CRN Interview: Vyomesh Joshi, HP

At Hewlett-Packard&'s ImagePrint 2005 event held this month in Orlando, Fla., Vyomesh Joshi, sat down with CRN &'s Edward F. Moltzen to discuss HP&'S channel strategy in the imaging and printing space.

CRN: Since the last time you sat down with CRN, there&'s been a lot of change at Hewlett-Packard. My first question is, what is the mission you&'ve been given by your new CEO, Mark Hurd?

Joshi: As you know, Mark and I talked about—I was managing both PCs and printing, [but] I&'m now focused on printing. The second thing is, Mark&'s approach is simplification and getting accountability in the businesses which is really powerful for us. IPG [HP&'s Imaging and Printing group] is a big business, and as I mentioned, we are going to continue to grow the business. And I feel that having that empowerment and simplification will allow me to continue to grow the IPG business.

CRN: There&'s been an awful lot going on in the market, especially with some of your competitors like Dell and Lexmark. They seem to have encountered difficulties where HP doesn&'t seem to have encountered difficulties. Is there a statement to be made about the services you offer and how you engage the channel in offering those services?

Joshi: I think there are three important parts to the Imaging and Printing strategy. First of all, our strategy has been really understanding the customers and looking at the growth opportunity we have. If you look at the overall market, just in the United States, there are 12 trillion pages being printed. In 2001, we were only addressing 4 percent of them. We are now addressing 12 percent of those pages. The other companies are really focused on what I call office and home, rather than the new opportunities such as marketing collateral, signage—in terms of how we are going after the copier pages, how we are going after the photo business. I think that&'s the first very big difference. The approach we are taking is there is a big trend on analog to digital conversion and we want to go after that opportunity.

The second thing I think of is innovation. HP continues to innovate. Lexmark and Dell are not innovating. And I think when you are continuing to innovate with scalable print technology, color laser technology, with ColorSphere, with the printer-based multifunction printers, you will be able to cut significantly that acquisition cost--that&'s what customers want. Customers really want to understand how you can solve their problems through innovation.

The third part is, we believe that this market is very different than a PC market. In PCs, you have Intel and Microsoft which are doing innovation. Here ... the approach that we are taking is solving the customer problems and having the right distribution strategy. We rely on channel partners. We firmly believe that when you want to reach the customer, all the way from consumer to small and medium enterprise to industrial to graphics customers, the channel plays a very important role. And that is also very clear. Plus the way people buy supplies. The supplies, we think distribution should be 7 by 24. If you run out of supplies, you are not going to wait three days to buy supplies. So our retail partners, our channel partners, allow customers to buy supplies any time.

Those are the three key things: the way we think the overall opportunity is; the way we innovate; and the way we touch our customers is the real reason we are different than those two companies.

CRN: How much of Imaging and Printing revenue is derived from things other than hardware sales and consumables? I&'m talking specifically about services and software?

Joshi: We don&'t separate them out.

CRN: You view it as a growth business…

Joshi: Absolutely. … We believe that Hewlett-Packard for the last 21 years is a leader in inkjet and a leader in laser, and we really understand the imaging and printing environment. We are the leaders in this particular industry. So we can work with customers like 3M where we will be able to assess their situation on the imaging and printing side and say, here&'s how we can help. ... This are customers like Ford [and] 3M where we have helped them reduce their cost and improve their productivity.

CRN: We&'ve heard a lot from the channel, programs like Rolling Thunder, other engagements you&'ve had ... rules of engagement you set out just a few days ago. How would you rate HP&'s ability to engage the channel during a time of transition at the company and during a time of transition in the marketplace? And how successful has Rolling Thunder been?

Joshi: Well, I think two key things. First, I believe HP has been very partner-centric. If you think about the work that we do in all of our business, we believe partners play a very important role. The second thing is, going through this transition actually we have increased our business, we have grown our business through channel partners. If you talk to channel partners, they will tell you. I think the important thing for partners is making sure we are consistent and we are always predictable. When you have alignment--and from an Imaging and Printing point of view if you talk to channel partners, they will tell you we have been very predictable and very consistent--and that&'s what we need to do.

CRN: We&'ve heard phrases out of HP recently like “iron fist.” Is there going to be any change you can see in the way Imaging and Printing engages the channel, the expectations you have, but then again the support you will also be providing?

Joshi: Well, I think we&'re going to be consistent and predictable. If you look globally, we absolutely rely on the channel. And if you look at the new market growth opportunities I&'ve talked about--going after [the] marketing collateral [segment], going after the signage business, going after industrial printing, going after photo--we need the channel. And these opportunities are going to be growth opportunities for HP and for our channel partners.

CRN: Have you heard feedback from the channel?

Joshi: Let me give you one very specific example. When I talked about our success in multifunction printers, where we have gone from zero percent market share to 15 percent market share, our partners are telling us, ‘Wow. This is a new opportunity for us.&' We now, if we are selling laserjet, we will be able to sell our laserjet multifunction printer like 4345 and now the 4730 which we are introducing. So channel partners, it&'s a tremendous growth opportunity in getting into new businesses, getting into new ways of engaging with customers. I&'ve talked about the way we are going to have services. We have talked to channel partners and said, ‘This is a new opportunity. Let&'s figure out how we can grow our business together.&' Clearly, our core business is also growing. If you look at our laserjet business. As we went into the color laser at less than $500 [there was] tremendous growth for both us and our partners, tremendous growth in our supplies business. If you talk to our channel partners, they will say our core business is growing, our new opportunities are also helping. So the programs we have put together are really helping them grow their businesses profitably.

