HP Execs Issue Challenge To Printer Rivals

That's the message some top Hewlett-Packard executives had for their printer competitors this week at the 2005 HP Imaging and Printing Conference in Half Moon Bay, Calif. Though rivals such as Dell and Lexmark are gunning for HP's hefty market share in the printer space, the Palo Alto, Calif.-based IT giant isn't afraid of a little competition, executives said.

Kevin Gilroy, senior vice president of worldwide SMB segment operations for HP, said he welcomes the heat. "I wake up in the morning thankful we have tough competitors," he told CRN Wednesday. "They make us be the best we can be. Competition brings out the best in people."

Vyomesh Joshi, executive president of HP's Imaging and Printing Personal Systems Group, had some harsher words for Dell, one of the company's more determined competitors in the printer arena. In a roundtable discussion at the conference on Tuesday, he said Dell isn't a viable HP competitor in printers because the Round Rock, Texas-based hardware vendor still must prove it can make money in that part of its business.

"I believe you're in business when you make money," Joshi said. "Dell doesn't make money [in printers]. Shareholders will not tolerate if you're not making your average profits. Dell has to prove [itself] to have a viable, long-term printing business."

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Dell faces a lot of challenges in the printer market because the company lacks the kind of partnerships that enabled it to dominate the PC hardware space, according to Joshi. "Dell is successful in the PC model because the innovation is done by Microsoft and Intel," he said.

Still, HP isn't ignoring the threat from competitors, Gilroy noted. HP is always watching its back and, if needed, will proactively implement changes in any part of its business that's under competitive pressure, he said.

"It wouldn't be prudent for us to just ignore competitors," Gilroy said. "I think we take an aggressive analysis, and we have leading indicators that we watch. There are programs we have in place and programs in the drawer that, if we need to launch, we can. We take competitors on before they get on the beach, and we hold them on the beach."

HP has been driving down the price of its printers as a tactic to ward off competitors--a move that has squeezed the margins of channel partners. But Gilroy said printer pricing has declined for years, and by now the savviest VARs have adjusted their business models to roll with the market changes.

"Channel partners are resilient," he said. "It's a bell curve. There are some who aren't resilient, and they are stuck in a business model. But there are early adopters who morphed their business models ahead of the curve."