Thursday, August 26, 2010

August Observations -- From the Magazine Rack and What a Difference a Year Makes!





Observations: From the Magazine Rack 2010 – What a Difference a Year Makes!
by Jim Lyons


In 2010, the iPad has been huge as a platform for traditional magazines and new forms of magazine-like publications

In my Observations column just over a year ago (see “Jim Lyons Observations June 2009 – From the Magazine Rack”), I observed that Time’s Mine was an interesting, ongoing experiment with a personalized magazine. In what looked like a traditional hard-copy magazine, Mine was a response to the long-heard siren-song of personalizing content, culling articles based on subscriber profiles from a bevy of Time, Inc. publications. At the same time, I reflected back on other Observations columns, earlier in 2009, that covered the conversion of traditional hardcopy magazines such as PC Magazine to Web-based viewing/subscription sites like Zinio (www.zinio.com) and somewhat experimental projects like The Printed Blog and HP’s Tabbloid that seemed to reverse the trend back to a hard-copy orientation. It seemed as if the magazine world was facing an unprecedented level of change, and even excitement, though in the face of significant threats.

Well, one year (and two months) later, that level of change, in some ways seems trivial. What is the catalyst for the recent tumult? The April 2010 introduction of Apple's iPad is the one significant event over the past 14 months that can be linked to so much more change in the magazine world. While the iPad has set sales records and offered new ways of doing many different things, and more generally inspired new ways to think about networked and tablet computers, one of the biggest opportunities presented by the iPad (and its ultimate offspring and offshoots) may be for magazines and newspapers to change the way they reach their readers. While the book world and its transition to e-books really started earlier, with the introduction of Amazon's Kindle as a major milepost along this evolutionary path from print to electronic, the iPad can be blamed, or credited, for shaking loose the vision and potential rebirth of magazines (and potentially, but to a lesser extent, newspapers).

Magazines and iPad Viewing

With the iPad launch, and in the months following, many magazines, including Popular Science, Sports Illustrated, Wired, and even People, have been formatted, and are sold, for the iPad’s distinct viewing capabilities. While the results have been praised, the business model is still yet to be worked out. For example, a single issue typically costs five dollars through the iTunes app store, and one year's subscription to the print version may be about the same, at least via many easily available promotional offers. There have been accusations that these iPad-specific magazine versions are gimmicky and destined not to last, and some industry observers, such as Techdirt’s Mike Masnick, have even compared them to the multimedia CD-ROM “revolution” of the 1990s (see “More People Recognizing That Media iPad Adaptations Feel Like CD-ROM Media”).


Zmags, which I covered in my May Observations column, is in beta with an iPad viewer

A look to the iTunes app store for iPad-specific apps or browsing for mobile-oriented Web pages geared for the iPad yields glimpses of some old friends. Remember Zinio (see “Jim Lyons Observations January 2009 – PC Magazine is Dead, Long Live PC Magazine”)? How about the more recently covered Zmags (see “Jim Lyons Observations May 2010 – Zmags—Another Online Viewing Alternative”)? HP’s MagCloud, (see “HP Enhances MagCloud Service, Offers ‘Blended Viewing Options’ for Magazine Readers", originally designed to help Indigo press owners (print service providers or PSPs) build volume by funneling short-run magazine print jobs to them, now has its own iPad app that offers partner magazine publishers the option of online viewing via Apple’s tablet, in addition to print-on-demand capabilities. Missing in the line-up, so far anyway, is Google’s Fast Flip (see "Jim Lyons Observations April 2010 – Google Fast Flip—More Innovation in Magazine and Newspaper Viewing”). Although this technology continues on with a mobile phone viewer, the firm has pulled back its presence on the Google News home page. Of course, the majority of these devices and apps are geared to the viewing of material prepared for print and then made available (i.e. “repurposed) for online as well. The exception is Fast Flip, which is based on viewing Web pages in a magazine style—a “flip through” format (as the name implies).

Flipboard

However, the biggest news on the iPad magazine front from the summer months is the launch of Flipboard (www.flipboard.com), the self-titled producer of “your personalized social magazine,” which includes Web pages and RSS feeds of your choosing (à la Google Fast Flip), but also intermingles material from your own Facebook and Twitter feeds (see image below). The excitement and rave reviews (see The Wall Street Journal’s Katie Boehret, “Your Own Digital Magazine”) have led to widespread downloads along with some start-up hiccups and threats from server issues (see “Flipboard hype crashes iPad app's servers”) and legal questions (see “Is Flipboard legal?”).


