Document Advisors | IDeAs blog, for better document strategies.

Document Advisors | IDeAs blog, for better document strategies.

Also on Twitter | @DocAdvisors

HP announces the Jetadvantage On Demand SaaS Marketplace | Chapter 2

Chapter 1 available here.

Papercut was on the list and Nuance was not. This comes as a surprise as links between Nuance and HP are quite strong, and this is a frequent combination in pretty substantial accounts. Nuance is a heavyweight and Papercut can be described as a challenger.  Why make such a bet? Big should associate with big, shouldn’t they?

 

I think there are two elements here:

  • Saas business models and the disruption they create in the SW market.
  • Market segmentation

 

If I start with the latter,

Nuance, a well-established, classic corporation with revenues nearing 2B$, is known for its penetration in Large accounts with complex and very sophisticated products to meet the complicated requirements of such clients.

Papercut is a more an SMB oriented easy-going company with a philosophy that is quite different (Just check their respective Websites and see with your own eyes how style can be different, though selling similar products).

 

So HP, another epitome of classic American Corporate, partners with the relaxed Australian company. What fuels this? There are common goals i.e. go after the untapped market of Print Solutions in SMB. This is where HP Inc. wants to push its devices and generate the profits it needs and where its marketing clout is so strong.  Automation and ease are key for these “smaller” clients, as they do not have large IT staffs to accommodate print solutions deployments.

 

Let us remark that the new HP portal is launched today in the US only. European regulations have just been refreshed (GDPR and others) and make the European Internet quite different than the American one. Privacy Shield is probably an interim measure only. In addition, on a cultural level, privacy concerns when it comes to cloud printing make it difficult to adopt a heavy weight deployment strategy throughout Europe, and require a more subtle step-by-step approach.

So for now, HP Inc. is in effect approaching the US Mid market.

 

Why did they not do this with Nuance, the market leader? HP’s was not in a good position to comment and provided a technical response.

“Today Nuance does not have a multi-tenant Cloud/SaaS solution and therefore cannot fit in the HP JetAdvantage On Demand SaaS Marketplace platform.”

 

I have my doubts about this technology-based explanation. I fully respect Nuance’s engineering community, which is at least as able as others, and could surely create a multi-tenant Cloud solution, if they really wanted to. However, I feel that Nuance is struggling with a business model question.

Is SaaS profitable? Especially when you are the market leader and not a new player?

Nuance has a good revenue and bookings stream (though one could say it is not showing much growth). Exchanging this for a stream of monthly revenues which can be quickly interrupted, and so reduce the current high level of recurring revenue level is, not something they are ready to risk for a possible but far from certain endeavour. Saas remains to be proven as a business model for Software vendors (with the exception of a few notable examples, such as Salesforce.com).

 

Remember Disruption ALWAYS comes from the fringe, not from an established player.

Could it be that HP Inc., the once giant with feet of clay, could become a nimble disruptor? It has a different agenda from ISVs. It wants to sell more Hardware and Supplies in the business mid market, and intelligently tying in software is a way to achieve that.

And in this world of coopetition, I am sure that both companies will continue to cooperate actively on the Large Account segment, directly or indirectly, providing these solutions to the corporate world. Realistically quite a few Large Accounts have standardised their platforms on their Software choices, which include some of the Nuance brands. It is the level of cooperation (technical and commercial) provided by the Hardware vendor that ensures its own success there, and not its devices per se.

A last remark is that when approaching SMBs, HP will have to rely on the Channel to succeed. And this is where The Change of Business Models may hit again. The channel, as a whole, has not been very keen at pushing Print Solutions (which also explains to some extent its current weak penetration) because it was too complex and not generating enough revenue. Additionally the projects were few and far between, and affected both the quality and the productivity of the client facing teams. It became a place for specialised dealers with great competence but this, in general terms, is called a niche.

Can HP through this platform which certainly simplifies the process, bring back Print Solutions as a mainstream offering in the untapped SMB Marketplace?

Leave a Reply

Information

This article was written on 12 Sep 2016, and is filled under Business Forecast, Event, Point of View.

Shortlink

https://tinyurl.com/yxwzb38h

Current post is tagged

, , , , ,

Links