Lynn,
At this juncture, we see Dell's ability to meaningfully disrupt HP's printer business more as a possibility to be monitored over time.
I agree 100% with this statement. It's not going to happen today, tomorrow, or in the next 2 years. But I wonder if G-S made a similar statement in 1990 about Dell's direct-to-the-customer PC model ten years before they became the largest supplier of PCs in the world.
Actually, I'm being too hard on G-S. They do go on to say...
*AT THE SAME TIME, WE WOULD NOT UNDERESTIMATE DELL'S ABILITY TO AFFECT CHANGE LONGER-TERM. On the surface, Dell does not appear to be in a position to make meaningful and immediate changes to the printer market. However, viewed as a long-term initiative for Dell, its potential to affect the market could build. As such, the more important element to monitor is Dell's effectiveness in building up its printer business over time. Today, HP accounts for about 37% of inkjet printer sales and 51% of the market for laser printers. Given Dell's traditional focus on gaining share, HP's leadership position in the printer market provides Dell with an attractive long-term target. We believe that this could become a win for Dell if the company is able to grow a fairly sizeable installed base, increase its PC/printer attach rate, pull in printer-only sales, and change the buying behavior for consumables.
They estimate Dell will have a 6.6% share in inkjets next year alone! That probably already puts them somewhere in the # 7 to #10 slot (just my guess) in overall printer market share.
The interesting question is where Dell would pull their share from? The odds are that they would pull most of their share in the first years from the 2nd tier players and have little effect on HP's share. HP has a very good name in the printer business with a very loyal following. I'd guess that they'd take it from the bottom of the chain and move up. Another guess, though. It'll be a number of years before they have a significant effect on HP's share. But just as many thought CPQ would be #1 in PCs forever (and were wrong), I suspect that those who think HP will be #1 forever could also be wrong. The good news is that HP has some time to figure out how to change their business model to fight the good fight.
Dave |
