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A test for innovation
July 11, 2005
Are home printers "good enough"? Or will buyers eagerly shell out more bucks for slick new features? Have printers turned into commodities, sold mainly on price, or is there still room for innovation?
These are crucial questions for the technology industry, with implications that reach far beyond the printer business, and we should soon know more about the answers. In New York today, Hewlett-Packard will introduce a new line of faster, higher-quality ink-jets that it sees, according to an article in today's Financial Times, as "an important breakthrough that would help [it] fend off rivals determined to drive down prices and chip away at its market share." The new printers took five years and $1.4 billion to develop, according to Computerworld.
As in many sectors of the tech business, two dramatically different business models are going head-to-head in the printer market. On one side is HP, the company that built a dominant position in printers by investing tons of money into R&D to give it a technological edge. HP continues to put its trust, and its capital, into innovation. On the other side is newcomer Dell, which is elbowing its way into the printer business, believing that printers are becoming cheap commodities. Rather than develop its own printers, Dell buys its machines from Lexmark and simply rebrands them. With its minuscule R&D budget and highly efficient operations, Dell hopes to gain an edge through lower costs.
HP's new printers give the company "a three-year edge in speed and quality," according to the FT. And because the printers require proprietary HP paper, they'll boost HP's supplies business. No doubt, some buyers will value the speed and quality improvements highly enough to pay more for them. The question is, will enough buyers feel that way to provide HP with a payback on its big R&D investments - or will commodity producers like Dell put a lid on prices, preventing HP from earning a return on its innovation expenditures? It promises to be a fascinating experiment.
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Comments
"because the printers require proprietary HP paper they'll boost HP's supplies business"
That might be not true. I suppouse that story is not much different from the case of printer ink cartriges.
Posted by: Darek at July 11, 2005 10:10 AM
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Nick's next book:
Nick's latest book:
"Future Shock for the web-apps era" -Fast Company
"Ominously prescient" -Kirkus Reviews
"Riveting stuff" -New York Post
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Avatars consume as much electricity as Brazilians
The love song of J. Alfred Prufrock's avatar
Flight of the wingless coffin fly
Other writing
The end of corporate computing
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