HP Summit 2011: A Graphic Arts Perspective

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Mar 22, 2011

In one of many breakout sessions during Day 2 of HP Summit (March 15-16), Vyomesh Joshi (VJ) of HP’s Imaging and Printing Group (IPG) reviewed the company’s strategy and approach to the graphic arts (print service provider) market

Here are few takeaways from the session:

1)      Show Me the Pages! VJ and his group at IPG are all about chasing “analog” pages, and graphic arts is where all these pages are. According to HP, about 90% of printed pages (47 trillion pages) were “graphic arts” pages in 2010. This represents a huge growth opportunity for HP and other digital print vendors, since less than 5% of these pages are considered “digital” (produced by digital printing devices versus offset or other “analog” output devices). Applications such as photos, signage, and direct mail are heavily penetrated, with 30%+ of total application volumes produced by digital printing. In contrast, less than 1% of packaging and publishing volumes are digitally printed.

 Much of HP’s success in graphics arts today is attributable to transforming applications such as direct mail, photo, labels, books, and signage into digital. What’s more, VJ provided some staggering statistics to back-up HP’s traction within these applications:

  • HP Indigo pages grew 6X, while volumes within the total printing industry have been flat or declining since 2004.
  • HP owns a 70% market share in photo specialty pages (e.g., personalized photo books/albums/calendars/cards), and has enjoyed 50% year-over-year growth since 2007. These volumes came from Indigo installations in companies such as Shutterfly, Blurb, RPI, and District Photo as well as HP’s own Snapfish.
  • HP has 70% of the value share in digitally printed labels, and has achieved 33% year-over-year growth since 2008.
  • HP’s graphic arts products have been installed in 4 out of 6 of the top book printers, enabling new business models surrounding custom / personalized books, long tail monetization, and self-publishing.

2)      New 42” Color Inkjet Web Press. During the session, VJ took the opportunity to highlight the breadth of HP’s graphic arts portfolio as well as the launch of the HP T400 Color Inkjet Web Press. This new device offers a 42” web width and generates about 600 fpm for full color, letter-sized pages. Concurrent with its summit, HP actually held a separate analyst event in Los Angeles to announce the T400. This announcement built off the success of HP’s T300 products, which have seen over 20 installations to-date. HP claims that its T300 installations generated about 1 billion pages during 2010. VJ even highlighted one installation that produced 70 million pages per month (we assume that this is the installation at O’Neil Data Systems, an early beta site for the Inkjet Web Press).

3)      Solutions and Services on Top of Equipment. In addition to its digital printing equipment, HP has built up a fairly robust portfolio of solutions and services to help print service providers (PSPs). On the solutions side, the company has made a considerable investment in building its own workflow solution (e.g., the SmartStream Director). Within the SmartStream brand, HP has built a network of 130 partner solutions that address various production areas such as prepress and Web-to-print. In terms of services and business development, HP promoted its Capture program and its growing DSCOOP user group event. This year, the DSCOOP event attracted over 5,500 PSPs.

4)      Cloud-Based Products / Services for the PSP Ecosystem. Consistent with HP’s corporate strategy in building cloud-based platforms and services, VJ also emphasized cloud initiatives within IPG. HP’s cloud-related efforts currently revolve around Snapfish and ePrintCenter, which have focused on providing end-users (consumers to enterprises) with access to HP printers. Last year, HP also announced a Virtual Print Center, which enables mid-sized and large enterprise users to access production printing services. To enable the Center, HP formed a partnership with Mimeo.com (which provides the ordering interface and back-end digital printing production). It is worth noting that HP appears to be backing down from its MarketSplash initiatives (announced back in 2009) due to concerns voiced by PSPs.

From InfoTrends’ perspective, HP appears to be doing very well in executing its strategy in the graphic arts market. The graphic arts market was hit hard during the recession, but the transformation to (color) digital printing technologies continues to accelerate. Broad portfolio, workflow,  services, and partner’s network are major differentiations for HP in the graphic arts market today. Emphasis on the Cloud as means to funnel volume to PSPs will become key differentiation moving forward.

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