Will Printer and Printer Supply Sales Ever Recover?

Are printers and printing supplies going the way of other outmoded
technologies like external modems and tape backups—destined to pile up in some
forgotten IT closet?

That’s the scenario that has some in the industry closely watching earnings
announcements from companies such as Hewlett-Packard, Lexmark and Xerox.

The question is, are the huge sales drop-offs in printing and supplies by these
companies caused by the recession, or is there a bigger trend at work?  Is
the move toward green computing and doing more with less driving some companies
to re-evaluate their printing practices?

Angela O’Donnell, owner of New York City-based solution provider W. O’Donnell
Consulting, says that company gate keepers from CFOs to office managers are
casting a more watchful eye on the printing supplies purchased and used.  

“As a function of the recession, a big piece of the business that wasn’t looked
at too hard was printing expenses," says O’Donnell. “Now businesses
are looking at every single expense.”

For example, she notes, some of her customers are changing the way that drivers
are installed at their site so that certain groups within the company can only
print in monotone and not in color anymore. That’s translated into a big drop-off
in color toner sales for her company.

And O’Donnell says that office managers are no longer stocking up on supplies.
They are working with more of a just-in-time stocking process.

“I do think this will become a permanent change,” says O’Donnell. “It will
change what people think about the things they really need and how they need to
work.”

HP’s CEO Mark Hurd disagrees, saying that
the changes to the printing business right now are “cyclical rather than
secular.” Answering analysts’ questions during HP’s earnings conference
call this week, Hurd told them that digital printing content is growing.

“So the cyclical stuff that we’re seeing right now … is based on GDP
and unemployment,” Hurd says. “… Is there some big secular change in printing?
Secular changes occur over years and decades and over very long periods.”

However, Hurd points out, HP is also hedging its bets. He says that home photo
printing makes up less than 10 percent of the company’s supplies revenue, but
that business is shifting to the Web and to retail locations.

“[That’s] one of the reasons you see HP investing in Snapfish,” Hurd says.
“It’s one of the reasons why you see HP investing in retail photo kiosks,”
which use HP supplies.

But some think the drop-off in printing hardware and supply sales is more a
function of the recession than anything else, and will pick up when the economy
is humming once again.

"There have been a ton of layoffs and therefore less folks printing,"
says Becky Connolly, director of computer and imaging supplies and accessories
at Technology Integration Group, a Torrance, Calif.-based solution
provider. "I have found a surplus of printers at my clients’ sites
due to closing of facilities.”

But Connolly believes that’s temporary. While companies are looking to operate
more efficiently and looking toward green practices, sales will come back when
employment does.

“I see a lot of companies evaluating in this space, and I feel more devices
will be sold, once they go through what they have and what can still be used
energy efficiently,” she says. “When people are employed, they print.”

And even if the change is a permanent one, as O’Donnell believes, vendors are
gearing up to address changes to the market.

“Clearly, more and more organization are moving toward paperless technologies,
which by extension equates to less printing and therefore less load on printers
and need for supplies,” says M.J. Shoer, chief operating officer at Portsmouth,
N.H.-based Jenaly Technologies. “However, this is not to say the printer
business is dying. Far from it, but it is evolving.”

Shoer points to Xerox’s solid ink technology as a strong value proposition for
companies concerned with the amount of waste they are generating.

“To me, this makes sense as the print market has been evolving,” he says.