've been in i typically see them leadding with CANON, and reverting to RICOH as a "cheaper" alternative. I wonder how they'll position HP COPIERS?

12/4/037:40 AM

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Gregory (Guest)

bmiller

Your reply to the HP article is very real. I would offer that you must truly take each situation on it's own. As soon as you walk out of one door and into another door, the players, preferences and attitudes change with the lock on the door knob. I have worked environments that have stayed the course with HP printers and lost the connectivity aspect. I have not yet lost to a copier, and I've been in two that were very heated. Frankly, I view Canon as more of a challenge than HP will ever be and I speak this only to make a point. Do not under any circumstance let this situation get the best of you. Follow up in a couple months, then a couple more. I assure you they will not get the support on the copier side, that they have been used to for decades from a dealership. This will not change any time soon. HP only has a name based on a reliable track record from their printers. You have a name backed by a track record of local support, great customer focused service, proven products both walk-up and connected. They simply won this battle. Just as easily as they put HP in, they can put you back in! The key is to stand the test of time, by moving on to the next one. GOOD SELLING!!!
-Greg

12/4/032:14 PM

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Old GloryMaven VIP

Very well said Gregory!!!

12/5/039:31 AM

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Art Post (Guest)

Brian:

My explaination of HP in the copier biz. (First of all, we're not going to outsmart any of the IT people).

We Ricoh, Canon, and Xerox not sellin copiers any more. We are selling Multi Functional Copiers (basically we are selling laser print engines with accessories and attachments).

For years HP sold laser printers and for years those laser printers worked flawlessly with the HP2, HP III and HP IV. IT fell in love with the reliablilty, the quality of the durability of the product! Thus the HP dominance of the laser printer industry for many years.

In later years prices errorded and speeds climbed, HP was forced to make price cuts and quality cuts on the lower end of the printer market. Lower end printers were now vunerable and HP needed to move upstream for speed and volume. They did this very well also.

All of this time HP never had to focus on service. Yes, they offered service but not like a copier dealers service. HP could respond a day or two days later (because the customer had more than two laser printers), while copier dealers had to respond asap becasue there was usually only one to two copiers per location. Plus copiers needed more service becuase of the multiple accessories, like document feeders, duplexers, staplers, and extra paper banks. The more you have, the more that can need service. Remember all HP had was a printer, no dulexers, feeders, paper banks, collators, etc.

As HP moves in to the copier market, they will be able to support the Konica Minolta Engine with relative ease, however look at the accessories like the feeder, the paper bank, the stapler finsiher, the saddlestitcher. Most of their guys have not seen these and might not understand the customers need to have the documents today and not two days from now!

I think, and agree with Greg that you need to sell the support and service aspect with the customer who may be giving HP the edge.

Ask them, has HP ever serviced your copier? Of course the answer will be no! Build a story, a case like presented here and put doubt in the customers mind, like yeah... HP can fix laser printers, but can they fix hi-speed laser printers with multiple accessories and options? And can they get in done in 2 -4 hours of the call? Will they provide a loaner service if the system fails? Will they even care if your system fails, or will they put you in touch with a service tech or customer service rep from outside of the country (like India). Ask the customer if this is what they really want.

I for one can not wait for the first opportunity to bang heads with HP!

Art

12/5/031:46 PM

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Gregory (Guest)

Bravo! Thank you for a couple of additional great concepts that I had not yet thought of, Art. My toolbox just got bigger!
-Greg

Thanks Jim.

12/5/031:52 PM

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Old GloryMaven VIP

Another tool for your tool box that I haven't heard touted very often is the supply inventory issue. Our copier contracts include supplies. Therefore the supplies are being paid for in arrears and $0 cost for supply inventory. Any decent sized company is going to have $1,000's of dollars invested in HP supply inventory that is all paid for in advance. Any CEO, CFO type can latch on to that concept without any trouble at all.

12/10/039:42 AM

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