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gapNews: HP Partners Startled By TouchPad’s Demise, Uncertain WebOS Future
by Amy Berryhill, CRN
August 19, 2011 5:02 PM ET
The death of the TouchPad tablet and the uncertain future of WebOS represent big issues for Hewlett-Packard, but partners may also be affected by the fallout.
Patricia Cuadros, sales director at Tru Technical Partners in Campbell, Calif., said internal documentation her company created for the TouchPad now represents wasted time. “We were just formulating a plan to utilize the TouchPad. In our Apple(NSDQ:AAPL) business, the iPad is a spinoff we’ve been using, and we just finished a similar plan for the TouchPad on Tuesday. All those plans are now gone,” she said.
HP (NYSE:HPQ) failed to reach its goal of turning WebOS into the number two player in the market behind Apple’s iOS, HP CFO Cathie Lesjak said in HP’s fiscal third-quarter earnings call Thursday.
“Essentially, the TouchPad and our WebOS phone have not met our financial targets and other milestones that were set. To make this investment a financial success would require significant investments over the next 1 to 2 years, creating risk without clear returns,” Lesjak said. “Therefore, we have decided to shut down operations around WebOS devices and we’ll be exploring strategic alternatives to optimize the value of the software platform and development capability.”
Robert McMillen, president of Portland, Ore.-based All Tech 1, a security solution provider with a strong mobile security business, said his company wasted no resources on the WebOS software or the TouchPad hardware because neither offered a value proposition for his customers.
“We never had a single meeting with our staff about supporting [the HP TouchPad] platform,” he said. “There was almost no information on security for this product. It wasn’t built for business, it was built more for consumers. It wasn’t even a blip on our radar.”
HP CEO Léo Apotheker said the options for WebOS remained open. “We were successful at launching software that was poised with a differentiated user experience. We know that many developers feel the operating system is elegantly designed and is a respected platform,” he said on the earnings call Thursday. “Therefore, we are exploring options for how best to optimize the value of webOS software going forward.”
HP once touted its ownership of both software and hardware as a defining aspect of the company’s value proposition. In an interview with CRN in July, Stephen DeWitt, the head of HP’s WebOS business unit, said the opportunity for WebOS running on Windows PCs, home appliances, printers and a range of other devices was game-changing.
“No one has ever had a playground of hundreds of millions of disparate devices to build applications on top. It’s one thing to have a smartphone, but what about applications that run on all sorts of different things that create experiences that we haven’t even envisioned yet?” DeWitt said at the time. “What’s most important for HP is to inspire the innovation we know is possible across the universe of devices that we can impact.”
Chris Barnes, vice president of research and solutions development at Gap Intelligence, a San Diego-based research firm that follows HP, wonders if the HP brass really believed the WebOS talking points. “WebOS was such a linchpin of the company’s overarching strategy; it was the virtual glue that tied together phones, PCs, tablets, printers,” Barnes said. “It really makes you wonder whether HP’s senior leadership ever really believed its own story about developing its own self-supporting ecosystem, vis-a-vis Apple. [It] sounds more like they were dishing out the Kool-Aid but secretly drinking iced tea.”
Brian Fino, managing director of Fino Consulting, New York, said HP deep-sixing the TouchPad and scaling back its WebOS plans aren’t a sign that HP is out of the mobile game for good, but instead shows the tech titan is taking time to regroup and focus, and the TouchPad was a casualty of that.
“[This week], we saw revered technology giant Google inch its way towards an outright duel with Apple in the development of perfect hardware and software solutions. [Now] HP bows out; implicitly acknowledging that such an endeavor is difficult, and more importantly, needs to be carefully evaluated with business upside,” Fino said. “HP hasn’t given up on mobile or the tablet, but rather I feel they have acknowledged that tablets will be specialized, like the iPad, or an inexpensive commodity device differentiated by their software. The cost of developing a commodity device for a media-iPad-focused market today is just not good business.”
Cuadros added that the losses could have been much worse, both for partners and for HP. “It’s sad for [HP], but maybe it’s better to stop the bleeding and let them get back to things they do better,” she said.
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gapNews: Acer Targets Families With 7-Inch Iconia Tab A100
By Amy Berryhill, CRN
August 15, 2011 9:08 PM ET
Acer added a third member to the Iconia Tab family on Friday with the launch of the 7-inch Iconia Tab A100.
