Sometimes it’s fascinating to let CEOs talk. Overconfidence or the desire to be 'real' often leads them to say a bit more than some advisors would call 'appropriate', and that seems to be the case with Enrique Lores, current CEO of HP. In a recent interview, Lores confirmed that blocking third-party printers and cartridges is primarily a matter of intellectual property, and he insisted on the idea of 'printing as a service'.
Anti-purchase, pro-rental. Everyone wants our money, but nobody wants to sell. Movies and series that disappear overnight, music impossible to buy, exclusive digital launches… and the story doesn’t end there. None of that would be possible without some form of restriction, some DRM. DRM in coffee makers, in trains, in printers.
And printers bring us together here today, or rather, the statements from HP CEO Enrique Lores. Last Thursday, Lores participated in a brief but very interesting interview with journalists from Squawk Box, a program broadcast on CNBC.
HP: Intellectual Property, Subscription Printing, and the 'Customer as Investment'
The first part of the interview focuses on what HP expects from the PC market. Lores talks about 'tailwinds', adding details like a 'Windows refresh next year' (or perhaps this year?), and the launch of new equipment optimized for artificial intelligence with dedicated hardware. There’s also a quick mention of hybrid work, but the journalist decided to move to the lawsuit HP faces regarding third-party inks.
Lores begins his response with a fairly obvious phrase: 'It is important for us to protect our intellectual property', and when they identify cartridges that violate that intellectual property, they will interrupt the printer’s operation. The journalist applied some pressure. Why 'break' the printer to block the use of 'fake' cartridges? Lores highlights the 'problems' that the printer could suffer from using inks that were 'not designed' for their equipment, and 'security issues' such as malware injection into cartridges, which can go from the printer to the local network. It sounds as if HP were admitting that its chip-equipped cartridges are vulnerable…
The next snippet comes at 03:52. One of the journalists asks whether 'there should or shouldn’t be a third-party market' for inks, and Lores says they need to simplify the printing process, so the long-term goal is that 'printing becomes a subscription'. According to HP and its CEO, the subscription is 'much more convenient' for the customer and more sustainable over time, because the company can recycle cartridges it receives. The journalist mentions that this strategy keeps prices 'artificially high', and adds the 'Razor and blades' model theory… which the CEO admits is true: HP loses money selling printers and makes money on supplies, but he decided not to share exact figures.
Which brings us to the third point, and I think it’s the most incendiary of all. Lores indicates that a few years ago, HP announced its intention to reduce the number of 'unproductive customers', i.e., those who buy HP printers but don’t consume their inks.
Every time a customer buys a printer, it is an investment for us, we are investing in that customer. And if that customer doesn’t print enough or doesn’t use our supplies, it is a bad investment.
Something tells me HP will spend the next few weeks in 'damage control', because if its plan is to attract more customers, this is not the way.
Sources: CNBC, Reuters, Ars Technica
