HP raises cartridge prices; resellers fume

While the reseller community is yet to breath a sigh of relief from the
counterfeit cartridge menace, HP has gone ahead and increased prices of its
inkjet and LaserJet cartridges with effect from 1st of May, 2002.

In a letter sent to all its Registered Supplies Resellers (RSRs), HP has
informed about a price increase of 4.4 percent on all but two models of inkjet
and LaserJet cartridges. On the other two models, the price hike is to the tune
of 9.4 percent.

However, with the introduction of resale tax and taking into consideration
the wholesale tax, overall changes in the cartridge prices turn out to be around
six percent.

Resellers obviously are not very happy with this development. “When
counterfeit and refilled cartridges are still widely in use, this increase in
price is badly-timed,” said Rajkumar Sheth of New Era Equipments. According to
him, this price hike may in fact provoke end-users to go for cheaper
alternatives.

Voicing a stronger opinion, Saifee Merchant of Best International, said,
“This is surely not a customer-friendly approach that HP has adopted and it
may well lose out on its market share in the next six month's time.”

The price hike has also created problems for those resellers who have annual
consumable supply contracts with corporate.

Highlighting this, Devang Shah of Crystal Impex, said, “RSRs or even
lower-tier resellers who have an annual contract for supplying cartridges to
clients would suffer as the latter won't revise their rates.” He feels that in
an absence of any kind of price-based support from HP, these resellers would be
forced to pay from their own pockets.

Resellers have also expressed their dissatisfaction over the reason offered
by HP for the price hike. HP attributes this hike to the devaluation of Indian
rupee against the US dollar.

Resellers, however, do not buy this because other brands have hardly
increased their prices. 

Goldie S

New HP faces glut of retailers

With the merger of HP and Compaq, the new HP is facing a glut of retailers.
With the result, there is fear among some of these retailers that they might
have to down shutters by the end of this calendar year.

Explains one former exclusive Compaq retailer who has now become a
multi-brand seller, “There are over 450 exclusive Compaq retail outlets and
another 400 HP showrooms in India, concentrated largely in metros. This is too
large a number for the market. Therefore, the new HP will have to downsize this
number to a manageable 500 outlets. Which means it will have to disown quite a
few of them.”

HP, however, said it will continue to invest in its retail channels for the
promotion of various products. V Krishnan, GM (Marketing, Imaging and Printing
Group), HP India, said that Compaq retail outlets will continue to retain their
current mode of operation. However, there will be lot of changes within the
store, which will now have a significant presence of HP peripherals.

“These stores will also offer supplies and consumables,” he added.

According to Krishnan, HP is currently in the process of consolidating the
retail operations of both companies. Retailers see this as a reason to worry.
Said Vengarai Srinivasan, Proprietor, Cyber Boutique, “Since I am an exclusive
Compaq retailer, the new HP will protect my loyalty. But other HP outlets which
are multi-brand in nature might be threatened by this process.”

Krishnan said that the new HP is working on branding guidelines for retail
outlets. “Once an uniform branding is implemented, every store will become a
part of the new HP retail chain,” he added. But, will the market absorb the
glut of new HP stores?

Vinita Bhatia

(CNS)