The Iconia A100 is the first 7-inch tablet to run Honeycomb 3.2, latest version of the Android operating system. It comes with Wi-Fi only and features an Nvidia (NSDQ:NVDA) Tegra 2 dual-core processor, which includes micro-USB and microSD ports as well as an HDMI port supporting the transfer of video in 1080p. A rear-facing 5 megapixel camera records video at 720p, while the front-facing 2 megapixel camera acts as a webcam.
Acer is positioning the Iconia A100 as a family tablet, but Gurpreet Kaur, a tablet analyst for Gap Intelligence, a San Diego-based research firm, thinks this marketing strategy is flawed. “I’m not sure why a consumer would need a 7-inch device, because it isn’t much more portable than a 10-inch tablet,” Kaur said. “I see [7-inch tablets] in point-of-sale scenarios or for CRM, but not for the general consumer.”
Kent Tibbils, vice president of marketing at Fremont, Calif.-based system builder ASI Corp., also thinks the 7-inch form factor is better suited for niche markets than the general consumer market. “I see this [7-inch] form factor as useful in a retail setting or other verticals where the mobility aspect is key,” he said.
Acer is betting that families — and mothers in particular — stand to benefit from any uptick in mobility. In Acer’s Iconia A100 press release, the company described the device as the “ultimate companion for mobile moms and families.”
Bob O’Donnell, a tablet analyst with research firm IDC, is bullish on Acer’s opportunity in the tablet market and thinks targeting families with a 7-inch tablet makes sense. “At this point, vendors need to create some sort of differentiation, and a 7-inch tablet is still sort of a unique thing. So it does allow you to say we have something different and unique,” he said.
O’Donnell added that Acer stands to benefit from avoiding cellular carriers by only releasing a Wi-Fi version of the A100. “People want Wi-Fi and they want to buy at Best Buy (NYSE:BBY), so Acer is well positioned to sell tablets,” he said.
The Iconia Tab A100 is currently shipping in the U.S. and is priced at $329.99 for the 8GB model and $349.99 for the 16GB model. The tablet will reach Canadian stores in September, according to Acer.
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gapNews: Dell Discontinues Streak 5-Inch Tablet In U.S.
Dell Discontinues Streak 5-Inch Tablet In U.S.
By Amy Berryhill, CRN
August 15, 2011 5:07 PM ET
Dell (NSDQ:Dell) on Thursday discontinued the Streak 5 tablet in the U.S. by placing a farewell message on its landing page for the Streak 5, which now reads “Goodbye Streak 5. It’s been a great ride.”
In reality, the Streak 5′s ride was bumpy from the start. According to Gurpreet Kaur, a tablet analyst for Gap Intelligence, a San Diego-based research firm, the Streak 5 launched with an outdated version of the Android operating system and an inflated price.” I’m not surprised that it was discontinued,” Kaur said.
The Streak 5 also suffered from an identity problem because of its 5-inch form factor. Apart from its size, the Streak 5 boasted similar specifications as many Android phones. It ran on a 1-Ghz Qualcomm Snapdragon processor and was enabled for Wi-Fi,Bluetooth and 3G. It also sported a 5-megapixel camera with dual LED flash and a microSD expandable up to 32 GB.
But it was slightly too large for use as a phone, said Allen Nogee, an analyst with In-Stat in Scottsdale, Ariz. “A display size of 4 inches to 4.25 inches is typically about as big as consumers want to go for a phone,” Nogee said.
At 5 inches, the Streak 5 was too large to fit into a pocket, but did not deliver the display space Nogee thinks most tablet consumers want. “People like tablets because they are much bigger than a phone. If you’re going to go out to get a different device you don’t want one that is about the same size as the phone you have,” he added.
In July, the Streak 5 went missing from retail shelves and Dell’s ecommerce website. At the time, a customer service representative from Dell told Engadget that the Streak 5 would receive an updateand return to shelves in early August. A spokesperson for Dell declined to comment on Engadget’s report at the time, citing the company’s policy of not commenting on rumor or speculation.
On Monday a spokesperson for Dell told ZDNet UK that the Streak 5 is available in the U.K. “for the foreseeable future.” The larger version of the Dell Streak — a 7-inch tablet — remains available for purchase on Dell’s website.
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Laptop prices: How low can they go?
By Deron Kershaw, Notebook market analyst
Consumers in the U.S. aren’t buying as many laptops as they used to so vendors and retailers are responding the best way they know how … by lowering prices. Scan the notebook assortment at most major retailers and you’ll get the sense that the holidays have come early. Sale prices that were previously reserved for Black Friday are now becoming a regular occurrence. Best Buy, Walmart, and Fry’s Electronics have offered 15-inch laptops for as low as $259 in recent weeks. The aggressive pricing is no longer limited to a handful of vendors, as many of the top manufacturers are now competing for the opening price point.
