HP CEO outlines six ways vendor is tackling print supplies problem

Dion Weisler reveals HP's print plan as vendor reports flat revenue

HP Inc CEO Dion Weisler has outlined the vendor's six-pronged attack to help stem the bleeding in its struggling print supplies business.

The PC and printer manufacturer revealed a hole in its ink cartridge revenue in its Q1 results, with the EMEA region fingered as the main culprit.

However, Weisler (pictured) said that the vendor has made good progress towards recovering this area of its business.

On a Q2 earnings call, the chief exec talked analysts through the six initiatives that the firm has put in place.

During the quarter ending 30 April HP reported flat year-on-year revenue of $14bn (£11bn), with print supplies down three per cent to $3.3bn.

"We are taking action; we have made and continued to make improvements in our business management systems and to enhance our measurements of the market and our performance," Weisler said.

"We are simplifying and strengthening our pricing discipline to achieve consistency of our value proposition."

Weisler said that HP has implemented four operational initiatives, along with two strategic moves, to revive the business:

Marketing and go-to-market

Weisler said that HP has overhauled its marketing strategy, boosting its presence in online searches, particularly in EMEA.

Online marketplaces stocking cheaper third-party supplies has proved to be one of the biggest challenges facing HP in the print supplies market.

"We've increased our investment in search significantly versus last year in all regions, and we've improved our search coverage in the main markets within EMEA," Weisler said.

"We've also changed our marketing mix with key online marketplaces to improve the prioritisation of HP original supplies."

Tackling counterfeit trading

HP has beefed up its efforts against counterfeit trading this year, publishing a do-not-trade list of suppliers selling what it claims to be illegal ink cartridges for its printers.

It recently failed in its efforts to prevent a Dutch company from selling HP-compatible products.

Trading of such products was a key talking point at HP's partner conference in Houston.

"We're upping our game in terms of brand protection," Weisler said.

"We're going to defend our brand as well as our intellectual property to ensure that our customers receive the quality, the benefits, the sustainability and environmental advantages that original HP supplies provide."

Working with partners

Weisler said that HP is working with tier-two partners to reduce the level of inventory currently in the channel.

When publishing its Q1 results at the start of the year, HP said that it had oversaturated the market with products and had failed to adapt to the growth in sales online.

On the latest earnings call, Weisler said: "We're working with our tier-two channel partners to gain more visibility into the overall tier-two channel inventory, and to reduce the overall level of inventory."

Improved business management systems

HP said it is using data in order to better understand its print business and have more of a real-time view of its supplies operation.

CFO Steve Fieler said that HP previously had "inaccurate assumptions" around its supplies arm, primarily around its share of the market, and pricing.

"We're leveraging the big data and the telemetry information that we're now collecting and we're doing that across the installed base of printers that we outlined in Q1 to provide more accurate and timely reporting and insight," Weisler added.

As-a-service offerings

HP has been aggressively pushing its device-as-a-service model, with the help of its channel partners, over recent months, but the vendor also has a subscription service available for its cartridges.

Instant Ink sees cartridges delivered to and collected from customers by partners, with clients paying for just what they use.

"We're evolving in print to focus on driving growth in our contractual business, certainly where our customers are really interested in transacting with us through those contractual motions," Weisler said.

Evolving business models

The print and PC vendor said that evolving its business models is a "key strategic initiative" to "drive long-term value in print".

CFO Fieler said that HP's contractual ambitions form a large part of this, adding that the vendor will continue to evaluate different go-to-market strategies.

"In terms of where the profit and the lifetime value of a hardware unit is, we are already operating in certain geographies where we do have printers that generate more profit of the lifetime upfront, so I think we'll continue to work on different areas and different models in the future," he said.