Hewlett-Packard further beset by decline in printing

  • Article by: STEVE JOHNSON , San Jose Mercury News
  • Updated: December 15, 2012 - 8:35 AM

On top of the Silicon Valley giant's other problems, one of its main businesses is shrinking.

As if Hewlett-Packard Co. didn't have enough problems, sales of printers -- long one of the tech giant's main revenue sources -- are shriveling.

HP executives insist printers, ink and related products will remain essential for businesses and many individuals. But people aren't printing as much as they used to, in part because of smartphones and tablets that enable vast amounts of information to be easily accessed from anywhere.

"They are in trouble over the long term," said Federico De Silva, a principal analyst at the Gartner market research firm. "It's a big business, to be sure, but it's not growing. It's in a slow decline and we don't see it coming back."

Just this month, International Data reported global shipments of printers had dropped nearly 26 percent in the third quarter this year. It blamed the soured economy, reduced business purchases and "the shift in consumer spending to other products like mobile devices and tablets."

Hewlett-Packard's stock already has been in a tailspin, largely because sales of its primary product -- personal computers -- have slowed dramatically. In addition, the storied Silicon Valley corporation recently announced it had been tricked into paying more than $5 billion too much for the software firm Autonomy. It can ill afford to have its printer business also go south.

So far, the evidence isn't encouraging. Sales of printers and related products at HP -- which owns about 40 percent of that market worldwide -- have fallen from nearly $30 billion in 2008 to $24.5 billion in fiscal year 2012.

"We certainly see pressure on the consumer printing market," particularly with people printing fewer photos at home, acknowledged Steve Nigro, an HP senior vice president. But he insisted "printing is not going away."

With the volume of information growing online and elsewhere, HP officials say, some of that is always going to get printed. In October, the company introduced what it called "the largest upgrade of HP's commercial printers in almost a decade." It's also pushing products that make it easier to print from mobile devices.

Noting that people have predicted the demise of printers for years, analyst Brent Bracelin of Pacific Crest Securities said the business is "still generating a good bit of profitability."

But even among businesses, which are widely expected to keep some printing, many have reduced the number of printers they have to cut costs. The trend is only going to accelerate, according to Cindy Shaw, an analyst with Discern, an investment research and analytics firm.

"Grandma and Grandpa may still prefer hard copies," she observed in a recent note to her clients, "but over time, Grandmas and Grandpas will have grown up in the digital age."

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