During the first half of the year, the average selling price (ASP) of notebooks (excluding netbooks) in the brick-and-mortar retail channel (Retail) dropped by over $100, from $755 to $653, according to Gap Intelligence data. Notebook prices in the online channel of brick-and-mortar retailers (Retailer Online), which offers a larger proportion of better-equipped and more expensive options, has seen comparable price declines over the same period.
Retail: brick-and-mortar retailers; Retailer Online: online operations of brick-and-mortar retailers
Source: Gap Intelligence U.S. notebook average selling price (ASP) report July 2010 – July 2011
From April to July of this year, notebook prices dropped 7.7 percent in the Retail channel and 7.5 percent in the Retailer Online channel. Last year, during the same period, prices dropped just 4.9 percent and 3.7 percent, respectively.
The drop can be attributed to a variety of factors:
- The economic slowdown in the U.S. continues to sap or delay consumer demand for PCs.
- The rise of tablets has delayed laptop upgrades. Not coincidentally, the current $650 price floor for laptops is close to the generally accepted price ceiling for tablets.
- As the netbook market dies off, manufacturers are looking for lower-cost full-sized laptops to serve as their entry-level offering. Most of the models are equipped with AMD’s new low-priced Fusion processors, which integrate the graphics and processing on a single chip.
- Beyond the immediate trends, the laptop market is simply a mature category that has seen increased competition from a wide range of manufacturers.
Despite the price declines, there is still a large number of premium laptops available to consumers. Due to cyclical pricing trends, laptop costs are expected to increase slightly in August before dropping again in September and October. The holiday refresh in November and December should see prices increase again before retailers offer heavy discounts. Manufacturers are also expected to launch higher-priced ultrabooks in the fourth quarter, which should serve to boost average selling prices (ASPs) as vendors attempt to stop the slide. As with any technology market, the largest vendors will continue to use their manufacturing scale to reduce prices. The big winners, of course, are consumers, who continue to get better laptops for better prices at a faster rate.
Deron Kershaw is a notebook market analyst for Gap Intelligence, a San Diego-based independent technology research firm with emphasis in helping product manufacturers and retailers understand current market trends in order to respond to customer demands.
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gapNews: Apple Dominating With iPad In Enterprise
Apple Dominating With iPad In Enterprise
http://www.crn.com/news/client-devices/231002878/apple-dominating-with-ipad-in-enterprise.htm
By Amy Berryhill, CRN
July 29, 2011 12:30 PM ET
Apple (NSDQ:AAPL)’s iPad is confirming the consumerization of IT by moving into the office in a major way. This is a troubling development for Hewlett Packard (NYSE:HPQ) and other competitors positioning their own tablets as more suitable for use in the enterprise.
In the competition’s view, enterprises are looking for iPad alternatives with better security and management. However, figures from Apple’s recent Q3 earnings tell a different story: 86 percent of Fortune 500 firms and 47 percent of Global 500 companies are deploying or testing iPad, Apple CFO Peter Oppenheimer said in last week’s call.
A recent study by Dimensional Research illustrates the presence of iPad in enterprises. Released in May, the study showed that 78 percent of respondents plan to have tablets officially deployed in their businesses by the end of 2013, and 83 percent of those businesses plan to deploy Apple iPads.
Apple was the only serious player in the tablet space at this time last year, but since then a variety of competitors have entered the market including Samsung, Research in Motion, Cisco and HP. Many of them have sought to avoid direct competition with Apple by focusing on enterprise.
Cisco (NSDQ:CSCO) thinks its Cius will be an enterprise game-changer because it consolidates all of a business user’s most important unified communications (UC) tools, and offers them in a mobile device with built-in enterprise security. Research in Motion boasts security certification from the U.S. government as a feature of its enterprise-focused BlackBerry PlayBook tablet.
While much of the competition seeks to differentiate based on a particular feature or service, HP and Apple are the only companies that currently offer a mobile device portfolio that encompasses hardware and software.
Partners for both companies consider this end-to-end ownership an advantage as they fight for market share in the crowded tablet PC space, but HP made a particularly big bet on the integration by spending 1.2 billion to acquire Palm’s webOS platform in July 2010.
HP has sent mixed marketing messages around the TouchPad. In May, Eric Cador, senior vice president of HP’s Personal Systems Group — Europe, Middle East and Africa vowed to overtake the iPad for the top spot in the tablet market.
