Rising use of supplies
One of HP Inc.’s (HPQ) key objectives is to place hardware units with a higher usage of supplies. In fiscal 1Q17, the Supplies subsegment accounted for 67% of total printing revenue, as compared to 62% in fiscal 4Q16 and 64% in fiscal 3Q16.
In June 2016, HP stated that it will “harmonize” global pricing and improve margins over time in its supplies subsegment. The company is looking to make a one-time investment to reduce the level of supplies inventory across channels over the next two quarters.
HP expects the trajectory of the revenue from its supplies subsegment to stabilize by 2017. As seen in the above table, revenue in HP’s printing business fell 14% YoY in 2016, but this revenue was limited to a 2% YoY fall in fiscal 1Q17. Now, with the supplies business stabilizing and HP’s investments in 3D printing, this business might drive revenue over the long-term.
Major players in printing
Notably, Canon (CAJ), a big HP competitor in the printing segment, reported a rise in unit sales in its laser printer business in 4Q16 (HP’s fiscal 1Q17), after a decline during the first nine months of calendar 2016. Revenue from Canon’s inkjet printer business, however, fell 11.1% YoY (year-over-year) in 4Q16. Xerox, another competitor, reported a 12% YoY fall in its equipment sales business segment in 4Q16.
According to IDC (International Data Corporation), HP led the worldwide hardcopy peripherals market with a share of 37.9% in 3Q16, as compared to 38.6% in 3Q15. Other leaders in this market include Canon, Japan’s (EWJ) Epson, Brother, and Samsung (SSNLF), with shares of 19.6%, 18.3%, 7.1%, and 3.3%, respectively.
Notably, worldwide laser printer sales fell 10.5% YoY in 4Q16, as compared to a fall of 14.6% YoY in 3Q16.