Thursday, August 31, 2006

HPQ Closes Over $36

It was June 9th, 2006 when I blogged about HP's stock (NYSE HPQ) trading below $30 a share. It went on to close at $29.94 that day, and didn't get back up above $30 for a close until June 14th. I was remarking about how quietly this plunge from May's highs in the mid-$33's had happened -- but of course the backdrop of June's sketchy general market activity probably had a lot to do with this. Well, markets have improved a lot since then, with even oil going down recently, HP hit good quarterly numbers again a couple of weeks ago, and the stock closed for the first time in YEARS at $36 or above ($36.00 even in this case). Speaking of HP's quarterly numbers, the printing and imaging highlights were typical -- improving margins on good growth in supplies, AIO's and color lasers, and digital presses.

Wednesday, August 23, 2006

More "cheap" Marketing Research?

In early July, I blogged about some interesting market data I'd gleaned from Amazon's web site, specifically regarding HP's (NYSE HPQ) interesting photo-oriented Color LaserJet 2605DN. Well, I meandered back to the 2605DN's Amazon listing today, about seven weeks later, and found some fascinating changes. The printer's Electronics Sales Rank has shot up to #5,995 -- that's up from rankings around 40,000 when I checked it several times in early July. And the percentages for "What do customers ultimately buy..." alternatives have move a bit -- actually more customers are buying the HP Color LaserJet 2600N now (78% vs 73%) but more are buying the subject printer too (8% vs 4%). The 2605DN's price has been reduced to $449.99 from $471.42 (strange price huh?), so maybe that accounts for the increase in sales rank and percentage. Another change is the product's description page is very thorough and attractive, much more so than earlier.

Tuesday, August 15, 2006

Observations: Hot Fun in the Summertime

by Jim Lyons

The Hard Copy Observer, August 2006

This month, Jim Lyons, a 20-year veteran of the printing and imaging industry, returns to the topic of document formats. He takes a second look at what is happening with XPS and reflects on what recent litigation between Adobe and Microsoft tells us about how these two industry giants see the future of document workflows.

In the United States, the hot months of July and August bring the annual tradition of taking some time off from the daily grind—kicking back and reading a few trashy novels while relaxing at the beach, in the mountains, or around the pool. This summer, I have been doing my best to conform to that tradition, but rather than reading pulp fiction, I have found similar enjoyment in reflecting back on the thrilling “file-format wars” of the past few years that lead right up to the present and that promise to spice up the future of our industry.

In my April 2006 column titled “Microsoft’s XPS—After All These Years, More Mumbo Jumbo?” I looked into the current industry dust storm surrounding Microsoft’s XPS document-format standard—promised as part of its new Vista Windows operating system and Office 2007 productivity suite—and its potential threat to topple the present incumbent standard, Adobe’s PDF. The title of the column referred to my recollections of some of the messy battles between Microsoft and Adobe during the late 1980s and these battles’ parallels to those of today.

The early fights between Adobe and Microsoft (and its seemingly unlikely coconspirator Apple Computer) centered on font formats (Adobe versus TrueType) and page-description languages (PDLs) (PostScript versus TrueImage). The latest battle centers on whether Microsoft has its sights set on PDF and Adobe Acrobat (née Carousel—there’s one for you fellow old-timers), which actually evolved slightly after the peak of the PDL wars. A year ago, when XPS was named Metro, The Hard Copy Observer published an excellent two-part article on the emerging new standard, directly addressing the PDF-killer aspect (Observer, 7/05 and 8/05). The threat has been discussed ever since, with most experts coming down in the middle. One the one hand, XPS will be an important step forward for Microsoft’s Windows operating system and Office software suite, as it addresses important customer needs. At the same time, PDF is entrenched and also, to its credit, does a pretty good job of addressing a wide range of customer needs itself. So in other words, everyone wins, right? (Conspiracy theorists, of course, will say that Microsoft always soft-sells its real interests in a similar way, with world domination, or in this case, dominating the world’s document formatting, being its ultimate goal.)