More recently, HP has been emphasizing an enterprise focus for the TouchPad. Richard Kerris, HP’s vice president of worldwide developer relations, in June told the Apple enthusiast blog The Loop that the TouchPad will not go head-to-head with the iPad.
“We think there’s a better opportunity for us to go after the enterprise space and those consumers that use PCs,” Kerris told The Loop. “This market is in its infancy and there is plenty of room for both of us to grow.”
HP partners feel that the company is well positioned to take on Apple in the enterprise tablet space because of the ease of integration with the existing HP product ecosystem and the reach of the channel. HP’s plan to get WebOS running on Windows PCs, home appliances, printers and a range of other devices foretells future success for the TouchPad, according to John Convery, executive vice president of vendor relations for Redmond, Wash.-based Denali Advanced Integration.
“The fact that HP is delivering that operating system on all their products from their PC line through their printer line is huge,” Convery said. “We take very seriously the integration piece. It is not about the SKU or the product, it is how the products integrate.”
Gurpreet Kaur, a tablet analyst at Gap Intelligence thinks integration between a tablet and existing systems is particularly important in the enterprise space, much more so than for consumers.
“A new tablet that integrates or gels with the existing infrastructure is more likely to be successful in enterprise. In that way, HP and RIM are at an advantage,” Kaur said.
HP partners also point to the strength of HP’s partner programs as an advantage over Apple. Rick Chernick, CEO of Camera Corner Connecting Point, a Green Bay, Wis.-based HP partner thinks the channel is essential to facilitating integration and explaining the benefits of the tablet to enterprise customers.
“I think the channel is hugely important. Our influence factor is huge because people come to us to help them answers those questions about integration,” he said. “There is still a lot of uncertainty in this space. We go to them and say ‘look at what [the TouchPad] will do for your business’ and teach them how it will make them more effective.”
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gapNews: Lenovo Launches Two Consumer Tablets, ThinkPad Tablet For Business
By Amy Berryhill, CRN
Lenovo launched three tablets on Wednesday, one for business users and two more aimed at consumers.
Lenovo’s new ThinkPad Tablet features an Nvidia (NSDQ:NVDA) Tegra 2 processor and security features tailored to IT managers supporting multiple devices. Digitizer pen and keyboard options are available for increased functionality, and all ThinkPad Tablet owners get access to Lenovo’s enterprise-level services including access to tablet technicians, additional warranty coverage and imaging services for the corporate environment.
The IdeaPad K1 also features an Nvidia Tegra 2 processor, but is aimed at consumers. It comes pre-loaded with over 40 applications, including SocialTouch, Lenovos’s own social media aggregation application. The K1 features a 10.1-inch display and weighs 1.63 pounds.
Lenovo’s consumer-oriented IdeaPad P1 features an Intel (NSDQ:INTC) Atom processor and comes with Windows 7. Lenovo expects this model to appeal to users that use Microsoft (NSDQ:MSFT) Office and other productivity applications.
The three tablets support streaming Netflix video. Lenovo is the first Android tablet maker to offer streaming Netflix on a tablet, a deal that required the company to build an internal Digital Rights Management (DRM) module into the tablet hardware, Engadget reported on Wednesday.
Lenovo touted the integration with Netflix as a major differentiator in a statement on Wednesday, but Gurpreet Kaur, a tablet analyst at Gap Intelligence, is not sure the feature will stand out in a crowded tablet market.
“Netflix is good, but is it enough? Questionable,” said Kaur. “At the end of the day it is about how companies get their message across and the type of expectation consumers have for a brand.”
Both the ThinkPad Tablet and IdeaPad K1 run Android 3.1. They share front and rear facing cameras, 2 megapixel and 5 megapixel respectively, as well as a native HD resolution of 1280 x 800. Ports include mini HDMI, USB 2.0, SIM and SD card slots. Lenovo is now taking pre-orders and will ship the ThinkPad and IdeaPad K1 tablets in August.
The ThinkPad and K1 tablets currently available are Wi-Fi only, and 3G versions will be available shortly, according to Lenovo. The 16 GB ThinkPad Tablet is $479 without the $30 digitizer pen that can lock into the side of the tablet. The 32 GB IdeaPad Tablet K1 is $499. Pricing is not yet available for the IdeaPad Tablet P1, which Lenovo says will be available in the fourth quarter.
