Sep 28, 2013
Several years ago HP conducted a limited pilot program on HP Instant Ink and InfoTrends provided a brief overview of the program.
HP plans to roll out the expanded Instant Ink Program in North America with several retail partners within the next few weeks and more stores will be going online as time goes on. According to HP, the new plan will directly address customers’ pain points and concerns. HP hopes to move from a transactional supply model to a subscription model with this new program.
How it works
To participate in Instant Ink, customers will receive an enrollment card kit at time of printer purchase (selective HP wireless models only) at participating retail outlets. During printer set-up, these customers will create account to register their printer and sign up for Instant Ink and enroll online.Â HP will than mail Instant Ink cartridges to the customer. Once customer inserts an ink cartridge service will start and monthly bills will follow. The printer will monitor usage via HP’s customer account management (a web-based dashboard) which tells HP when to send ink to the customer. Customers can monitor their usage, manage roll over account, track additional pages cost, and track recycled cartridges.Â Furthermore, customers are not locked into any plan and can change plans throughout the life of the printer. In addition to customer convenience, HP also believes this program reduces waste and provides environmental benefits.Â Fewer ink cartridges are manufactured and shipped since HP puts more ink in each large instant ink cartridge and empty cartridges are returned to HP for recycling in pre-paid envelopes.
Figure 2: HP Instant Ink Program Kit
According to HP, the plan will offer customers a three tier monthly pricing program.Â Dependent upon customers’ usage they can select occasional printing, moderate printing or frequent printing. The monthly plans are flexible and can be changed or canceled at any time.
Figure 3:Â HP Instant Ink — Monthly Plans
Why is HP doing this?
HP reports that during the test market phase for instant ink they saw a significant uplift in equipment shares for those devices in those stores that were coupled to the instant ink program. HP expects that as the program rolls out there will continue to be uplift in market share for the HP devices available for this program. As time goes on more devices will become available that can enroll in instant ink.Â Overall they believe this program will improve hardware market share and make desktop inkjet more sustainable in the future.
For HP, engaging customers in this way secures revenue for HP OEM supplies while offering a different value proposition to customers to reduce the likelihood that they would want to use aftermarket supplies due to lower prices. Â In addition, the convenience of home delivery, ease of use and ink tracking take away customers frustration levels with printing.
How can HP do this?
HP believes this program offers real cost savings to them from the utilization of jumbo-size ink cartridges to the reduction in shipment expenses, to the housing of ink cartridges and cost of packaging material. Overall, Â they believe the benefits out way the upfront costs.
Participating resellers should be happy with this program as they will have a continued annuity stream based on how long the customer stays on the plan not just the sale of the product.Â In addition, over time, they can begin to shift the use of their current high value shelf space from inkjet cartridges to more lucrative high value items in their stores. The impact on other vendors will likely be a measureable change in market share. That coupled with the significant cost reduction that participating users see under the instant ink program, it’s our expectation that other inkjet vendors will need to respond to instant ink.
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