Hello I just have to get this off my chest – no one else seems to have written about this topic in great detail. Its was supposed to only be about the Xerox vs HP buy out talks but then I realized a lot more than that needs to be discussed.
Lets go back a little and analyze some of the printing industry history (from my view point). The day before (October 31, 2017) HP purchased the printing business from Samsung for the whole world except South Korea. Samsung was private labeling printers and toner cartridges for almost everyone in the toner market, companies which are most obvious were Dell, Lexmark, Ricoh and yes Xerox.
Xerox was getting almost all their printers from Samsung, in fact there was not one Samsung cartridge I could not modify to get to work in a Xerox printer. Dell had the same type of involvement with Samsung and with Lexmark as well.
Lexmark used some Samsung private label printers but still had their tank type family of cartridges T650 (1 piece cartridge solution) / E260 (2 piece solution), the same technology being used for over 20 years – with a more advanced chip solution for each new family of printers. Lexmark still private labels IBM and InfoPrint (Ricoh owned) printers and cartridges. The same line of printers and cartridges are presently used in their version of MICR solutions called Source Technologies the same type of business as Troy Group which sells HP MICR solutions. If I remember Lexmark was at one time private labeling Samsung and Dell Ink printers and supplies (There is another Lexmark story to come)
HP on the other hand – uses Canon technology for its toner and laser printer business. Almost all HP cartridges can be made to work in a Canon laser printer with either a simple chip swap or a slight mod on the hoppers or cartridge side caps. We can safely say the same for Canon laser printer cartridges which can all be placed into a HP printer with the same type of modifications. In fact all the inner components of those cartridges are identical or fully interchangeable.
Back in the late 80s until mid 90s HP was private labeling Canon technology for almost every OEM including Apple – yes Apple. Samsung had recently started becoming the printing world’s new private label printer manufacturer.
So you need to wonder why Canon and Samsung bothered teaming up with all those other OEMs instead of just wiping them out of the printing business.
Until recently Canon toner printers were non visible in North America and the Canon machines and supplies which became available where priced about 50% higher than the HP equivalent. HP supplies where already overpriced – so you can imagine the profit made on an even more expensive Canon toner cartridge by Canon. In theory swapping chips on HP original toner cartridges with after market Canon chips – could have been a profitable endeavor, for customers wanting OEM product, but the Canon footprint was rather small to focus on that type of business.
It was also easier to sell a US HP labelled printers than a Japanese Canon machine. Same goes for South Korean Samsung products – back then Samsung was known for being a lower end product much like Samtron and GoldStar (LG) brands. On the other hand Canon always had a higher end perception much like Sony. For Samsung to private label for its perceived higher end partner Xerox was an easier, simpler path into the higher end business market. Same for the Dell experience. Maybe for Lexmark – they were in partnership with Samsung since they needed help at the lower end to compete with HP home products which Samsung competitively offered.
Now Xerox also has a long standing licensed arrangement to sell re-manufactured HP / Canon cartridges under the Xerox product label – not sure if the arrangement is with both HP or Canon or individually.
So lets see what the score is, Samsung owns Xerox, Dell, Lexmark, (and more ) private label business. Canon owns HP and somehow Xerox private label re-manufactured products.
The day after ( November 2, 2017 ) the HP purchase of Samsung is announced – HP now had briefly in some way a piece all the laser printer business except for second fiddle players OKI, Brother (biggest of the second fiddle players), Konica, Kyocera.
The only one of those 4 worth talking about is Brother. A brand that is late evolving to the chip technology for its supplies. Brother is a good brand slowly growing its market share. Kyocera and Konica are from the copier world dabbling in the laser printer marking with Konica ahead of Kyocera in North America. Then we have poor old OKI or OkiData.
OKI was once the king of the ribbon printer business, now its the brand that distributors of OEM and knock off supplies can not make money on. Not sure what their strategy is but it has to be the most under represented brand in the home printer market in North America. Back in the mid 90s they had a few laser models which were quite popular. Now we offer supplies for a mountain of OKI laser printer models which no one purchases or use. They need help biggly. (lol)
Now back to the HP -Samsung deal – which caused Dell terminate their printer business, probably Lexmark dropped those private label Samsung printers from their lineup and who knows how far this rippled into the industry where no one wanted to partner with HP.
All this leaves Xerox – poor struggling Xerox, selling new private label Samsung branded HP products and selling remanufactured branded HP products. Now competing directly against HP who is now also selling Samsung copier products. HP has Xerox in a vise grip type head lock. Basically Xerox presently have all their eggs in one big HP basket. That is the last place anyone wants to be in. The HP – Samsung deal may be the biggest and best strategised deal in all of the laser printer market history. They killed a bunch of birds with just one stone. Genius!!!
Not sure how many heads have rolled a Xerox but those guys maybe should start working on developing their own products OR !!!!!
Are they going to take the easy way out again and try to make the HP -Samsung deal look like it played directly in the hand of the new owners at Xerox. New owners ? Since 1962, Fuji Xerox had a joint venture which was one of the oldest relationships between an American and Japanese firm. Faced with its continued decline within the technology industry, Xerox announced in January 2018 that it was being acquired by Fujifilm in a deal valued at more than $6 billion.
Then on May 14, 2018, Xerox announced a new CEO, who now had lots of cash to play with, who maybe has a little God Father syndrome in him, walked into HP HQ and made them an offer they actually refused.
They are presently going back and forth on this. The way I see it – cause everything I write here is mostly based on what I see – otherwise I might as well cut and past a CNN or CNBC half baked reportage link to their sites.
The way I see it – besides HP being 3 times bigger than Xerox – HP has its feet in too many technological areas making them everyone’s competitor. No one likes HP, in the printer supplies business they messed up the distribution channel in the USA reducing the number of authorized dealers and distributors and forcing us into ridiculous conditions to be able to sell their products. Those that lost their authorization were forced to get grey market products which is what they were trying to control in the first place. (Bad move HP). Much like Epson, which had been doing the same thing. (Grey market products another story to come)
So by having no one liking you – by being everyone’s competitor – private label business like Samsung once enjoyed will not happen for HP. So no growth in a shrinking market in the horizon, unless you go the other way and sell the HP printer division to Xerox.
Then Xerox has a new life line and cuts out the middle man becomes more profitable and by not being a competitive nuisance can retain, regain or even grow that Samsung private label business. I just hope they are smart enough to grow the Samsung technology and not just sit on the existing technology. Remember HP laser technology is mostly owned by Canon- so that would be another battle.
So by Xerox taking over – it will allow the HP shareholders to profit much more if they purchased Xerox themselves. Or by not doing anything and refusing the Xerox offer to purchase HP. For those guys its all about cash – the HP laser tech belongs to Canon anyways. That is why Canon is suing everyone in the knock-off market. So in my opinion all shareholders will benefit more with the Xerox purchase of HP Inc.
To be fair, I have barely touched upon the copier and ink business mainly because I was more interested in the laser toner business being a re-manufacturer. I am not sure of the financial implications and who owns the technology each of the OEM use when it comes to ink and copier machines and supplies. ( I should have a future story about this topic)