In recent years, even the best printers have come down significantly in price and this is due to the fact that ink sales are where HP and other printer manufacturers make the majority of their profits.
HP’s ink and toner businesses has generated billions of dollars in profit over the years but this aspect of its business was threatened in 2019 when more customers began considering cheaper alternatives such as off-brand print cartridges known as “cloners”.
At its Securities Analyst Meeting 13 months ago, the company came up with a solution in which it would raise the upfront price of printer hardware for customers that did not want to be required to only use HP ink. At the same time though, HP also planned to create hardware that made it impossible to use off-brand print cartridges.
HP CEO Enrique Lores provided further details on how the implementation of this plan has been going during a Q4 2020 earnings call with investors, saying:
“We continue to evolve our print business models with our drive towards services and a rebalance of profitability between hardware and supply. We are making progress on rebalancing the business model between hardware and supplies. We are expanding profit upfront with 69 per cent unit growth on SES or Big Inc. We have improved consumer hardware AIU year-over-year through selective price increases, new product innovations and lower discounts.”
Locking down the print ecosystem
In an effort to ensure its customers only use HP ink, HP recently began the rollout of HP+ which includes the ability to automatically detect and fix connectivity issues, a Smart Security monitoring system, native in-OS printing and its environmentally friendly Forest First feature.
However, to use HP+ a customer must have an HP account, internet connection and agree to only use “Original HP Ink or Toner for the lifetime of the printer”. While the new service doesn’t come with a subscription, the company is giving users a six-month trial of Instant Ink which recently led to a bit of backlash from customers when the company ended its print-for-free lifetime deal and replaced it with a monthly payment plan.
Another new security feature in HP+ is Private Pick-up and this makes it so that a printer will only release documents when the user who printed them is physically near the device.
We’ll have to see whether HP’s decision to lock customers into only using its ink pays off but lowering the cost of these printers could be enough to win some users over.