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HP's Edgeline, SPT Investment, And Ink vs. Laser In The Office
Angèle Boyd
March 26, 2010
Word is spreading that HP is discontinuing Edgeline (its' departmental, page-wide-array ink-based MFP), and this has caused an industry stir. This raises questions about why HP is doing this, and about the outlook for ink vs. laser in the office. We thought we'd share our perspective.
Q1. Is the HP Edgeline story true?
HP has indicated to IDC that it will continue to sell the products as complements to its laser line into Spring 2010. These reflect what's in inventory, as production is being discontinued. HP will continue to support machines in the field for five years after the final shipment date, including warranties and SLAs.
Q2. Why didn't the devices disrupt their laser-based competition as intended?
HP targeted departmental-class A3 color and mono laser copier-based MFPs with the following competitive advantages, and a goal of 10% share of color laser segment 4 by YE 2008.
No hardware price premium for color
No mono cpp premium; minor color coverage charged at mono cpp
Good-enough office color quality
Ease of use (e.g. real-time video to clear jams)
Usage based clicks or cpp
Black/white mode – is comparable to mono cpp on mono laser MFPs of same speed, which is less than color laser MFPs.
Professional color mode – is the default color mode, and IDC believed HP would charge 6-8 cents since their goal was to be comparable to color cpp for color laser MFPs.
General office color mode – this is 20% less than the professional color mode cpp
Accent color - a lengthy string of text demonstrated the amount of color ink coverage on a page that was considered accent color and HP would charge the same as for a black page.
When General office color mode and Accent color mode are combined, color cpp was expected to be up to 30% less than color laser’s color cpp.
We believe a combination of two factors contributed to Edgeline's poor market performance – technology and channel. Edgeline had some compelling attributes – no hardware price premium for color compared to its laser counterparts, better mono cpp than color laser, and color cpp up to 30% less than color laser, However, in a laser-biased world, they weren't enough and compounding that, Edgeline's paper handling, good-enough output quality compared to laser, and reliability issues held it back. Secondly, HP depended for too long on the indirect channel instead of building out its direct channel. Copier dealers weren't wowed enough to displace other brands or add it as a compliment. IT resellers generally don't sell this class of MFPs. If HP's direct salesforce, MPS strategy/marketing were as developed then as they are today, no doubt Edgeline could have done better than it did. But, it's technology shortcomings would still have held it back.
Q3. Does this mean HP's multi-billion investment in the SPT ink platform did not pay off?
On the one hand, Edgeline has not been successful (or else HP would not be discontinuing production), however the SPT platform is providing HP with success in other areas and the company plans to continue to invest and leverage the technology. HP told IDC its intent is to "fully leverage its' Scalable Printing Technology investment and make it available across multiple platforms and customer segments. Two examples available today are the HP T300 Color Inkjet Web Press in the Graphics Solutions Business, and the HP Photosmart ML1000D Minilab, a retail publishing solution."
Q4. What is HP's strategy going forward relative to ink vs. laser use in its workgroup/departmental devices?
HP indicated to IDC that it is "focused on building out its laser-based MFP portfolio and can provide a broad range of high-speed MFPs for our MPS customers through our expanded Canon alliance. For non-MPS customers, we will continue to offer our existing MFPs." We believe that the Canon relationship will evolve even further so stay tuned.
Q5. What does Edgeline's end-of -life mean for ink versus laser in the office?
For the most part, it will be business as usual since Edgeline was not a high volume seller. However, it does reinforce the office market bias favoring laser and the need for products based on other technologies to not only offer very compelling price-performance packaging compared to laser, but compelling marketing and distribution channel programs.
Evidence of the success that can result in the office are seen in Xerox' ColorQube (A3 departmental solid ink). The ColorQube's technology, market positioning, channels and marketing have been very well executed and done with gusto. ColorQube's total shipment volume in less than a year is testimony of this. Acceptance in W. Europe, the largest WW market for color laser, since its launch in September 2009, has been very strong. Also, Xerox reports the following when it comes to output quality, reliability, and operating costs. On print quality, its post-installation customer satisfaction surveys show nearly 100% are satisfied or very satisfied. Reliability has proved to be comparable to 3rd/4th generation color laser. Compelling factors during the sales process include the cost savings demonstrated in case studies, and, for some, the environmental benefits are key.
For the foreseeable future, there is a place for both laser and ink in the office. Each one has its benefits when it comes to hardware price, cpp, media flexibility, environmental friendliness, reliability, and which technology is favored for each of these changes over time thanks to R&D.
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