HP 2016 Global Partner Conference Boston

Also published on IDeAs blogsite document-advisors.com

The Global Partner Conference is HP’s premier event of the year for channel partners, press and industry analysts. So it was fitting that HP saved their biggest news for this event, delivered in a high energy compelling presentation, by Dion Weisler and his management team.

The announcement of a complete new range of A3 MFPs, both PageWide Inkjet and new LaserJets, combined with the $1.05Bn acquisition of Samsung’s printer business, show that HP is deadly serious in its stated intent to disrupt the $55Bn worldwide A3 printer market.

Based on what we have been able to see so far, the new products appear to represent a big step change in HP’s competitiveness in the A3 printer market.

Channel partners have long complained that HP’s A3 models were uncompetitive compared with offerings from competitors, such as Ricoh, Canon and Konica Minolta, in terms of cost per page, document finishing options, and device robustness.

That looks set to change. The PageWide Inkjets and New A3 LaserJets offer two options for general office printing, each with a competitive cost-per-page, output speeds from 22ppm up to 60ppm, and a range of finishing options. The architecture of the new models (of both technologies) is much simpler then traditional ‘copier’ machines, involving many fewer components, and very few parts requiring replacement during the normal life of a device. According to HP, this should result in much lower service costs for these new models, allowing channel partners either to sell at a more competitive cost per page, or to improve their margins.

Improved device serviceability is further enhanced by HP Smart Device Services, a package of cloud-based tools for remote sensing, monitoring and management of devices. These tools should allow channel partners to monitor the status of printers remotely, and receive alerts when service interventions are required, often before a fault becomes apparent to the user. This will allow partners to diagnose faults, which in some cases they may be able to remedy remotely by making changes to device settings, but if this is not possible, they can despatch a service engineer equipped with advance knowledge of the fault and the appropriate parts to fix it. This should reduce the time taken to get devices back up and running, and avoid the need for return visits, because an engineer is unable to fix the fault first time.

HP Smart Device Services will support the entire new range of PageWide Enterprise and Pro platforms, as well as the new A3 LaserJets.  It is also compatible with legacy HP Future Smart printers. The toolset will be available free for qualified partners, for contractual devices using original HP supplies.

It claims to be the best-in-class suite of print security features.

Another key competitive advantage for HP comes from what it claims to be the best-in-class suite of print security features. Security has been identified as a key and growing customer concern, not just among large enterprises, but increasingly among SMBs as well. It is becoming recognised more and more that printers often represent a weak point, through which hackers can gain access to the entire network. HP demonstrated graphically how easily this can be done in real life.

HP’s suite of printer security features is designed to protect not only the documents which users print, and the underlying data in them, but also, more fundamentally, to ensure the integrity of the device to avoid it being used as a gateway for illicit access to the network. This does appear to represent a competitive advantage of growing importance for HP.

HP appears to have taken on board the other big complaint of channel partners.

Last but not least, HP now appears to have taken on board the other big complaint of channel partners, that its programmes have been too complicated, and it has been too difficult to do business with, compared with some of its ‘copier manufacturer’ competitors. HP also announced at the GPC a new, more streamlined programme of support, named ‘Partner First’.
Key features include:

  • Streamlining of support and incentive programmes, with a simplified partner tier structure, to make these fit with the way partners sell, rather than with HP’s internal product divisions and their objectives, which have often resulted in overlaps and unnecessary complexity for partners.
  • An expanded and upgraded co-marketing zone, delivered via an enhanced online portal, which will allow partners much more easily to create their own co-branded marketing materials and campaigns, targeting their customers.
  • A new HP Social Media Centre, to help partners make full use of the power of social media as a marketing tool.

The co-marketing zone will be available in the US from the beginning of November, and then rolled out on a country-by-country basis in EMEA. The Social Media Centre is already up and running in the US, and will be introduced to the UK by end-September – with other countries in EMEA expected to follow in due course.

IDeAs Comment

The initiatives announced by HP at the GPC represent a significant step on the long-anticipated path to rationalisation and consolidation of the printer industry. Following the move to digital technology, more than 20 years ago, and the more recent emergence of Managed Print Services, the A4 ‘printer’ market and A3 ‘copier’ market have been converging, to the point where the distinction between them has become largely a matter of historical legacy.

With these announcements, HP looks set to break down the last remaining barriers to its offering a complete range of solutions and services for all print needs, at least in the general office.

However, this is not the first time HP has tried to do this. They have had false starts with the ‘Mopier’, and more recently with the ill-fated Edgeline platform. Both these attempts failed, partly because the technology was not fully mature, and did not provide a competitive range of products to meet all customer needs, but also, importantly, because HP did not fully understand the A3 market, and did not develop an effective GoToMarket approach.

HP’s opportunity is to be the industry consolidator

HP executives conceded privately that they cannot afford another failure. The new set of products and support programmes appears much more complete and better thought-through, and accordingly, its chances of success should be higher. They certainly need to be, as HP Inc’s recent results have been uninspiring, to say the least.  This is a tough market, with office print volumes now clearly declining, and still too many competitors chasing a shrinking revenue opportunity. HP stated in their recent quarterly results announcement that they expect printer supplies revenue, which is their key driver of profitability, to continue declining in constant currency terms through the end of 2017, and only to start growing from 2018 onwards.

HP’s opportunity is to be the industry consolidator, and by taking over Samsung’s printer business, the have taken the first step on that road. However, HP’s ‘copier manufacturer’ competitors remain a considerable force to be reckoned with, and they cannot afford to and clearly will not easily give up their market to HP. It will be interesting to see how they respond. Canon will be particularly interesting to watch, as they remain a key partner for HP in the A4 printer market, but HP will now become a major competitor for them in their core A3 market.

We believe the key factor determining HP’s success will be their ability to get the GoToMarket strategy right this time.

If we are picky, one criticism of HP’s new product range could be that it stops at 60ppm, and does not include high volume/light production devices. Although these are not required in the general office for many customers, they can be important for larger enterprise clients, and for mid-sized customers in some key document intensive verticals – e.g. law firms. Copier manufacturers may take advantage of this gap in HP’s range, to make a proposition to these customers that they can meet their full range of requirements with a single vendor solution, whereas HP cannot. HP may counter that they still have the Sharp-manufactured S900 range, but they do not appear to have marketed these devices very successfully, at least so far.

However, we believe the key factor determining HP’s success will be their ability to get the GoToMarket strategy right this time. This will mean really understanding how the ‘copier’ vendors work, including their business model and cost structure, selecting and persuading the right partners to work with them, and making sure they can deliver a truly competitive offering, to the point where HP becomes their first choice as lead brand.

This article has focused on the A3 print announcements, as that is our core area of interest.
However, we should mention that HP Inc. also made significant announcements on personal systems, laying down a real challenge to Apple in particular, and of course are now launching their first 3D printers, with the exciting Jet Fusion technology. If that lives up to its promise, the potential new revenue stream could dwarf anything which may be achieved with A3 printers.

An interesting question for our print community is whether there will be a significant role for existing HP channel partners in the new 3D world.