The Imaging Channel

HP Seeks to Grow Its MPS Program By Acquiring Printelligent — And It Probably Will

As you know, all of the hardware manufacturers have sworn various oaths to their investors, channels and customers that they’ll beef up their managed print solutions and grow their MPS businesses. Some of this is hype, of course, and I’m skeptical about a lot claims being thrown around. Frankly, I wonder if certain programs will ultimately succeed.

That said, I think Hewlett-Packard has become quite accomplished in its pursuit of the MPS market. It has successfully grown and managed its MPS business in a few short years. The company was a relative latecomer to the game and faced stiff competition from strong, established players such as Ricoh and Xerox along with other copier firms that had been marketing MPS-like programs for years. But using strategic acquisitions, the company has scored a string of successes since entering the market just over five years ago.

Much of HP’s MPS assets come through acquisitions. In fact, when HP looked to launch its nascent MPS program in 2006, it “acquired” one of its fiercest foe’s (Lexmark) sales executives, Bruce Dahlgren, to run the business. And when it has sought to more successfully penetrate certain market segments, it’s accomplished this through acquisition. The best example is the EDS acquisition. While it provided HP with a variety of other valuable assets, the nearly $14 billion EDS buyout has allowed the company to sign more MPS contracts with enterprise customers. HP had a small direct sales force prior to the deal but EDS provided vast resources to service the enterprise space.

While HP has focused much of its attention on the enterprise space, it has demonstrated a strong desire to capture more revenue from small- to medium-size businesses. It has put in place programs in different regions around the world to support its channels as they go after more SMB customers. Now it appears the firm will place more of its attention on the North American SMB market. The first concrete indicator came a couple of weeks ago, when HP announced it was acquiring Printelligent, an privately-held MPS provider based in Salt Lake City, Utah, that caters to the SMB market.

According to the HP press release announcing the acquisition, “Printelligent’s assets will be integrated into the LaserJet and Enterprise Solutions unit within the Imaging and Printing Group of HP.” The deal is pending what the firm calls “customary closing conditions” and is expected to close during the company’s fiscal third quarter, which ends in July. The terms of the purchase were not disclosed, but for sure the scale of this acquisition will be miniscule compared to the nearly $14 billion HP spent to gobble up EDS. But here’s another example of where size doesn’t necessarily matter. This acquisition ought to provide HP an established platform from which to deploy future MPS offerings.

According to the firm’s corporate website, Printelligent has been in business since 1988 and it launched its first MPS program in 1993. It claims to be “the industry's most experienced Managed Document Solutions provider.” Printelligent’s client list includes small-to-medium businesses in 39 states and says it can provide service to some 728 cities. It manages about 500 million documents per year. Printelligent will provide HP with an established presence in the SMB market and it also gives the firm MPS technology that’s been recognized as among the best in the world.

HP recently strengthened its arsenal for its assault upon the MPS market. Last month, it replaced the venerable LaserJet 4345 MFP line with its new M4555 MFP family. Originally launched in 2004, the 4345 MFP series was growing long in the tooth, but was historic nonetheless. HP has credited the 4345 machines with allowing it to compete toe-to-toe with copier manufacturers. While they are not the least expensive devices in terms of total cost of ownership, the new machines have slightly lower per-page costs than their predecessors thanks to a new high-yield toner cartridge. In addition, HP says the M4555 units use almost 20 percent less energy, presumably because the new machines use a chemical toner with a lower fusing temperature. And they come loaded with new management tools that were not available in the middle of the past decade.

Of course, HP isn’t the only hardware manufacturer looking to better penetrate the SMB market via strategic acquisitions. Earlier this year, Konica Minolta snatched up All Covered, an IT services provider based in Redwood City, Calif., that services SMB clients across the U.S. All Covered itself has grown significantly by purchasing smaller IT MSPs throughout the U.S., and that practice is expected to continue. Just after HP announced it was acquiring Printelligent, Xerox said it would acquire NewField IT, a U.K.-based print consultancy and software solution provider with an office in Philadelphia that services SMB clients. NewField IT developed the popular Asset DB package, which provides tools to remotely monitor and manage a small or medium-sized firm’s printers and copiers. Unlike the HP acquisition, NewField IT will operate as a wholly owned Xerox subsidiary.

Posted by Charlie Brewer on 06/09/2011