The Web Ruins The Printer Business

August 28, 2007 by Douglas A. McIntyre

Hewlett=Packard (HPQ) has set out on a big campaign to get Web 2.0 users to make greater use of its printers. HP’s printer business is not only large, it’s profitable. In the last quarter, according to the HPQ 10-Q, printing and imaging brought in almost $7.2 billion. The business had an operating margin of over 16%.

HPQ wants to protect that business. It has announced that it will try to get enterprises to use its printers to make hard copies of content found on the web. It is also setting up a partnership with Yahoo! (YHOO) to create a printing toolbar that will provide printing support and services. Another partnership, with Microsoft (MSFT), will encourage users of the Microsoft Live Spaces community to print their photos of the web.

According to MarketWatch: “For its business and commercial customers, H-P will launch Scitex X2 printhead technology for faster and cheaper wide-format printing, and a new Web-based imaging and printing platform called Open Extensibility, which allows printing technology developers to create industry-specific applications online with support from H-P”

It won’t matter. The bleeding for printing operations like the HPQ unit, Kodak (EK), and Lexmark (LXK) has already started. Shares in LXK are down by half over the last 52-months.

The trouble is that many businesses don’t need printers at all. Images and text can be moved around, changed, and saved using software like Word, and photo are shared on huge photo sites like Photobucket, which was recently bought by by MySpace.

Sharing and transferring text and images is in. So is storing these same things on hard drives and remote servers.

Printing is out. And, it isn’t coming back.

Douglas A. McIntyre