HP’s Hiflex Buy: More Than Meets the Eye

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Dec 20, 2011

On December 6, HP announced its acquisition of Aachen, Germany-based Hiflex Software, a provider of print Management Information System (MIS) and Web-to-print software. Unlike EFI, which scooped up German MIS provider Alphagraph on exactly the same day for the purpose of expanding its customer base and sales capabilities internationally, HP’s prime motivation was to acquire technology to power its enterprise cloud-based printing initiatives.

Since the printing industry is in decline and printed pages are under pressure from electronic communications, growth in digital page volume for digital print manufacturers needs to come either from offset migration or by switching over pages produced on competing devices. For HP, developing cloud-based technology that capitalizes on its IT strength with the intent to capture enterprise print directly is a practical (albeit risky) strategy to route more volume to its Indigo customers.With the Hiflex acquisition, HP hopes to kill two birds with one stone. First, Hiflex’s core strength is in offset automation; Hiflex understands offset and has front-end Web technology that can capture promotional print previously produced on offset presses and migrate it to digital. Second, Hiflex has recently added support for cloud-based deployments of its solutions, which is helpful in HP’s cloud-based printing ambitions. Nevertheless, it remains to be seen whether Hiflex’s cloud technology is robust enough to be deployed in enterprise environments.

As mentioned, this strategy is somewhat risky for HP, as the company has unsuccessfully tried similar moves before and can be easily seen by its customers as direct competition. The issue of competing with customers is a touchy one in the printing industry, which harkens back to Adobe’s implementation of the FedEx Kinkos “print” button in 2007, as well as HP’s own issues surrounding its MarketSplash program in 2009 that it eventually scaled back due to concerns from the printing industry, including franchises. InfoTrends’ Barney Cox also wrote about HP’s Print Station initiative earlier this year, which had some of the same issues in concept, but ultimately ended due to lack of traction.

InfoTrends spoke with Sumeer Chandra, VP of Strategic Marketing for HP’s Graphics Solutions Business (GSB) who was adamant that HP will not compete with its print service provider customers, but could not provide specific details at this stage on how HP will accomplish this. From InfoTrends’ perspective, it will be a substantial challenge for HP to setup a print network that includes its Indigo customers and enables democratic distribution of print jobs while maintaining consistency in price and quality. That being said, if HP is successful with this initiative, it could impact vendors that have a substantial footprint in in-plant environments, such as Xerox, as HP tries to steer more volume its way.

InfoTrends believes that HP’s continued focus on cloud-based solutions and services is a good direction. The software industry and IT industry at-large are moving in this direction, and we believe leveraging the cloud, in this instance, can help enterprise customers order print in an easier, more cost-effective manner. For print service providers, the battle for print volume is likely to continue and their priority should be to diversify their business with additional high-value services so that they can absorb further declines in print volume. Ultimately, HP’s acquisition of Hiflex is about supporting technology for enterprise print services; Hiflex’s role in HP’s Graphic Solutions Business is secondary. It will certainly be interesting to watch the reaction from the printing industry as HP reveals more details about how it plans to utilize Hiflex.


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