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Can HP really transform the A3 Print Market? 2/2

1st part to read here.

Thirdly, the signs are that this time, HP has taken the time and trouble to do its homework, to listen to channel partners and customers, and to get the offer right before launching it. As a result, they appear to be gathering the rewards of success, with 500 new channel partners already signed up worldwide. Initial indications are that the new offering is getting a very positive reception from channel partners and end customers alike.

But what about channel partners who cannot or do not want to adapt to HP’s view of the world, and prefer to stick with their existing A3 vendors? There is no doubt that HP is not just introducing new products and services, they are challenging the whole business model which is currently used by A3 vendors and their channel partners.  This model is based on products which traditionally have needed relatively high levels of break-fix service intervention, requiring partners to maintain teams of field service engineers. However, this has also enabled partners to generate large and profitable revenues from service, and to maintain close personal contact with customers though regular visits by field engineers.

HP describes this model as ‘people intensive’, and out of tune with the modern IT world, where service is mostly delivered remotely, and often automated. The ‘IT’ model is already largely used for most A4 printers.  The challenge for a traditional  A3 partner in taking on HP’s new offering is that service is a fixed cost, and he won’t see the benefits of HP’s lower service interventions unless he lays off engineers – but he still needs them to service his existing A3 ‘copier’ MIF. How does he run the two business models at the same time, or maybe manage the transition?

The issue for HP then is which channel partners to work with. The A4/’IT’ business model sits more comfortably with HP’s existing IT channel. However, these partners generally are not so well equipped to deliver a contractual click-based or MPS model, which is the norm for A3 devices, and also the model towards which all print volume is moving. For this reason, HP has recognised that it also needs to increase its penetration in the A3 ‘copier’ channel.

However, there, at least initially, it will be Number 2 or 3 in multi-brand resellers, alongside established vendors such as Xerox, Canon, Ricoh or Konica Minolta. Will HP be able to convince these channel partners to shift towards an A4/’IT’ business model, and, over time, increase HP’s share of their business? And can HP help them manage the transition? Alternatively, HP could try to sell more of its new A3 products through the existing IT channel, using a transactional approach, rather than a contractual or click-based model. That would run counter to the trend towards MPS, and might encounter customer resistance. It would also carry the risk for HP of reducing their control over the aftermarket consumables, and so losing more revenue to compatibles.


In an ideal world for HP, its existing IT resellers would adapt to selling both A4 and A3 printers on a simple contractual model, and at the same time HP would also increase penetration in the ‘Copier’ channel, with resellers there transitioning to a business model based on remote monitoring and management, with much less physical service intervention, and also extending into IT services. In effect, this would mean the two channels coming together. The potential obstacle is that the ‘Copier’ vendors have seen this coming for some time, and they have been working hard to reduce the service requirements of their own devices, including the introduction of remote monitoring and management tools, and at the same time they have been building bridges to the IT channel.


Where does all this lead us to? If we look forward ten years, we can anticipate that most printers, whether A4 or A3 will be sold on a contractual model, with much less on-site break-fix intervention, and large field engineering teams a thing of the past. Print volumes will be significantly lower than today, and the industry will have consolidated, both at vendor and channel level with both OEMs and resellers who cannot adapt going out of business, or being acquired. If we had to place a bet, we would certainly have HP as one of the winners in this scenario.  However, the interesting point to watch will be how the transition plays out, and who manages it best. That will determine who is left standing, and who falls by the wayside.

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This article was written on 02 May 2017, and is filled under Point of View.


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