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The successful run of HP's imaging and printing business, which contributes
to 30% of its total revenues, is quite well known. The supplies segment,
consisting of cartridges, media-paper, print heads, memory cards and toner
cartridges, is a vital part of this profitable division. Keeping this profitable
lineage in mind, Vincent was in the country recently to study ways and means to
push HP's supplies business in India, especially as cost of printing has come
down by 50%.
What is the supplies division's market position at present and what is
your view of the Indian market?
Supplies form a substantial part of HP's imaging and printing business. In
the last fiscal, it was worth approximately $14 billion and we saw a growth of
10% last year. Supplies are an integral part of the printing group. We don't
see it as being separate from the printing business. We only market to our own
installed base and don't make supplies for other printers like Epson or Canon.
India at the moment is one of the fastest growing markets after China. In
some ways, both markets have the same kind of characteristics-a lot of new
users, first time IT buyers and also sophisticated groups of buyers. However
there is much greater diversity of customers in India.
India is a very price-sensitive market and HP cartridges are very costly.
Do you have in place a pricing strategy for the country?
People need to realize that the cost of printing has actually come down by
as over 50%. Printing has become significantly cheaper and accessible to people.
And in many ways, it is a myth that it has become more expensive. I do realize
that since hardware has decreased in price, and supplies have not, people tend
to conclude that supplies are more expensive.
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Vincent Vanderpoel
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VP, Imaging and Printing Group, Supplies Business,
Asia-Pacific/
Japan, HP |
The other thing is that people have different views on costs. For some, it is
the cost of acquisition and for others the cost per page. For every segment and
every conceivable user requirement, HP has a printer and associated supplies.
For people who are sensitive about acquisition cost, we have low-cost printers
and lower cost supplies. For enterprises, who are not too worried about
acquisition cost but about running and operating cost, higher end printers are
more economical.
How do you try and counter the competition from remanufactured cartridge
manufacturers?
We believe we offer something entirely different to our customers. A
customer using remanufactured cartridges on a HP printer is still a HP customer.
So our customers have the choice. However, it is our duty to inform them that HP
offers them a better proposition as manufacturer. There is an increasingly huge
body of evidence that using originals offers much better quality and
consistency.
Can you elaborate on HP's technology in the print supplies business?
Another myth is that technology is the same across all print supplies.
Nothing could be further from the truth. This is a high-technology area. The
imaging and printing group has the largest number of patents in HP numbering
about 9,000 and counting and almost half of these are in supplies alone.
What activities do you plan on the channel front for India?
We hope to continue expanding our existing initiatives like the HP
authorized original cartridge store, most valued customer program and the
dial-a-cartridge initiative, that is now available in 75 cities. We are trying
to expand these programs in as many cities as possible, not just metros but
up-country markets as well.
In the recent past, HP has been faced with some dealer boycotts of the
company's products in India. What have you been doing to improve on this
front?
Counterfeit cartridges are a problem for HP. Three years ago we embarked on
a very aggressive counterfeit program and communicated to dealers on how to
identify counterfeit products. Secondly, we have security labels on the
cartridges. In India, we have been working a lot with law enforcement agencies.
Yes, there have been cases in the past where some associations have
protested. But we have been working with them and on their request, we are
conducting training to association members to identify genuine products.
Trivia About HP'S Supplies Business
- Total revenues in 2004: $ 79.9 billion
- Imaging and Printing Group's share: $24.2 billion (30% of total
business)
- Printing Supplies revenues: Approximately $12.1 billion
- HP's investment in overall R&D annually: $ 4 billion
- R&D spend on Imaging and Printing (IPG): $1 billion
- Number of patents from HP's IPG division: 9,000
- Number of patents in print supplies: Around 4,000
PRIYA PADMANABHAN
CyberMedia News
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