Monday, November 30, 2009

HPQ Q42009 Printer Metrics and commentary

I have been away for a few days, so missed a prompt update on HP's announcement of quarterly results, which took place Monday, November 23rd. However, here are the summarized metrics for the Imaging and Printing Group (IPG), as well my first impressions as I get caught up on the announcement and related materials.

HP CEO Mark Hurd was quite enthusiastic about printing overall, with the presentation "Key Messages" slide claiming "IPG poised for recovery". Clearly, profits held strong, despite a number of decreases continuing on quarterly top-line unit and revenue numbers, as seen in the spreadsheet below. Obviously, as supplies continue to dominate by exhibiting lower y/y decreases than hardware (8% versus 27%), and comprised nearly 70% of overall IPG revenue in the fourth quarter of 2009. (It seems not that long ago when supplies breached the magic "50% mark".)

Other impressions? Hurd's reputation for operational efficiency is evident in the numbers as well as remarks, including this passage from an answer to a question regarding expected growth in supplies and hardware from Katy Huberty, of Morgan Stanley, as contained in the earnings call transcript.

I think, Katy, let me go up a level for you. In many ways, the tough market has been a blessing for IPG. The business is now run with stronger operational rigor than we've ever had before. As Cathie mentioned, the inventory's been leaned out. Sales in and sales out are continuing to converge. We've made progress on the cost structure. Clearly we have more work to do. To the point of the question printer demand is picking up. And we plan to grow printers materially double digits in printer units in Q1. While staying within the operating margins. A little bit will depend on what the demand looks like and how we go for the printer unit growth. We will trade off operating profit dollars no question about it. What we're talking about doing, we couldn't have done it a year and a half ago. We simply couldn't have done it at the magnitude that we are going to do it. Frankly, that the -- in a strange way the 2009 situation was a positive for us and we knew this was coming as we said through 2009, we saw strong page performance and strong supply usage through 2009.


And on the opportunities for IPG? From the prepared remarks, as reported in the transcript, Hurd identifies three areas beyond the basic printer and supplies outlook improving (with my bolding):

IPG is poised for recovery and is getting on the attack. As we enter fiscal year 2010, the headwinds in channel inventory are behind us. We expect supplies growth to improve with economic trends, and employment levels and project a flattish result in Q1. Demand is also improving for our printers. We gained share sequentially and we expect to drive further share in installed base gains with double digit printer unit growth in Q1. Due to improvements in our cost structure we can do this while remaining within the 15 to 17% operating margin that we laid out at our analyst meeting in September. IPG is also gaining significant traction with its growth initiatives. We deployed hundreds of photo kiosks this quarter at Wal-Mart and look forward to further expansion in 2010.

Recent studies released by market analysts highlight HPs leadership in managed print services with more signings than any of our competitors. We're encouraged by our Managed Print Services funnel, which is at record levels, these deals are generally for multiple years and have a high attach rate of supplies. In commercial print the analog to digital page shift is occurring and we are leveraging our technology to accelerate the transition. Partnerships with industry leaders like Pitney Bowes, RR Donnelly, and web press purchases from communication leaders, Omnicom demonstrate the power of our portfolio and capabilities. We expect you will hear more partnerships from us shortly.With our significant market leadership and broad patent portfolio, we are well positioned to capture this significant page opportunity.


Interesting to note that despite the optimism, Indigo page growth, at 13%, was at its lowest mark since it began being reported several years ago. (Though, in fairness, anything UP 13% in these economic times is pretty impressive!)

Happy Cyber Monday!

Decades ago, even before I was involved directly with printers, the branch of the high-tech world where I worked (storage) often referred to $X/MB ratios. Many orders of magnitude have come and gone in that business -- for example, in the early 1980's HP shocked the world with a 400MB hard drive for a stunningly low $25,000! And of course, those same "orders" have come and gone in our printer industry as well. CNET's Cheapskate blog's post "Get a Brother HL-2140 laser printer for $49.98 shipped" makes me think back to those ratios for the first time in a long time, and how maybe the printer idustry will be crossing a dollar-per-ppm threshold sometime soon, if that means anything. Brother's 23ppm mono laser printer can be had for $50, meaning we're at a little over $2/ppm, again, if that's meaningful as anything other than as a geeky ratio.

Friday, November 27, 2009

Happy Black Friday!

My friends over at Techbargains.com (Search: "Printer") have some great printer and AIO/MFP deals highlighted, but today's big find goes to the Cheapskate.com blog. Today, Rick Broida is highlighting the Polaroid PoGo Zink-based printer, covered in this blog many times for its newsworthy achievements (see example), at Amazon's door-busting price of $29.95!

Speaking of Zink, Tekla Perry has a recent in-depth piece in IEEE Spectrum on the Massachusetts-based firm.

Wednesday, November 25, 2009

November Observations -- Interview with Ian Schenkel of EuroSmartz

Observations: Interview with Ian Schenkel of EuroSmartz

Completing the fourth year of my monthly “Observations” column for the Observer, I find myself reflecting back on the exciting variety of subjects I have had the chance to cover. Originally, my beat included two rather broad but related areas of the printer industry—simply stated, its past and its future. The former category often includes a healthy dose of nostalgia regarding how things have changed since foregone days when we were all young but also a reminder of how things may have stayed the same. The latter category is where I point to areas I have observed that are new and emerging.

However, a third category has developed, tied to the future, which is interviewing and reporting on some of the people involved with future-looking products and technologies. These entrepreneurs have typically been contributing to the future of our industry, and this month, I had the pleasure of chatting with Ian Schenkel, co-founder of EuroSmartz Ltd., the company known for being “#1 for Printing Apps on the iPhone and iPod Touch.”