CRN: In terms of pricing and margin strategy, HP&'s been extremely aggressive this year--more so than in past years. Dell has been aggressive with pricing as well, in many cases giving away printers in bundles. Where are we now in terms of the market and pricing? Where is your strategy? Will it level off?

Joshi: The most important part for Imaging and Printing is to really look at from the customer point of view, from the consumer to small and medium-[size] to enterprise customer. We absolutely believe that our focus is more on the customers, and really meeting the customer needs. ... We feel that the market will set the pricing. I really believe that--really understanding the customer needs and figuring out how to meet them and innovate.

The scalable printing technology that I talked about has been a big success. We really provided our customers with the fastest photo printer where you could print a photo in 14 seconds. We have our business printer, which is the fastest business printer from an inkjet point of view. So what we are seeing is customers are actually saying ‘Wow, now I can get 14 seconds, 24 cents photo from a photo printer.&' We are actually selling up. So we could sell up. Customers are feeling they are getting a price-performance unparalleled by any of our competitors. So my view is, our approach is really understanding the customer and providing the right solutions. We offer all the price points from $39, $49, $79, $149, $199, $299--all the way to $499 on the inkjet side. On the laser side, we have $149 mono laser, we have $299 color laser. So my view is focused on the customer rather than worrying about other dynamics.

CRN: You mentioned security as part of your strategy going forward. What is your security road map?

Joshi: We believe we need to have intelligent devices which are secured. It starts with the device. You want to make sure you put security right into the device so, [for example], from an authentication point of view, security [is] really right there. The second thing is you want to make sure the network is secure because, just by itself, a device will not be sufficient. You want to make sure--there&'s a lot of transactions going on. You&'re in the communications business, essentially. The hard copy or the print is used for communications. We want to make sure the communications between the employee, between the company and the partner, they are all secured. We are providing the right kind of a framework so the devices are secure; they are intelligent also. And the network is secure. What we do is we put our security software layer, which we are able to provide. … HP pays a lot of attention to the security side.

CRN: When will we start to see things in terms of technology that&'s available in the marketplace? Things that are not available now…

Joshi: When we talk to the customers, they are telling us continue to drive performance. Speed is very important. Continue to make it easy to use, easy to install, easy to control. Our universal driver, our Web Jetadmin tools. And they are also saying security is very important. Especially with the legal aspects of it, SOX [Sarbanes-Oxley], and keeping track of it all. Scan-to-e-mail capability is very, very important. Authentication.

CRN: Customization is a real interesting issue now. Companies like Canon, Lexmark to a degree, Kyocera Mita are talking about providing a software layer on top of the hardware, based on Java, where you could add customized applications. Where do you stand with that.

Joshi: The approach we want to take is we don&'t want to double up our proprietary stuff. We have a very partner-centric approach. If you look at our Indigo [printers], we work with three companies to open up our APIs, so people could write a front end to our Indigo press. We are doing the same thing with SAP. We are publishing our API so the customers can get solutions from anybody. And we will be the integration point; we have intelligent devices, you have the API and you have applications. We are also integrating with OpenBook, our management software. Because what we believe is that what customers want is an open way of connecting to any applications they have and run our devices with document management software. So we work very closely with all the Documentums of the world, Filenets of the world. We work very closely with Adobe, with SAP, with Oracle. We firmly believe that we really want to have an open solution approach rather than try to have a proprietary solution. I think that&'s a big difference with what a lot of companies do. The approach we are taking is saying we are very partner-centric. Making sure our APIs are very clear so we can have contributions from all the companies.

CRN: What&'s the single biggest piece of innovation we will see from your division in the coming year that you can talk about?

Joshi: Well I think that Scalable Printing Technology we talked about, where we can go all the way from consumer to SMB to photo finishing to enterprise printing.

CRN: We&'ll see Scalable Printing Technology more in the enterprise?

Joshi: (Nods yes.) I think we are still going to continue to grow our business. We have been very consistent. If you look in 2001, we were a declining business and we were making 10 percent operating profit. Starting from the second half of 2002, we are growing our business and we are profitable between 13 [percent] to 15 percent. So my objective is to continue to grow our business and make 13 [percent] to 15 percent operating profit.

CRN: As services and software become more of the overall part of the document solution, do you see any changes to what portion of the solution services and software is? Do you see that growing over time?

Joshi: The approach we take is we consider services and solutions as part of our core business strategy, rather than a separate strategy. For the consumer, really, they don&'t need any services except for installing. Look at SMB, that&'s our smart services offering—Web-based, very simple, very template-based services. For the enterprise side, it&'s really a Total Print Management engagement. We will engage with them with a different assessment tool and manage their imaging and printing environment. That&'s the approach we want to take. If you look at a lot of copier vendors, when they talk about services, most of their services are break and fix. I wouldn&'t call them services. As a matter of fact, customers expect your product to be reliable. You don&'t want to have something that&'s break and fix. My view [of services is] document management. My view is really helping them to assess their environment and tell them how they can save a lot of cost and get a lot of productivity out of the services we provide. We don&'t want to be in break-and-fix services. I don&'t think that&'s a really good thing.

CRN: If you have one message to give solution providers, one message for the channel with respect to your strategy, what is it?

Joshi: The one message will be that together we have a phenomenal opportunity for profitable growth, for HP and for our channel partners.