Profits from printers and ink cartridges are shrinking as firms and individuals go electronic.
As if Hewlett-Packard Co. didn't have enough problems with its lagging personal-computer business and its admission to having paid billions of dollars too much for software firm Autonomy, sales of printers -- long one of the Palo Alto, Calif., tech giant's main revenue sources -- are shriveling.
HP executives insist that 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, according to some experts, because of smartphones and tablets, which enable vast amounts of information to be easily accessed from anywhere. And experts predict that the trend will accelerate, which could further threaten HP's bottom line.
"They are in trouble over the long term," said Federico De Silva, a principal analyst at Gartner. "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."
Gartner foresees global sales of printers and copiers -- $50 billion in 2010 -- dwindling to $47.8 billion in 2014. 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 ... mobile devices and tablets."
Some people -- including 28-year-old Ai-Lien Le of San Jose, Calif., an early intervention specialist for developmentally challenged children -- hit the print button as much as they ever did. Although she owns a smartphone and iPad, she said, "When I go into meetings, I have to print out documents to the participants. I still like paper."
But James Jeffery, a 46-year-old sales engineer from Reno who frequently flies into the San Francisco Bay Area for his equipment automation company, said he mostly e-mails information to his clients.
"In business, my printing is down over 90 percent," he said, "It's just becoming antiquated."
That's not what HP wants to hear. The company's stock 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 that it had been tricked into paying more than $5 billion too much for Autonomy. It can ill afford to have its printer business -- which CEO Meg Whitman has termed "the lifeblood of HP" -- 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 2012. And those products, which represented 31 percent of its total revenue in 2003, now account for just 20 percent.
"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 on the Internet and other sources, HP officials say, some of that is always going to get printed. Moreover, they foresee the printer market for businesses in some parts of the world growing, which is why the company is focusing more on those areas.
Noting that people have predicted the demise of printers for years, Brent Bracelin, an analyst with Pacific Crest Securities, said the business is "still generating a good bit of profitability."
But others point to many signs that society is going paperless. Gartner's De Silva said workers on average print half as many documents today as they did in 2005.