Printer market hots up as HP enters sub-Rs 5,000 segment

New Delhi

Hewlett Packard India Ltd (HP) has announced its foray into the sub Rs 5,000 inkjet printer market. The one model that has been launched in the category-deskjet 630C-is available for Rs 4,999. The company has also announced that it will grow its marketshare in this segment, from zero to 60 percent within the next three months. 

The sub Rs 5,000 segment is approximately 13 percent (approximately 8,000 to 9,000 units a month) of the entire inkjet printer market. Thus, HP targets at selling about 4,500 to 5,000 printers every month within the next three months. Canon and Lexmark are the other players in the segment. Canon has said that it will surely react to HP's move, but has not decided as yet, how and when.

Unlike its two competitors, HP will target its sub Rs 5,000 in the up country markets in the A and B class cities. According to Princy Bhatnagar, Market Development Manager (Consumer Peripheral Division), HP India, "We are not just trying to increase our marketshare with the launch of these printers, but we are primarily trying to develop a new market, educate people in the smaller cities and give them an affordable value for money printer. Revenue-wise, the printers will not give us much initially. If we do about 4,500 printers a month, it comes to Rs 16 lakh, which is not very much. So, more than focusing on increasing the sales initially, we will concentrate on building and expanding this untapped market."

Talking about why HP had not ventured into this segment before, Bhatnagar said, "We did not want to compromise on the quality of the printer. To be competitive on the price front, we would have had to degrade the quality. This is something we did not want. Now, we think is the right time, because we can offer a quality product at an affordable price point."

According to Bhatnagar, HP profiled an average home printer user in the up-country market and found out that he still prefers to use a DMP printer and is very price conscious. "Not surprisingly, the up-country home user prefers to use a DMP because it is a cheaper option. Our main task now is to educate and tell him that he has a better option."

For this, HP will be running a strong promotional campaign in the smaller cities. Regular roadshows will be held. The company will also announce bundling schemes in association with its resellers. The retail channel will also be focused on. HP's channel strategy concentrates on improving the net revenue earned by their channel partner than hiking the margin per sale of HP product. HP currently has more than 150 outlets in more than 60 cities with plans to double this infrastructure in the next year. HP has earmarked 20 percent of its funding towards promotions in the up country regions. 

Canon, which has the BJC 1000 at Rs 4,500, does not seem threatened with HP's new launch. Said Ajay Kapoor, Marketing Manager, Canon India, "Over the past one or two years, HP has been facing competition from other players like Epson and Canon. Whereas its marketshare was almost 90 percent about two years ago, the same has come down to around 55 percent today. I think this is HP's strategy to counter the competition it is facing." 

Talking about how Canon will react to HP's new offering, Kapoor said, "We will surely have to react. We have not worked on our strategy as yet. It could be in terms of pricing, or bundling, or anything else. We already have started bundling our printers with the new scanners that we have launched." Canon currently does not have a presence in the up country market. Kapoor informed that the company has plans of expanding into this market as well. However, instead of promoting just the entry level printers there, it will take the entire range of its printers. 

With HP bringing the price point of the entry level printer to the sub Rs 5,000 mark, is there a chance of a printer price war ensuing, like there was for the sub Rs 40,000 PC a few months ago? Kapoor doesn't think so. "In a PC, the price war is more evident, because there are so many components that make it. Bringing the price of even one of them, would bring the overall cost down. That's not there in a printer," said he. 

Added Bhatnagar, "We don't want to get into a price war. If we had to do that, we would have priced the printers lower than the others in the market, but that is not the case."

Compaq also launched its inkjet printers recently. But these printers are not to be sold separately, but will be bundled along with Compaq PCs. Both HP and Canon don't feel threatened with Compaq's strategy. "I don't know how an IT company will fare in the peripheral segment. We will have to wait and see," said Bhatnagar. Kapoor of Canon does not feel Compaq is any threat to Canon because, "this is something that Compaq keeps doing. Most probably, they have rebranded a Lexmark printer. They have earlier used Canon printers for the purpose also."