IDC: HP printer business on a roll

Hewlett-Packard continues to make gains in the printer market it dominates, accounting for roughly three out of every five printers sold in the United States, according to market researcher IDC.

HP's share of the printer market increased to 59 percent in the fourth quarter of last year, up from 53 percent in the third quarter and 47 percent in the fourth quarter of 2001, said IDC research analyst Jennifer Thorwart.

"They've put a lot of focus on winning at the low end and at broadening their portfolio," Thorwart said of HP.

The company's most recent gains stem more from the demise of smaller players rather than taking significant market share from its nearest competitors, Thorwart said. In the second half of last year, Lexmark International Group's market share was relatively flat as was Canon's, while Epson lost about three points of market share in its desktop inkjet printer business. HP also has unified its own brand, replacing the Compaq Computer printer brand and its own low-cost Apollo line. Together the Compaq and Apollo brands have been shipping 300,000 to 400,000 units per quarter, Thorwart said.

Printer sales are vital to HP's business, with the profit from the company's imaging and printing business exceeding its overall profit in several recent quarters. The company will report its latest quarterly results after the close of trading Tuesday.

Although HP's printer business is gaining market share, the overall market is flat or even declining slightly. In the fourth quarter, U.S. printer shipments were down 10 percent from a year earlier, although Thorwart said that figure was misleading, because there was a shift in demand in the third quarter. As a whole, shipments in the second half of last year were down just 2 percent from a year earlier.

Also, the printer figures do not include shipments of so-called multifunction peripherals, which can print, scan and copy documents. Fourth-quarter numbers are not yet available for that segment, which while small is also growing fast.

"There is cannibalization going on, pretty significantly, although it is still a small market," Thorwart said.

Another fast-growing segment is the color laser printer market. That market, including Xerox's line of dry-ink desktop printers--which don't actually use lasers--grew 50 percent from a year earlier, spurred in part by falling prices. Minolta has been the price leader, with models selling for as little as $600, while HP also has introduced its first sub-$1,000 color laser.

"They are really coming down in price," Thorwart said of color laser printers.