HP has high hopes for high-end moves

Seated at a conference table in San Diego, California, Vyomesh “VJ” Joshi can barely conceal his excitement as he picks up a computer mouse to demonstrate Hewlett-Packard’s latest piece of high-tech gadgetry.

“This is the first time we’ve done a live interview with this thing,” says Mr Joshi, head of HP’s imaging and printing group, the $80bn computer company’s most profitable business.

Although he is sitting 500 miles away, the images and sounds projecting from the screens embedded in the wall of the “Halo” room in HP’s Silicon Valley headquarters are so sharp and lifelike that Mr Joshi might as well be sitting across the table.

Halo, HP’s new high-end video conferencing system, is one of a series of innovations that Mr Joshi’s engineers have brought to market this year as part of an ongoing attempt to transform HP’s imaging and printing group. Companies such as General Electric, PepsiCo, and BHP Billiton pay HP a hefty one-time installation fee and service charges to run Halo over a custom-built internet backbone.

Along with Halo, Mr Joshi this year introduced a line of in-store photo kiosks to boost the company’s photo printing offerings, which include at-home photo printers and Snapfish, an online photo storage and printing service HP bought last year.

Last week, at a conference in San Francisco, Mr Joshi outlined plans for HP to begin offering printing services to cater for the huge increase in user-generated content online.

The company is also launching a direct challenge to Xerox and other companies in the office copier market by marketing networked, multi-function laser printers that can also copy documents.

All this is a long way from the inkjets and laser printers that make up the core of HP’s imaging and printing business, and that is how Mr Joshi likes it.

“We want to take our technologies and go after completely new businesses,” he says.

Two years ago Mr Joshi launched a restructuring of the company’s imaging and printing group, which last quarter accounted for almost 30 per cent of HP’s $22bn in total sales. In 2004, HP’s vaunted “razor and blades” printer strategy – in which the company sold printing hardware in order to profit from sales of high-margin ink – was beginning to come under pressure from rivals such as Dell, Lexmark and makers of generic printer ink.

Now, says Mr Joshi, the imaging and printing group is well on its way towards its goal of 5 per cent revenue growth this year, with profit margins of 13-15 per cent.

Peter Grant, an analyst at Gartner, says that combining HP’s traditional strength in hardware with innovative services such as in-store photo printing, networked multifunction printers, and Halo, should allow HP to find new growth by bringing more of its technologies to bear on solving customer problems.

In the enterprise market, says Mr Grant, “more businesses are interested not so much in owning the equipment but linking up with a partner or having HP manage it directly”.

HP is also pursuing a services-based approach in its push to offer printing services to amateur photographers and other creators of user-generated digital content.

Mr Joshi last week outlined a broad vision of how HP plans to use the internet to connect people to different kinds of printing services.

Snapfish, the company’s online photo site, already allows people to print photos at home or order prints online from a retailer.

Soon, Mr Joshi says, a family back from holiday could be able to get directly in touch with a professional printer to turn hundreds of vacation photos into a hard-bound coffee table book, using the internet as a portal.

HP has plans to offer small businesses a similar service. By using the internet as a portal, small companies could soon be able to connect with professional printing shops to place orders for homemade marketing materials, such as brochures and posters.

For the time being, Mr Joshi is coy about what kind of online services portal he has in mind.

“Stay tuned,” he says.