HP arrival worries copier market

Hewlett Packard's entry into the copier market could seriously hit resellers' margins, analysts have warned.

HP is promising customers 30 per cent cost savings with its new total print management (TPM) range, which features a new copier-based line of high-volume, multifunction printers, including the HP LaserJet 9055, 9065 and 9085.

Vendors see imaging as likely to be the next focus for corporate cost cutting, and are positioning their products accordingly.

Vyomesh Joshi, executive vice president of HP's Imaging and Printing Group, told vnunet.com: "We have been gathering data for over two years and are very confident that we can save enterprise businesses 30 per cent."

The firm believes its savings can be achieved through consolidating devices and by halving help desk costs through better management tools.

"We want to move away from the reliance on break and fix that copier vendors have," said Joshi.

But reducing services costs will hit copier dealers' income, which leans heavily on after-sales support.

"I don't want to run it down as HP is clearly a successful organisation, but it is arrogant to think you can change the business model in this way," said Tracy Rawling Church, head of marketing at copier vendor Kyocera Mita.

"This is erosion of the traditional [copier] channel model."

HP has acknowledged that its TPM strategy requires a new European channel programme and has indicated that its IT printer channel will be involved in some way.

"TPM will give our existing channel partners the opportunity to sell new devices. We will also sell direct to large enterprises," said Joshi.

But with HP yet to discuss this new programme, fears are growing at what its move into copiers may mean for margins.

"The printer space has seen a lot of price wars, particularly with colour laserjets, which HP, strangely, has instigated," said Jason Harcourt, senior analyst for imaging at consultant Context.

"They're looking at bringing cost savings into [the copier] market and that may hit margins. It's a strategy that could win market share at the detriment of dealers' margins.

"Dealers not prepared to compete with HP on margin will have to devise a services strategy to blow them away."

Harcourt added that HP may struggle to win over copier channel dealers unless it offers a more diversified range, and that its current VARs lack necessary skills to provide the service expected by copier customers.

"Services are fairly alien to the IT channel," said Harcourt.

See also:

All in one and one for all

With the market for multifunction devices expanding steadily, Martin Lynch examines the opportunities and pitfalls for resellers  27 Jan 2004

HP revises reseller rebates

Savings to come direct from distribution as vendor discards Compaq Second Tier process  27 Oct 2003

HP shrugs off leadership challenge

Vendor questions commitment of Dell and IBM in volume printer market  20 Oct 2003

Partners look beyond HP

European resellers actively selling rival vendors' products  13 Oct 2003

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