Two decades ago, Hewlett-Packard Co. launched a printer that would create global demand for what would become one of its most profitable products: ink.
HP marks the 20th anniversary of the Deskjet on Thursday and is seeking new markets for its printers and ink, including retail chains and corner drug stores where Americans are increasingly turning to have their digital photos put on paper.
Printer supplies — ink, paper, photo books — provide 60 percent of the revenue at HP’s printing division, according to analysts. And that division delivers almost half the company’s profits, which totaled $7.26 billion last year.
In 1988, the Deskjet was a clunky 14 pounds costing a hefty $1,000, but it turned hugely popular after dropping below $500 in the early 1990s: Office managers could typically buy supplies that cost under $500 without approval from a higher up.
Now, inkjets cost less than $100 and provide all-in-one services, including high-quality photos. HP has sold more than 200 million Deskjet printers, each with a big hunger for ink.
But with home-based photo printing on the decline, HP is now marketing its inkjet technology to retailers like Target Corp. and Costco Wholesale Corp., urging them to scrap their old “wet lab” chemical-based photo printing and go with “dry lab” inkjet machines that shoot out 1,500 prints an hour.
As Vyomesh Joshi, executive vice president of HP’s printing division, puts the company’s strategy: “Instead of thinking of printers, think of printing.”
While HP holds 46 percent of the printer market, Joshi is eyeing the printing market — books, magazines, newspapers — where HP grabs only a 1.8 percent share of total pages printed.
Joshi sees HP growing its printing business 4 percent to 6 percent per year, with a 14 percent to 15 percent operating margin, by converting some of the traditional analog printing market to digital…