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HP Redirects Imaging Strategy

5/15/2003 02:24:00 PM Eastern

Palo Alto, Calif. - Hewlett-Packard is going home.

A year and a half after its pronouncement that it would tackle all ends of the digital imaging universe, from capture to output at retail, HP has decided its investment is better spent on selling digital cameras and inkjet printers.

According to a company spokesperson, HP will 'redirect its investment' in digital imaging toward growing digital camera sales and home printing, and abandon the retail photofinishing space.

To that end, HP dissolved its joint venture with Kodak and is terminating its central lab business. The company will maintain its Indigo division and retain a footprint in the commercial printing business, but all other retail photofinishing efforts are being disbanded, the spokesperson said.

While the spokesperson said the decision to terminate the Phogenix joint venture was a 'mutual' one between the two partners, retailers and industry sources suggested HP was the driving force.

'HP pulled the plug and left Kodak out in the wind,' said Joel Paymer, owner of New York based Camera Land, one of the beta-test sites for the Phogenix DFX digital minilab system.

Rather than break through into a new market, with uncertain returns, the company sees its efforts better spent where consumers will do the bulk of their printing - at home, on inkjet printers, where HP already has a lucrative market selling replacement cartridges.

In her 2002 CES keynote, HP's president Carly Fiorina said the company's 'primary focus' would be to create 'a great end-to-end experience to anyone who uses a camera.' But when it came down to looking at where its business should be focused, the spokesperson said the company had decided future investments would be better spent, as it were, closer to home.