HP, the maker of one of the most expensive printer inks, has finally decided that the method is no longer viable. Instead, the tech company has shifted to the “expensive printer” model. It is time to move on!
The New HP “Expensive Printer” Model
For years, HP has made bulk of its profits producing cheap printers anticipating that users would spend a lot of cash to buy expensive ink cartridges. But competing companies have been targeting the same customers using cheaper printer inks and toner cartridges. Top options such as Brother DCP-L2550DW Toner are highly effective and loved by clients. Now, HP is aligning its operations with emerging marketing dynamics for greater appeal and profit sustainability.
Tuan Tran, the new HP printer president, explained to the Securities Analysts Meeting that they had to rebalance their operational model profitability in order to draw more returns upfront from printer hardware.
One of the new strategies that HP has adopted to safeguard its revenue is using the Smart Tank and Neverstop printers. These printer models are sold fully loaded with ink or toners that last for about 2 to two and a half years. This is designed for clients who want to purchase printers and related supplies only from HP.
Tran says that the new models guarantee clients better security, higher reliability, improved quality, and sustainable print experience.
HP is also focusing on a way of making the target clients to pay, in advance, the full value of HP printers. This will give them access to higher flexibility of printer supplies.
Tran continued to say that the new model is like purchasing a mobile phone that has been unlocked so that a customer is free to select the preferred wireless carrier. This means that clients will be able to enjoy HP’s top-rated printing hardware. However, they also have the option of selecting alternative suppliers.
The expensive printer model, like Tran explained, involves rebalancing HP’s profitability system through innovation monetization. Note that hardware rebalancing is indeed not new for HP. Tran explained that the company has been using the model, especially in China, where 50% of the mono laser printers are sold by HP. Although China is a highly price-sensitive market, HP holds the view that it can hit a 50% price premium with printer hardware alone.
Today, HP has over 150 million printers in use in the field. This makes it one of the leaders in both the office and home printing market that is estimated to be more than $155 billion per year.
In addition, Tran pointed out that HP was taking crucial steps to help protect its IP. So far, the company has already pulled down about 50,000 online listings that violated its copyrights. The focus of the company is reaching the main channel sellers that sell its supplies to clients using a centralized prizing system as well as disciplined channel partner programs.
The above efforts, according to Tran, will elevate HP’s tighter visibility inventory for robust management. And that is not all. Additionally, HP is injecting more cash into tools development to assist tracking and verifying cartridges designed in its factories using its multi-tier distribution system.