Ian, along with brother Martin, form the basis of a bi-continental team, spanning England and New Zealand, a time-zone combination that the company sees as a big advantage with respect to making good on fast-turnaround 24 × 7 product support. For cohesiveness, I have consolidated a series of international phone calls and e-mails with Ian Schenkel into one interview .

Lyons: What is your professional background?

Schenkel: EuroSmartz was formed in 1994 when we launched a sales force automation application for Mac and Windows. Over the years, it has taken a few different iterations and has now turned into mainly an iPhone-app developing company specializing in printing apps. I am based in Amersham, which is 25 miles northwest of London, and my background has pretty much all been software sales and marketing—I have also helped establish a number of U.S. software companies in Europe.

My brother Martin is based in Auckland, New Zealand and has been a developer for more years than I can remember. His background is in C, C++, Java, and many other different languages. Part of the reason we started EuroSmartz in the first place was because of our complementary skill sets, which has really paid off well for us in the app store.

You need to create great, innovative apps to sell in volume [Martin’s job], but now with 100,000 apps, you also need to make some noise to stand out [my job].

Lyons: What led you to iPhone apps and especially to those that feature printing?

Schenkel: The decision to make iPhone apps was actually pretty easy, I read a few pieces about developers that were making apps for the iPhone and how the SDK [software development kit] was pretty easy to use. I then spoke to my brother, and he downloaded the SDK, and we started making apps.

As for the specifics of printing, that came about from looking for gaps in the apps that were available and also because of our own use of the iPhone—we found there was no solution at the time to print anything, so we thought we would design and build something ourselves. It was a bit of a learning curve getting into passing information and documents to the myriad print drivers on both Mac and PC, but once that was broken down and built, the rest followed pretty easily. Most enhancements we add to our apps are customer-driven requests. Field testing is always the best way to build better products, and we now have an absolutely huge number of customers that give us great feedback.

Lyons: Without saying exactly what is “huge,” can you provide some scale on the success of your apps?

Schenkel: The "number-one" claim we make on our Web site is due to the fact we are the top selling paid printing app in the entire app store and have been for all of 2009. We have two printing apps in the top 100 of productivity, and no other printing app in the store will print the range of document formats that our apps support. Because of this position we have sold more in terms of volume across our family of apps than any other printing app vendor.

Lyons: Will you tell us about being included in one of Apple’s famous “There’s an app for that” television commercials?

Schenkel: The ad was a little out of the blue really, Apple were looking for business apps that enabled them to showcase how the iPhone is a useful business tool. Print n Share was shortlisted and eventually made its place in the Office ad. There is not a huge amount more I can say about the ad, it was all very exciting but also very easy. The biggest thing we had to prepare for was translating the app into other languages. The ad showed in the U.S., UK, Japan, and France. Seeing the app for the first time in Japanese was fun, we knew each of the buttons but could not read what they had on them. We also helped Apple with the sequence of our app in the ad, so that it all flowed correctly.

Lyons: What’s next for EuroSmartz?

Schenkel: We have a number of new apps in the pipeline, some are variations on printing, and some are a complete departure. However the biggest initiative we have in place right now is integrating with other apps to enable them to print. We have created a simple way that other app developers can use our app to print. We provide all the tools for them to build this, and best of all it is free for the developer. Once the apps are integrated, all the customer needs to do is have our app along with the other app on their iPhone, and they can print from that app. We feel this is going to bring some major new features to the iPhone. So far we have two apps integrated and quite a number more in the pipeline.

We are adding four new apps that have integrated with our printing apps in the next few weeks, so we are excited about launching those too.

Tuesday, November 17, 2009

Ad Age looks at the new (online) PC Magazine

In a piece entitled "What Life Is Like for Titles After They Leave Print", Nat Ives of Advertising Age takes a look at publications that have converted to an online-only presence, including, among others, PC Magazine. The transition was covered in this blog in last November and this January, and Ives' follow-up nearly a year after the transition traces some of the changes the magazine has faced. An excerpt:
That meant an end to the product troubleshooting guides that once worked so well in the magazine, because countless websites, including manufacturers' own, by then offered the same thing. Professional laboratory reviews of gizmos and electronics, on the other hand, drew a lot of traffic and remained costly for competitors to match. A similar evaluation unfolded on the business side, where the reduced sales force all but gave up chasing advertisers from outside core tech categories. Partnerships with outsiders, such as a content deal with Yahoo and keyword ads from Google, became more important.

Interesting developments, and a recommended read!

Canon is buying Océ

Without a great deal of perspective to add here, it still must be noted that Canon has announced its intended purchase of Océ, the Netherlands-based provider of high-end printing gear and services. Yesterday's announcement represents further consolidation in the printing industry. In a related note, Konica Minolta, another industry player and partner with Océ in various areas of the business, has stated it has no intent to counter Canon's 730-Million-Euro offer.

Monday, November 09, 2009

iPhone Printing Apps in bloom


The last three or four weeks have seen a plethora of iPhone printing apps hit the market. Canon (Easy-PhotoPrint), Kodak (NYSE EK) (Pic Flick) and Lexmark (NYSE LXK) (LexPrint) have joined HP (NYSE HPQ) (iPrint Photo), as providers of photo-printing apps that 1) are free, and 2) work on a subset of their own branded printers, which are typically WiFi-enabled but in some cases simply reside on the same WiFi LAN as the user's iPhone.

The overall market hasn't totally ignored the developments either, with LexPrint gaining kudos from Gizmodo. (see photo)