HP Changes Its Imaging

By Jeremy Caplan

Hewlett-Packard is in transition mode--and not just because former CEO Carly Fiorina was pushed out in February, making way for Mark Hurd, hired April 1. The company is also changing from the bottom up, shifting away from old technologies like monochrome printing toward newer, more lucrative markets like portable photo printing. Coming off a strong second quarter in which profits rose 9.3% from a year earlier, the company is laying off workers--1,900 in the second quarter alone--and refocusing its printing business on the increasingly popular color laser jets; HP has 42% of the market. There is also renewed focus on large-scale printing and imaging. HP has new contracts to provide digital presses to companies like Jeppesen, a Boeing division that produces millions of pages of flight manuals annually for numerous airlines.

But HP faces a new challenge. Dell has become a strong competitor in printing, undercutting HP's pricing. Given that imaging and printing account for 70% of HP's profit, the challenge is significant. "Dell is giving away their printers rather than charging for them," says Vyomesh Joshi, head of HP's printer and PC group. "They're trying to buy the business." HP continues to diversify, presenting rear-projection TV, for instance, as an extension of its innovations in printing. No doubt HP is hoping to avoid a race to the bottom. --By Jeremy Caplan