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Hewlett-Packard Goes Home

6/23/2003 02:00:00 AM Eastern

Hewlett-Packard is going home. A year and a half after CEO Carly Fiorina took to the stage at CES 2002 to advance her company's vision of a digital imaging 'ecosystem' encompassing everything from image capture to retail printing, the company is revamping its digital imaging strategy to focus strictly on the home-user.

What this means in the short term is an end to the Phogenix joint venture with Kodak (TWICE, May 19, p. 4), which was to provide retailers with low-cost digital inkjet minilabs to print digital photos. In the long term, the company will put a greater emphasis on growing the market for home printing, and on improving the industrial design and ease-of-use of HP's consumer digital imaging products, said Mary Peery, senior VP, digital imaging and publishing.

Peery said the company still believes in an "end-to-end" solution for the digital imaging consumer, as long as all 'ends' terminate in the home. While Peery noted that the company believed printing at retail will be a "very viable part of the industry" HP decided its investments would reap greater returns elsewhere.

Indeed, recent numbers released by the Photo Marketing Association show that consumers overwhelmingly choose to make their prints at home (94 percent, with multiple responses allowed). Peery said that internal numbers generated from the company's year-and-a-half old Instant Share series of cameras and USB docks, confirm that home printing is the method of choice among consumers.

"People are printing five times as many images using Instant Share than before adopting the system. And the recipient of images that are e-mailed are printing four times as much," Peery said.

HP's retrenchment from retail is a reflection of a conservative business strategy in the face of a tough economy and the uncertain future of digital image printing at retail, said Chris Chute, analyst, IDC.

"When you look at where people are making their prints, it's predominantly in the home and not at retail," said Chute. "The retail end of the market isn't going to develop overnight and it's extremely competitive" with established vendors such as Fujifilm aggressively getting their equipment in place, Chute said.

"Considering the business climate, HP put their money where they think the future of the market is going to be," Chute said.

Kerry Flatley, senior research analyst at InfoTrends, agreed. "It was a decision to focus on the core competencies." Flatley expects that HP will redouble efforts to capture greater share in the digital camera market and focus on opportunities to grow the already surging market for photo printers.

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