Flipboard has become an iPad sensation as "Your Personalized Social Magazine," but except for my plea for interested souls, there has not much Twitter action on "Flipboard printing"

Flipboard delivers dynamic and very personalized content and is far from the static PDF examples above and for that reason, seems like perhaps an ideal candidate for some printing as users attempt to capture a “moment in time” that conceivably combines their online worlds. So far neither Flipboard nor its user community seem to have given printing much thought, as evidenced by a search of Twitter for “Flipboard printing” that turns up only a few obscure references (see image below). After a few more months of maturation, however, we would not be surprised to see a printing need emerge, just as with the iPad at large. (See bottom of post for additional links related to Flipboard.)




The Return of the Ultimate Countertrend?

Clearly the world is changing quickly around this space, so stay tuned. But there are some comforting moments of stability … and even nostalgia. Earlier this week, I received an e-mail from an old friend I met while covering this “beat,” Joshua Karp of spring 2009’s first darling (and then defunct) The Printed Blog (see "Jim Lyons Observation, April 2009 – Ultimate Countertrend—The Printed Blog”). Karp’s e-mail announced … drumroll please ... the return of The Printed Blog! With these words, Karp announced a subscription-based, paid model, with the following description that will no doubt warm the hearts of at least some of my readers.

I wanted to let you know that I've restarted The Printed Blog. We re-launched because there is no publication that brings you the best of the web, curated by people you follow and respect, in a beautiful print format every week - and there needs to be. Sometimes, it's just nice to sit down - on the train, or a couch, or at a café, and to read something on paper. Not everything is always better online, by default. We believe that the web is best suited for cutting and pasting and searching and linking and transacting - and print is best for actually CONSUMING information, and, ironically, the more content is pushed online, the more important print is going to become.

For more info, stay tuned here, or hit www.theprintedblog.com.

As I love to preach to my MBA marketing students: segments, segments, segments… We learn over time that as fast as things change, different users have different needs, at different times, and for different purposes. Printing and viewing have already coexisted for generations (remember 35mm slides?), and will no doubt continue their jostling for some time to come. Be sure to watch this space for further developments.

_____________

Other Links for Flipboard (and iPad magazine) commentary

http://www.businessinsider.com/flipboard-the-social-ipad-app-everyone-is-going-crazy-over-explained-in-80-seconds-2010-7

http://www.usatoday.com/tech/products/2010-08-11-flipboard11_ST_N.htm?csp=usat.me


http://mediamemo.allthingsd.com/20100816/why-ipad-magazines-wont-be-a-really-big-business-for-a-while-and-why-prices-wont-come-down-either/

Monday, August 23, 2010

HPQ Q3FY2010 Printer metrics and commentary

From the Earnings teleconference, here are the comments and number.

From HP Earnings Teleconference Q32010 August 19 2010

Available at HP Investor Relations site.

(Opening summary, as presented by interim CEO Cathie Lesjak)

Looking at the details of our performance by business. Revenue in the imaging and printing business grew 9% to $6.2 billion, fueled by year-over-year unit shipment growth of 16% and supplies revenue growth of 5%. Commercial hardware revenue increased 28%, while consumer hardware revenue grew 4% compared with the prior year quarter. Segment operating profit totaled $1 billion, or 16.9% of revenue. We continue to lead the market with innovative new products. In June, we launched the ePrint platform and the ePrint Center and announced we were expanding our portfolio of web-connected printers to include all printers above $99. This strategy is driving success with third quarter consumer Inkjet hardware shipments up 9% year-over-year, led by 64% growth in wireless printers and OfficeJet growth of 16%.In addition, our retail publishing footprint continues to expand both in the US and across the world. Commercial printer unit shipments grew 44% with strong mono and color laser shipments as hardware availability improved significantly from the prior quarter. We continue to see strong momentum in our growth initiative in the enterprise and commercial print market, both graphic arts and managed printer services grew double digits. Multi-function printer shipments increased 47% over the prior year period, and HP Indigo Digital Press page volume was up 22%. We will continue to aggressively target these markets, leveraging our technology leadership to drive the shift from analog to digital printing.

(Selected Q&A – printer and supplies related questons and answers)

Brian Alexander - Raymond James - Analyst

Thank you. Good evening. Cathie, you mentioned increasing investments in R&D and sales and marketing in your prepared remarks. It seems like a quite a few investors believe the next CEO might decide to noticeably step up the pace of investment as they assume the Company has systematically underinvested in recent quarters, so the concern is this would create near term margin pressure and perhaps even a reset of earnings expectations, so I'm just wondering if you could address the premise that HP has been underinvesting and do you plan to reflect the possibility of the next CEO investing more aggressively when you provide the FY 2011 outlook at your analyst day?

