Unlike a jovial pub lock-in, HP’s strategy of locking in customers to its expensive consumables could backfire, potentially driving consumers towards more cost-effective alternatives offered by competitors.
An opinion article by David Connett.
Down at the Drunken Duck, where the landlord’s lock-in creates an atmosphere of camaraderie and enjoyment, starkly contrasts HP’s strategy of locking in consumers. While the pub’s lock-in is seen as a delightful exception, a way to extend an evening’s enjoyment amongst friends, HP’s approach is more strategic and profit-driven. By designing printers that predominantly or exclusively use HP’s ink cartridges and promoting a subscription model for these consumables, HP aims to bind customers to their brand and products. Unlike the pub’s harmless after-hours fun, this form of corporate lock-in directly impacts consumers’ wallets and choices, potentially limiting their options and leading to higher expenses in the long run.
As The Register at the UBS Global Technology Conference reported, HP’s CFO Marie Myers expressed pride in HP’s ability to “raise the range on our print margins” thanks to “bold moves and shifting models.” This statement reflects the strategic nature of HP’s efforts to increase profitability, contrasting with the more community-focused intent of the Drunken Duck’s after-hours lock-in. Myers’ pride in HP’s financial strategy underscores its focus on leveraging vendor lock-in to boost its bottom line. This perspective is fundamentally different from the social and relaxed atmosphere of the pub’s lock-in.
Now, HP is very proud of the 11+ million subscribers paying anything from 0.99 cents up to €24.99 a month to print, which is probably where the double-digit revenue growth comes from. What is unknown is how many HP subscribers jump ship each month.
Here’s the rub: the office print world is undeniably in decline, a trend that HP is acutely aware of. Add to this the looming shadow of the EU’s ecolabeling legislation, which could redefine the playing field. HP’s strategy appears even more like a desperate tailspin towards an inevitable decline. Rather than a savvy market position, this might be seen as a short sighted attempt to sidestep upcoming regulations. But consumers are savvy and gradually recognise this ploy and shift their loyalty elsewhere, with investors eventually seeing through the facade. Moreover, one must question the ethics behind HP’s pride in manipulating consumer choices in a diminishing market.
David Connett is a partner at Connett & Unland GbR, a Media, Marketing, and Public Relations team based in Germany that provides expertise to office imaging business owners and companies worldwide. He was the founder of ETIRA (the European Toner and Inkjet Remanufacturers’ Association) and is a current member of the ETIRA board. David has spoken at many industry conferences and events and regularly briefs the international press and lobby groups on industry issues.
