HP hopes printer unit sales will grow up to 6% in 2008

Duesseldorf: Hewlett-Packard (HP), the world's biggest maker of PCs and printers, sees sales growth at its imaging and printing unit stable or slightly lower this year as it focuses on its digital graphics business.

Vyometh Joshi, executive vice-president in charge of the unit, said yesterday he also aimed for an operating margin of 13-15 per cent this year and next, compared with 15 per cent last fiscal year to end-October.

"We would like to grow our business 4 to 6 per cent in revenues and make 13 to 15 per cent operating profit," Joshi said in an interview at the Drupa print media trade fair in Duesseldorf, Germany.

Sales at HP's imaging and printing unit grew 6 per cent last fiscal year.

Asked whether the targets were for the current fiscal year, Joshi answered: "Yes, for next year also."

HP's imaging and printing unit made sales of $28.5 billion last year - about a quarter of the company's total revenues - but almost half of HP's operating profit.

The unit is helped by a lucrative business in printer cartridges which customers must keep buying to keep their HP printers running.

Joshi said, however, he saw the future in digital graphics, which had now caught up to an acceptable extent with analogue printing methods in cost and quality, if not yet in speed.

In its favour, digital printing is far more flexible, and so more cost-efficient for smaller print runs, Joshi said. For example, changing details for a printed label could take months using analogue, compared with days for digital.

Although HP has 46 per cent global market share in printers, Joshi said, it accounted for just 1.6 per cent of the 50 trillion pages printed worldwide last year, a $781 billion market, because more than 90 per cent still used analogue methods.

"Instead of focusing just on the printers, we are focusing now on the pages. That's how we can continue to grow," he said.

HP estimates the value of pages printed in the global graphic arts market will be $663 billion by 2010.

After the digitalisation of music and photos, which are already well advanced, labels, marketing materials and books will follow in the next few years, Joshi predicted.

He referred to Google's ambitious project to scan all the world's books that are out of copyright, which has already gathered digital versions of more than a million books. "If you want to get a book that's out of print, digital is the way to do it, because you only print one copy," he said.

HP has made several acquisitions in the graphic arts field in the last few years, including most recently that of Israel's NUR Macroprinters in March for $118 million.

Joshi spoke as HP showed a new digital printing press for the first time at the Drupa fair, which is due to come to market in the second half of next year.