Vyomesh Joshi - Hewlett-Packard - EVP - Imaging & Printing Group

Brian, this is VJ. At Ipex, we introduced our next generation of Web Press, we got a phenomenal feedback. On June 6, we introduced all of our new web connected printers, that below $99, every single printer will have an e-mail address and you could see the results. We gained two points of market share in Inkjet. We had 16% unit growth in every single category, we are increasing our market share so from an innovation point of view, we are on fire. As a matter of fact, the feedback that we get that the product portfolio that we have right now is the best in the last six years.

Ben Reitzes - Barclays Capital - Analyst
Yes, thanks. Could you talk a little bit about what you're seeing in the businesses from this context? I mean, I think some might be surprised that a lot of the revenue upside was in PCs and services versus my model and obviously there's been strength in enterprise and there's been strength in printers for some, and I just would have thought maybe supplies or some of the other things might have picked up more. I was wondering if there's shortages there and if you could just talk about the segments a little more because I think PCs were a lot better than expected and services revenue as well, and some of the others look like there might still be some shortages and what not heading into the next quarter.

Cathie Lesjak - Hewlett-Packard - CFO, Interim CEO

So Ben, in terms of supplies growth, so we had 5% supplies growth year-over-year and on a constant currency basis that was8% supplies growth, so still, quite strong supplies growth and as we've talked most of this year, we have this roughly threepoints of currency headwind and we see that continuing into Q4, so if you think about supplies growth, we think about it in terms of kind of reported mid single digits and on a constant currency mid to high single digits for Q4.

Ben Reitzes - Barclays Capital - Analyst

And was there still constraints in the quarter?

Vyomesh Joshi - Hewlett-Packard - EVP - Imaging & Printing Group

No, I think-- this is VJ, Ben. There are no constraints. I think the LaserJet you can see 44% unit growth that we delivered and clearly, we have a tremendous demand here. The LaserJet brand is fantastic, and we are expecting in fourth quarter at least30% unit growth for the LaserJet, so we believe that the demand is strong, we continue to get out of the availability and in the supplies, you'll also remember that we are gaining share against refill and reman so we are really driving our supplies sell out, we absolutely believe that putting more units now and valuable units and with web connectivity and the stuff that we are doingwith ink in the office we will continue to see very good growth.

Bill Fearnley - Janney Montgomery Scott - Analyst

Yes, thanks. If I could address the question of VJ in printing. It appears that the supply chain is fixed and so with the strong hardware performance this quarter, you still came in at the high end of the 15 to 17% range, so should we start, should we bethinking about IPG operating margins in the 16 to 18% range given that the strong hardware performance and then I have aquick follow-up.

Cathie Lesjak - Hewlett-Packard - CFO, Interim CEO

Let me address that. We don't let VJ talk about those things. Our guidance for this year is 15% to 17% and we're not really changing that at this point. We will talk more about what our guidance is for 2011 at our security analyst meeting. Our goal isto get as much growth as we can in the good usage hardware units and stay within our 15 to 17%.

Bill Fearnley - Janney Montgomery Scott - Analyst

And have you seen any effect of the expanded Canon relationship any benefit there in the most recent quarter?

Vyomesh Joshi - Hewlett-Packard - EVP - Imaging & Printing Group

I think we have started with the copier lineup. We like the lineup that we got. We are selling managed print services , we had a very good quarter, sort of what total contract value for managed print services and I think the very important part is we want to continue to invest and innovate because innovation is our blood line so we want to make sure that not only do we place high usage unit but also we continue to innovate.

Jeff Fidacaro - Susquehanna Financial Group - Analyst

Great. Thanks for taking the question. Just on the supply side grew 5% in the quarter. Could you talk a little bit about how the inventory looks there? Was there any points contributed to a channel fill and I may have missed this but how is the fiscal fourth quarter shaping up, is that sort of a mid single digit type growth again?

Vyomesh Joshi - Hewlett-Packard - EVP - Imaging & Printing Group

I think the channel looks very satisfying as Cathie mentioned. We are focused on making sure that we put the right units in the place and get the right sell out. As far as the Q4 is concerned, we continue to look at the mid single digit range.

Cathie Lesjak - Hewlett-Packard - CFO, Interim CEO

And I think I should have said that we got the 8% constant currency growth without channel, the benefit of any channel fill, unlike some of our competition.

Wednesday, August 11, 2010

Thanks American Printer Blog -- hosting Part Two of my guest post

My friends over at the American Printer In Focus blog have flattered me by hosting another guest post, Part Two in my ink-and-toner-economics series. Check it out, please! Inkjet vs Toner, Part Two.