HP Print VARs: The Sky Is Not Falling

HP's Imaging and Printing Group (IPG) revenue declined 23 percent to $5.9 billion during the quarter from the year-ago period, the company reported. Supplies revenue fell 14 percent from the same quarter last year due in part to channel inventory realignment, the company said. Commercial hardware revenue and consumer hardware revenue declined 40 percent and 31 percent, respectively. Printer unit shipments decreased 27 percent, with commercial printer hardware units down 36 percent and consumer printer hardware units down 23 percent.

Operating profit was $1.1 billion, down from $1.2 billion in the prior year period.

Despite the gloomy financials, several VARs said they were doing fairly well selling HP products.

At Canon IV in Indianapolis, HP print products make up 98 percent of the business, and according to Jim Fall, vice president of strategy, the reseller actually is seeing 3 percent growth in year-over-year sales.

Mark Szalkiewicz, a senior account manager at HP reseller Horizon Computer Resources in Sacramento, Calif., said that he's seen HP print sales drop but that the products are still strong sellers.

"I'd say HP sales have dropped in the last two years, but they're still quite respectable," Szalkiewicz said.

One HP VAR who did not want to be named said that his HP sales are down somewhat, but not enough to give him pause.

HP joins its fellow print brethren Lexmark, Xerox and Canon in the sales slump thanks to the economic climate and spending pullback. However, some VARs said that changing their strategies and being patient can pay off.

Kevin Morse, senior partner at QuestingHound Technology in Deerfield, Fla., also is a Xerox reseller. He said that even in the down economy, the company was "pretty successful."

So what's his secret? Follow the money trail.

Morse and several other VARs said that the majority of clients have no idea how much they spend on printing costs.

"It's how you pitch hardware," he said. "Customers may still be holding on to products, but if you can make an assessment of where the money is going and show them that they can recoup what they spend with new equipment, it will make sense."

At Horizon Computer, Szalkiewicz said that the even though clients hold a tight grasp on existing equipment, a case for quick ROI can elicit a sale.

"When customers realize they have to replace printers, they will often do a larger lease deal," he said. "We move more units than we normally do because customers are looking at this as, 'Well, if we're going to replace machines, we might as well get a few more and try to squeeze out a discount.' "

Canon IV's Fall attributes much of the company's success to diversification. Canon has 3,500 customers across several verticals, including education, government, SMBs and Fortune 100 businesses.

"It's a real advantage in that we have a diverse customer base," he said. "Not one of our customers represents more than 7 percent of our business."

Fall also said that the company doesn't believe in the one-size-fits-all sales strategy practiced by some other resellers.

"We take more of a problem-solving approach with the customer rather than a transitional approach," he said. "We ask a lot of questions -- how does the company want to acquire imaging and printing technology, how do they want to put it in place?"

And in spite of the beating drum of negativity surrounding the economy, these VARs have a cautious but optimistic take on the future.

Morse believes that things will start turning around in the fourth quarter this year or the first quarter of next year, while Fall thinks a recovery will take a year.

"What worked last year won't work this year," Fall said. "Nobody can take their eye off the ball, you have to maintain a sense of urgency and be more creative every day, but there's a feeling that things are beginning to bottom out."