Fiorina: HP talked about breaking up - Dec. 7, 2004
Hm, so another article on industry giants, mergers, and possible breakups.
I like the part in this article that mentions HP's "lucrative" printing business. Let me tell you something I learned while working as a contractor for HP.
Say you're a huge industry giant. Let's say you're big enough to produce, market, ship, and sell printers. Ok, so you charge, for arguments sake, $100 for a printer that costs $85 to build. After shipping and other overhead, there is not much of a profit margin on the hardware. However...the consumer is now faced with occasionally replenishing the consumables; the paper and ink. Now, since you're an industry giant, you produce your own consumables (but probably not paper). Which gets us back to the ink. The consumer comes back to you for ink.
Let's say you need to ship some ink to a neighbouring country. You have a barrel of ink at the border, and it costs a few pennies for the contents. There's this thing called a tariff. So you ship it across the border, and apply the tariff on the other side. So the price on the barrel just increased.
Now lets say you ship it back again. Price goes up again. And back across. Price goes up. Back again. Price goes up again. And so on. And so on. What was pennies for the barrel just became dozens of dollars per barrel. Divide that up into small plastic cartridges...
One solution...laser printers. The initial cost is high, but the operating costs per page tend to be lower. While I couldn't find any specific stats, here is a forum that discusses some of the variables.
Just last year I purchased a new inkjet, 4 color printer. Cost, with cartridges, came to under $80. About a month ago I replaced all 4 cartridges, to the tune of around $70 after tax. For another 10 bucks I could have bought a new printer, with warranty, AND new ink. Blech!
Sounds "lucrative" to me!!
Hm, so another article on industry giants, mergers, and possible breakups.
I like the part in this article that mentions HP's "lucrative" printing business. Let me tell you something I learned while working as a contractor for HP.
Say you're a huge industry giant. Let's say you're big enough to produce, market, ship, and sell printers. Ok, so you charge, for arguments sake, $100 for a printer that costs $85 to build. After shipping and other overhead, there is not much of a profit margin on the hardware. However...the consumer is now faced with occasionally replenishing the consumables; the paper and ink. Now, since you're an industry giant, you produce your own consumables (but probably not paper). Which gets us back to the ink. The consumer comes back to you for ink.
Let's say you need to ship some ink to a neighbouring country. You have a barrel of ink at the border, and it costs a few pennies for the contents. There's this thing called a tariff. So you ship it across the border, and apply the tariff on the other side. So the price on the barrel just increased.
Now lets say you ship it back again. Price goes up again. And back across. Price goes up. Back again. Price goes up again. And so on. And so on. What was pennies for the barrel just became dozens of dollars per barrel. Divide that up into small plastic cartridges...
One solution...laser printers. The initial cost is high, but the operating costs per page tend to be lower. While I couldn't find any specific stats, here is a forum that discusses some of the variables.
Just last year I purchased a new inkjet, 4 color printer. Cost, with cartridges, came to under $80. About a month ago I replaced all 4 cartridges, to the tune of around $70 after tax. For another 10 bucks I could have bought a new printer, with warranty, AND new ink. Blech!
Sounds "lucrative" to me!!
posted by Jeremy at 4:57 p.m.
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