With printer sales slowing, HP favors PCs

HP will merge its printer division into its PC business to cut costs, reports say

The writing may finally be on the wall for Hewlett-Packard's storied print division.

HP is expected to announce soon that it will merge its Imaging and Printing Group into its PC-making Personal Systems Group as a way to reduce costs and simplify its business. Under the plan, Vyomesh "VJ" Joshi, who has run HP's print business for the last 20 years, will step down, and Todd Bradley, head of the PC group, will run the combined division, according to reports.

HP has yet to confirm the move, though it has not denied it either. The Wall Street Journal, citing unnamed sources, said the change would be announced Tuesday. Reuters also reported that a move was imminent. If the announcement is made, it's likely to come before HP's annual shareholder meeting on Wednesday afternoon.

The move would reflect two realities, industry analysts said: That the market for printers and printer ink, long the backbone of HP's business, has a dwindling future, and that HP needs to cut costs somewhere in order to boost spending on research and bring innovation back to the company.

It wouldn't be the first time HP has merged its printer and PC groups. Carly Fiorina did that in 2005, just before the end of her tenure as CEO, but Mark Hurd reversed the decision soon after he replaced her. Hurd reportedly revisited the idea a few years ago but decided against it.

This time it's different, however. When Fiorina made the move, she put the combined division under Joshi. This time, the man who has driven a good part of HP's profits for more than a decade will leave the company, and the head of the PC division will be put in charge.

That could reflect the fact that the humble PC might actually have a brighter future than printers, something that seemed unthinkable seven years ago when IBM had just sold its PC business to Lenovo.

"The problem is, this is just a trailing-edge business," said Endpoint Technologies analyst Roger Kay. "Printer sales are declining, ink sales are declining, people just don't print as much any more."

The iPad and the Kindle have made it easier than ever to read documents electronically, he noted, and technologies that allow people to sign documents electronically, from DocuSign and others, have removed a big hurdle to doing away with the printed page.

"The growth just isn't there, and as HP looked out in the future, I think they're not seeing it there either," Kay said.

Printer ink remains one of the most profitable parts of HP's business, but sales in its Imaging and Printing Group have been declining. They totalled US$25.8 billion last year, a billion dollars less than in fiscal 2005. Over the same period, sales at HP's Personal Systems Group increased about 30 percent, to $39.6 billion.

Analysts don't see things getting any better. The printer market is expected to grow just 1 percent to 2 percent in the next few years, said IDC analyst Crawford Del Prete, while PC sales will grow as much as 5 percent. Printer sales are also more sensitive to changes in the economy, he said.

At the same time, HP needs to cut costs, as current CEO Meg Whitman made clear on the company's last earnings call. HP has underinvested in innovation, she said, and must spend more money to stay competitive.

That means freeing up money elsewhere in the business, and rolling two big divisions together could help. Printers and PCs share some of the same components, and there is likely to also be overlap in areas such as manufacturing, sales and marketing.

"Todd Bradley has done a fantastic job in creating a more efficient Personal Systems Group, and I think they're looking to him to work some of that magic in the printer division," IDC's Del Prete said.

James Niccolai covers data centers and general technology news for IDG News Service. Follow James on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

James Niccolai

IDG News Service
Show Comments

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?