Great article on the computer printer industry. My money is on the Dell strategy model. Innovation counts for much less these days…
Today, Dell is an upstart in computer printing compared with Hewlett-Packard. Dell sold an estimated 1.5 million printers in its first nine months in the business last year. This year, analysts estimate that Dell will sell 4 million printers or more. Its revenues from printers and ink cartridges have already blown past the $1 billion-a-year threshold, the fastest takeoff ever for Dell in a new product category.
Yet the printing group at Hewlett-Packard reported nearly $23 billion in revenue last year. It sold 43.6 million printers, more than double its nearest rival, Epson, reports IDC, a research firm. The business is big and immensely profitable: it accounted for about 30 percent of Hewlett-Packard’s sales last year, but 80 percent of its earnings.
The Dell strategy is obvious: build a printer business, attack Hewlett-Packard’s crown jewel and, thus, hobble its principal rival. And Hewlett-Packard is trying to return the favor by cutting prices aggressively on PC’s with the goal of grabbing sales in the corporate PC market, which is Dell’s stronghold.
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Things are just beginning, Mr. Dell replies. “Stay tuned; there’s a lot we can and will do,” he said. A better business model, he explains, will beat a better technology, and he insists the odds are on his side in the printing business over the long run.
“The days of engineering-led technology companies are coming to an end,” Mr. Dell declared.
Carly, have you re-read your copy of “The Innovator’s Dilemma?” You ought to.
Both Dell and HP printers are pretty beat. I just bought a Brother Multifunction (http://www.brother.com/usa/fax/info/mfc8820dn/mfc8820dn_ove.html) and it hands down beats all of the HP models in its class in tems of cost, speed, features, and print quality.
Who would have thunk it?
-P-
HP is no longer an innovator, no matter what Carly’s PR blather claims, and basically spends the billions from selling overpriced ink and paper on pointless acquisitions like Compaq to muddy the waters and hide her mismanagement. Dell at least has the honesty of admitting it doesn’t do any R&D.
Samsung is interesting – they are a recent entrant, and have already carved out a #2 position in laser printers, including a $600 color model available at Best Buy. I have never liked inkjets – dye subs or digital minilabs yield much better results for photos, and lasers are much more economical and sharper for office documents.