Little did I know back in April that the 2006 battles had only just begun! In early June, the Wall Street Journal and other news organizations reported that Adobe had filed suit against Microsoft in Europe, seeking to block some of Microsoft’s actions after secret behind-the-scenes negotiations had broken down. Based on the history between these two firms, none of this should come as a surprise, but like all good tales, there’s a twist. The legal action, it was reported, was filed to block the new Microsoft software’s inclusion not of XPS but of PDF capabilities! Yes, indeed, the ability to read and write PDF files directly from the new version of Microsoft Office seems to be the subject of the dispute. PDF-translation features have been noticeably absent from Microsoft Office until now (but are available through third-party add-ins), although they are commonly included as part of distant-also-ran office applications such as the WordPerfect suite. Adobe, in what I maintain is a case of displacement behavior, is seeking to block a very customer-friendly and PDF-supporting move, most likely because of the firm’s anxiety about Microsoft’s PDF-alternative, XPS.

Well, all that was early June, and since then I’ve been carefully watching the news wires. While there have been minor Vista and Office announcements, speculation about further relatively small schedule slippages, and European Union actions against Microsoft for other, older infractions, nothing more has come out about the PDF-related legal actions. So maybe the Adobe/Microsoft secret negotiations have reconvened? Or maybe, just maybe, the respective Adobe and Microsoft executives are taking the summer off reading trashy books at the beach?

Clarification on PDF Pervasiveness

One other detail in my April column has stirred some reader interest. In making the case for the ongoing solid position of PDF, I quoted some numbers that I had been provided to show the size of the massive PDF beachhead. Or at least what I thought was massive! It turns out that when I referred to “20 million individual PDF documents” available on the Internet, that figure was a four-year-old, government-documents-only number. The more current correct number for all PDF documents is 613 million! And this number includes only PDF documents on the public Internet, not those behind corporate firewalls, or what we used to call the “intranet.”

One of the primary wisdoms of my business career is the importance of learning magnitudes—that is, the general, if not exact, sizes of things such as markets. What is a large installed base? When is a market’s annual unit shipments sufficient to make a company take notice?

This is just a long-winded setup for me to apologize for passing along the 20 million number in April. I should have known better. If I had just stopped to think about it, there are probably at least 20 million PDF files that have been created just for rebate forms, and, speaking of rebate forms, next month’s column will explore that topic.

Friday, August 04, 2006

Security Flaws in Printer Software

I covered some reported security issues with HP's printer management software in my May Observations. Now Computerworld reports some similar-sounding concerns, this time around Xerox MFPs. The news comes from The Black Hat Conference, held this week in Las Vegas.

Brendan O'Connor, the "finder" of the problem (there might be a better descriptor of the type of people that "find" these problems), has some very interesting things to say about printers, MFPs, and copiers on our corporate LANs -- a familiar-sounding good news/bad news assessment that we in the industry have heard before.

"Think of all the sensitive data that's going through these," he said. "Everybody prints, and there's an inherent trust in these types of devices."

O'Connor said he was not trying to "pick on Xerox," but rather using his hack as a case study to draw attention to the security threat posed by increasingly powerful embedded devices.

"I don't think they're getting the level of scrutiny that they require," said O'Connor, who identified himself only as a security engineer who works at a U.S. financial services company.

"This is a Linux server wrapped in a copier box. These things are all over the enterprise," he said

Thursday, August 03, 2006

Analog to Digital?

The dog days of summer are continuing to be enlivened by some interesting financial results and announcements coming from some of our industry's leading companies. Kodak (NYSE EK) announced another quarterly loss, this one larger than Wall Street expected, and saw their stock drop below $20, which is a 25-year low! Ouch. Losses in the quarter were accentuated by higher materials costs in the traditional film side of the business. And another reason for the stock's decline was attributed to their reduced outlook for digital camera sales growth, due to their efforts to steer clear of sales increases at the expense of profitability in this rapidly saturating market.

On the other hand, Adobe Systems (NASDAQ ADBE) led the entire tech sector to gains in Wednesday's markets, as they affirmed guidance for a strong third quarter. The company crowed about upcoming releases of Acrobat and Creative Suite -- interesting that one of the news items on their announcement referred to Adobe as being known for "the ubiquitous Acrobat program for sharing digital documents". We can see why there is some nervousness over the impending XPS functionality in Microsoft Windows and Office!

By the way, with EK below $20 a share, the company's market cap is between $5 and $6 Billion. And with ADBE back about $32 (a big improvement over the $26 of a couple of weeks ago but well below its range in the low $40's earlier this year), their market cap is just under $20 Billion.

Looks like...bet on digital!