HP Set to Purchase Samsung’s Printer Group for $1.05 Billion As it Prepares for Assault on Copier Market

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HP Inc. is aiming its gun squarely at the $55 billion copier/MFP market, announcing today that it will purchase Samsung Electronics’ Printer Business Unit for $1.05 billion, with HP Inc. Dion Weisler stating “We are absolutely committed to go after” the $55 billion A3 copier/MFP market.” HP also introduced 16 next-generation HP PageWide and LaserJet platforms; new print security; and new advanced monitoring based on cloud and “big-data” analytics to predict service and supply needs (see below for more).

Samsung Printer Group Acquisition

Samsung’s board of directors is said to have approved the sale of its Printing Business Unit during a meeting in Seoul, South Korea, today, but the deal must also be approved by Samsung shareholders at a meeting to be held in October. Once approved, Samsung will spin-off its printer business to HP on November 1st, with the deal expected to close next year. HP will purchase a 100 percent stake in the newly formed company. Samsung will then source its printers back from HP and continue to market them under the Samsung brand in Korea. The Samsung Printer Business Unit acquisition would be the largest print acquisition in HP’s history.

Samsung’s printing business currently employs around 6,000 people. It has a production hub in China and more than 50 sales offices around the world.

Better Deal for Dealers

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HP Inc. CEO Dion Weisler, third from right, flanked by HP Inc. CEO Cathie Lesjak (left) and Enrique Lores, president of HP Inc. Imaging & Printing, at an online press conference held today.

In a press conference held today, HP executives said HP will be able to offer channel dealers with more competitive A3 copiers with lower cost per copy, better service capability, better security, and more – in short, HP states that it will deliver better A3 products “in a market that hasn’t innovated in decades.” HP says it will be combining Samsung’s technology with HP technology. including better security, and serviceability. It says that 1,300 Samsung R&D engineers will join HP R&D engineers with a “cross-merging” of talent.

Ultimately, HP’s goal is to channel business to 87 percent, up from 80 percent.

How? HP says that using its own software and solutions, it will deliver copier/MFPs that eliminate the extensive and costly service associated with traditional copiers, stating for instance in a press release: “Copiers are outdated, complicated machines with dozens of replaceable parts requiring inefficient service and maintenance agreements. Customers are frequently frustrated with the number of visits needed to keep copier machines functioning. Today, HP is investing to disrupt this category by replacing copiers with superior multifunction printer (MFP) technology.”

The firm will continue using the Samsung brand for about two years and then merge it into the HP brand. It will also continue to market directly to existing A3 customers, but also expand into the dealer channel. HP resellers currently selling HP A4 printer/MFPs with managed print services will now also be able to sell HP A3 copier/MFPs.

Referring to HP’s distribution of Sharp-sourced copier/MFPs in the last several years, HP Inc’s Enrique Lores, president of HP Inc. Imaging & Printing, said that competing in the copier market with a non-differentiated copier was “clearly not a winning  proposition” …”instead we’re introducing printers that have diverse capabilities that will be able to compete head-to-head with copiers with lower service costs… explaining to dealers how they can make more money.”

“We’re not reselling Samsung copiers we’re combining Samsung and HP technology,” said HP Inc. CFO Cathy Lesjak.

The images below show how HP says how its MFPs are engineered for better reliability with less service required, as well as how they are engineered for easier supply maintenance:

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HP Inc. Core Businesses

Weisler says HP Inc.’s core business is printing and PCs. He expects HP Inc.’s revenue growth will come from the A3 market, as well as from commercial mobile-computing products, and the graphic-arts-printing market. Other important segments include virtual reality computing and 3D printing.

Channel Programs and Financing

HP introduced what it calls “a services-led” channel business program for A3 portfolio and managed print services-designated printers. Qualified partners will receive guaranteed pricing, sales tools, and service support. Visit HP  here for more information.

HP Financial Services (HPFS) will also provide a variety of IT investment options to help partners and their customers acquire and pay for A3 models.

New A3 Copier/MFPs

As part of its drive to disrupt the copier/MFP market, HP states that the copier industry has been slow to innovate, failing to deliver efficient service, as well as failing to protect against security breaches, and failing to provide cost-effective color printing. It says its next-generation A3 copier/MFPs it introduced today address these weaknesses.

“The complexity of traditional copiers makes repair and maintenance too inefficient for our partners and customers,” said HP’s Lores said. “By leveraging our superior printing technology, we can change the status quo with next-generation A3 multifunction printers that improve the overall customer and partner experience while also serving as a springboard for growth in managed print and document services. This is what we mean by reinventing printing.”

HP’s full portfolio of A3 MFPs – including three PageWide platforms and 13 LaserJet platforms – will be available as 54 different SKUs with a range of document-finishing options, such as in-cave stapler stacker, hole punch, high-capacity staple/stack, and booklet makers. By providing a broad range of device options, HP says it’s providing channel partners with “robust possibilities and pricing flexibility to meet the needs of their customers.”

