1) HP makes a profit when people buy this $699 printer (though not as large as when they sell four ink tanks without a printer for $822);
2) Every printer re-purchase helps maintain their 40% marketshare in the printer business, if it's measured by printers sold rather than cartridges sold;
3) Every printer re-purchase keeps a sale away from Brother or another competitor;
4) HP's printing division has now been merged into the declining PC division, so nobody would notice the declining printer margins amongst lower-margin PC's anyway.
"HP's new CEO Meg Whitman, who calls the printing division "the lifeblood of HP," responded to the decline by folding it into the PC division, which saw a 15% drop in revenue last quarter. That will solve one problem: concealing the extent of the decline in HP's printer margins by blending it with lower-margin PCs. More practically, it could give HP greater leverage in negotiating prices with component suppliers."
Comments
I can only imagine that:
1) HP makes a profit when people buy this $699 printer (though not as large as when they sell four ink tanks without a printer for $822);
2) Every printer re-purchase helps maintain their 40% marketshare in the printer business, if it's measured by printers sold rather than cartridges sold;
3) Every printer re-purchase keeps a sale away from Brother or another competitor;
4) HP's printing division has now been merged into the declining PC division, so nobody would notice the declining printer margins amongst lower-margin PC's anyway.
"HP's new CEO Meg Whitman, who calls the printing division "the lifeblood of HP," responded to the decline by folding it into the PC division, which saw a 15% drop in revenue last quarter. That will solve one problem: concealing the extent of the decline in HP's printer margins by blending it with lower-margin PCs. More practically, it could give HP greater leverage in negotiating prices with component suppliers."
From: http://tech.fortune.cnn.com/2012/03/29/hps-printer-problem/