With third-party manufacturers getting smarter — and faster — than ever in replicating the OEM’s products, and big retailer’s seeing a veritable explosion in private label printing supplies, competition is toughening up for the likes of Hewlett-Packard (HP).
At a time when the company is undergoing a massive restructure that affects all divisions including its supplies business, the head of supplies for EMEA, Vincent Vanderpoel, discusses the printing supplies market and HP’s future role within in with OPI+.
OPI+: Mark Hurd is currently implementing a mammoth restructuring at Hewlett-Packard (HP). To what extent is the supplies business affected by the changes?
Vincent Vanderpoel (VV): Mark Hurd has set high expectations for all of HP’s businesses, in establishing competitive cost structures, investing in growth areas and in focussing on what matters to our customers. The supplies business is not exempt. In order to better meet those expectations and to more quickly respond to changes in the market place, The Imaging and Printing Group (IPG) has created several integrated business units, of which supplies is one.
OPI+: What is your overall view of the printing supplies market at present and what are the main trends affecting the market?
VV: The printing market has changed dramatically over the past decade and the pace of developments is by no means slowing down. Everyday office printing is moving to colour and the photo printing market has seen dramatic changes with traditional photography making way for digital solutions. Worldwide colour laser pages are increasing by 24 percent from 2004 to 2009. Manufacturers have had to respond to these changes by creating inks and toners that can replicate true-to-life colours and papers that can lock these colours in so that photos, graphics and text remain clear and bright for generations.
There has also been a significant trend towards moving the production of marketing materials in-house. From a supplies perspective, this has provided an opportunity for a new range of HP presentation papers to be released alongside new hardware, which equips offices with everything necessary to produce professional quality in-house documents, saving businesses time and money and giving them increased flexibility.
With multi-function printing, pages are shifting from copiers to printers and printer-based MFPs. We also see the demand for speed, convenience and choice within print management driving innovations around smart technology. Printers will be able to offer even greater levels of information to help customers anticipate and manage their supplies needs more effectively. Automated replenishment will become a reality, where e-enabled devices not only inform customers about pending ink and paper requirements, but also then help them specify and order on-line.
OPI+: What are the main challenges you expect to face over the medium-term and how do you expect to overcome these challenges?
VV: One big challenge has been the education of consumers on the total costs of ownership/printing and we see this as continuing to be important in the medium and long term. The concept of total cost of ownership/printing can be tricky and customers are often plagued by misconceptions. For example most customers assume that, for a fixed price, the higher the volume of ink in a cartridge, the more they will be able to print and the cheaper the cost of printing will be. In reality, however, the ultimate value depends on actual printer usage patterns and the efficiency with which the printer and print cartridge combination in question use ink during normal, non-printing servicing and maintenance functions.
OPI+: You are currently working with OfficeMax and Walgreen on patent infringements. How does HP seek to get the balance between protecting its IP and adhering to antitrust laws?
VV: We have notified Walgreens and OfficeMax that we have discovered HP ink patent infringements in their refilling programmes. Both companies have indicated to us that they intend to move quickly to procure reformulated inks that do not infringe our patents. We are grateful for their cooperation and willingness to respect our IP rights going forward.
We support free and fair competition and do not object to the lawful sale of refilled cartridges. However, HP does ask that other companies respect our intellectual property rights, including ink patents. We will continue to defend our intellectual property rights and take action where we believe our rights are being infringed.
OPI+: Aftermarket/ third-party supplies are becoming increasingly popular and gaining an increasingly large stake of the market. To what extent does HP feel threatened by the aftermarket?
VV: HP has been in the printing business for more than 20 years. We have seen aftermarket competitors come and go, all the while maintaining a healthy business and market share. HP has remained the leader in the market by consistently offering customers the best overall value. We have reduced total printing costs for customers by nearly 70 percent since 1991, while improving quality nine-fold.
Ultimately, HP believes it is up to customers to decide which solution is best for them. While customers can choose to use refilled print cartridges, they may not enjoy the quality, reliability and technological benefits that HP inkjet and laser jet print cartridges deliver. Customers should also bear in mind that HP spends billions of dollars in research and development to create printing mechanisms, inks, toners and paper that work together as an entire "print system" to provide outstanding quality and reliability at affordable prices.
OPI+: To what extent does HP feel threatened by the increased importance of private label among the big retailers? Is HP benefiting from the opportunities presented by private label sourcing?
VV: While HP is a leading provider of print cartridges for HP printers, we are certainly not alone, and private label offers from big retailers are having an increasing role in the market. Our competitors sell millions of printing products throughout the world and will likely continue to do so in the future. This competition is healthy for the industry and for customers, as it has resulted in constant innovations and improvements in printing technology, as well as a reduction in the overall cost of printing. Customers must realize though, that unlike other private label products, customers who are buying a private label HP product are buying a refilled or remanufactured product, not a new one, and this has a demonstrated impact on quality and reliability.