HP says its new PageWide Enterprise and Pro platforms, which use HP page-wide color inkjet printing, “will make color affordable, along with best-in-class print speeds and lower energy consumption than in-class laser devices.” It says the simple architecture of HP PageWide printing technology  – with only three components that may need replacing – will help lower service costs for channel partners. The single-function printers and MFPs have print speeds ranging from 40 to 60 ppm (up to 80 ppm in General Office mode). The HP PageWide Pro devices will be available beginning in spring 2017, while the HP PageWide Enterprise devices will be available in the fall of 2017.

The HP LaserJet Managed MFPs will be available as MFPs, with color or monochrome printing and speeds ranging from 22 to 60 ppm. The new LaserJets, which HP says will have long-life components and fast repair times, and will be available beginning in the spring of 2017.

HP Smart Device Services

The company is also introducing HP Smart Device Services, a set of cloud-based tools and device-based sensing capabilities, designed to “dramatically enhance the service experience.” Smart Device Services monitors and diagnoses many service needs to minimize device downtime and cut costs. For example, the service can anticipate parts servicing before the part fails and avoids premature ink and toner replacement.

Smart Device Services is also compatible with HP printers and MFPs that incorporate HP’s FutureSmart platform, which HP introduced in 2012, including the new A3 PageWide and LaserJet devices. As such, HP says Smart Device Services will enhance service-efficiency on partners’ fleets and improve uptime on customers’ devices. It will be available to qualified channel partners at no additional cost for all contractual devices using HP Original supplies.

Printer Security

HP says print security was a key consideration in the engineering of the new HP A3 MFPs. The HP PageWide and LaserJet Enterprise devices feature industry-leading embedded security features including Sure Start, run-time intrusion detection, and white-listing, which HP says make them “the world’s most secure printers.” The HP PageWide Pro devices will feature best-in-class security with features such as secure boot and firmware-integrity checking.

All of the new HP PageWide and LaserJet devices can be used with HP’s security services and JetAdvantage portfolio of management and security software, including the recently announced JetAdvantage on Demand cloud platform, reducing the burden on partners to secure and manage these devices.

Our Take

This is a massive undertaking by HP and may result in a very significant shake-up for the copier/MFP market, with HP appear to be promising A3 copier/MFPs that address one of copeirs’ chief headaches – lengthy servicing times and costly repairs. While one loser in the deal would appear to be Japan’s Canon Inc., as HP has sourced its laser-printer engines from Canon from the very beginning with the first HP laser printer in the 1990s. HP Inc. CEO Weisler notes that while Canon has been “a fantastic partner,” it’s also been a strong competitor in the inkjet-printer market. Weisler however says HP will continue to focus on its A4 printer-engine business with Canon. On another front, many Xerox low-end laser printers and All-in-Ones are also sourced from Samsung. As a main competitor to HP, it seems unlikely HP will continue supplying these units to Xerox.

Last, with the Samsung printer group acquisition, HP will have a ready-made Samsung dealer network as it inherits the BTA dealers that sell Samsung A3 copier/MFPs, a channel that Samsung has built up over the last several years.

Only a few years ago, in about 2009, Samsung said it was determined to penetrate the A3 copier market. While seems to have had some success doing so, signing on various dealers, it seems clear that it wasn’t enough to justify continued involvement in the copier market. Recent reports of defective Samsung Galaxy Note 7 smartphone that allegedly catch on fire – and that  could potentially expose Samsung to up to a billion dollars in recalls – may have also influenced its decision to divest from the copier market.

Overall, this is of course an extremely ambitious campaign on HP’s part to tackle the copeir – something it tried in the 1990s with the “Mopier” – but didn’t have much success with. Key to succeeding this time appears to be eliminating one of the chief headaches associated with copiers: the often extensive, costly and complicated service they require. At the HP press conference held today, HP Inc. CEO Dion Weisler exuded confidence and seemed up to the challenge: “We are reinventing every single day… The printer is not dead… this has all about extending our entrance into the A3 copeir market.”

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2 Responses

  1. arkachowdary says:

    Quote from the post “The complexity of traditional copiers makes repair and maintenance too inefficient for our partners and customers,” said HP’s Lores said.

    Traditional copiers are digital copiers- where the complexities of maintenance has come down drastically.
    Analogue copiers had maintenance issues.

    • Terry Wirth says:

      “Traditional copiers” include analog copiers and I believe that Lores was also referring to the traditional manner of distribution. Moreover, (digital) “copiers” as sold by copier dealers are far more complicated than printer-based MFPs, and if you ask me, require far more maintenance and service by design. I remember when Canon released their first copier with replaceable all-in-one developing unit cartridges and the dealers nearly revolted because they sensed a loss of service revenue if customers found out that they could change them on their own. Of course, the design was quickly modified so that tools were required to change them and customers would continue to purchase service contracts. There’s more, but deliberately making digital copiers so complex that they protect their dealer channels and profits is rightfully under siege in today’s market and HP knows this and plans to disrupt it. This will sadly be to the detriment of the toner-based dealer channel. On the other hand you might say that their suspiciously complicit vendors deserve it for having their heads in the sand for far too long. So in the end, customers save, HP profits, and traditional copier dealers and vendors may take it on the chin. This phenomena is common in the world today and is known as “disruptive innovation.”

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