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CRN: HP Highlights TouchPad Apps With WebOS Pivot
By Amy Berryhill, CRN
As HP (NYSE:HPQ) gears up to launch its TouchPad tablet on July 1, the company is unveiling a new monthly magazine called HP WebOS Pivot to highlight certain WebOS applications.
As HP (NYSE:HPQ) gears up to launch its TouchPad tablet on July 1, the company is unveiling a new monthly magazine called HP WebOS Pivot to highlight certain WebOS applications.
HP WebOS Pivot will be a component of the HP WebOS App Catalog and will focus on specific applications as determined by editors, writers and app experts. HP will use WebOS Pivot to organize and curate apps around particular topics and to educate users on how to get the most from their apps.
Drawing in developers will be important as HP looks to grow the number of WebOS applications available to TouchPad customers. And while developers are likely to follow the customers wherever they may be, a product that rewards certain applications with free publicity could help make HP stand out from the crowd.
“It’s really a great idea as a differentiator. There are so many tablets with such similar specifications, so something like this is a great marketing tool so to speak,” said Gurpreet Kaur, a tablet analyst at Gap Intelligence, a San Diego-based research firm that covers HP.
In addition to content from journalists and photographers, WebOS Pivot will feature “columns from notable guest writers sharing their perspectives on digital culture, feature stories focused on applications around specific topics, and in-depth reviews — all accompanied by vibrant photos and illustrations on HP TouchPad’s brilliant screen,” HP said in a press release.
Perhaps the most important element of Pivot is its full integration with the HP WebOS App Catalog, meaning that a user can purchase and download an app directly from the editorial content.
“It’s definitely attractive to developers because they have a chance of getting highlighted. For consumers it is useful too — I don’t really want to go to an app store and search through 10,000 apps,” said Kaur.
Each month, new content will be pushed to all HP TouchPad customers, who will initially be able to access Pivot in English, French, German and Spanish. WebOS developers are likely to look longingly to Pivot for promotion of their apps when the HP TouchPad launches next month.
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CRN: HP Trying To Spark Interest In Windows 7 Slate 500 Tablet
By Kevin McLaughlin, CRN
Page 1 of 2
Hewlett Packard is cranking up its marketing machine for the Slate 500, a Windows 7 tablet PC that faces a murky future as HP prepares to launch its WebOS TouchPad tablet this summer.
In a promotional e-mail for the Slate 500 that went out this week, HP’s sales pitch to would-be customers goes like this: “Do you have yours yet? No? Why Not?” It’s an ironic approach given that HP ran into Slate 500 supply problems last November that delayed shipments for six weeks. Some customers posting recently to HP’s product support forums claim to have waited several months for theirs to arrive.
HP didn’t respond to a request for comment on whether the Slate 500 e-mail represents a renewed push to drum up interest in the product. HP’s Web site currently shows an April 27 ship date for the Slate 500, so the company appears to have at least dealt with the supply shortage.
The Slate 500, which comes with a 1.86-GHz Intel Atom Z540 processor and 8.9-inch, LED-backlit display, debuted at CES 2010 when Microsoft CEO Steve Ballmer showed off a prototype in his keynote. But a few months later, HP acquired Palm for $1.2 billion and set out in a new mobile direction with WebOS. When the Slate 500 hit the market in October, its $799 price tag raised eyebrows, and not in a good way.
Since the Palm deal, HP executives have insisted that Windows 7 would continue to play a role in HP’s tablet plans, but the fact that HP didn’t mention the Slate 500 at its Americas Partner Conference last month makes those claims ring hollow.
Meanwhile, HP spent a ton of time at APC talking about and showing off the forthcoming TouchPad WebOS tablet. Gurpreet Kaur, an analyst at Gap Intelligence, a San Diego-based research firm that follows HP, sees the Slate 500 as a measure on HP’s part intended to help Microsoft save face. “Windows 7 is not meant for tablets. The touch capabilities are bad and battery life is short,” she said.
Microsoft is reportedly working to make the next version of Windows tablet friendly, but that release isn’t expected until next year at the earliest. In the meantime, other vendors are continuing to roll out Windows 7 tablets. Asus began shipping its Eee Slate EP121 tablet in February, and Acer on Tuesday launched the Windows 7 version of its Iconia tablet. Dell, meanwhile, is reportedly planning to release a Windows 7 tablet this fall.
At this stage, OEMs are moving forward with Windows 7 tablets but appear to be doing so with a minimum of fanfare, Kaur said. “Windows 7 tablets will be low-key affairs with distribution limited to IT channels and with a B2B selling focus,” she said.
It’s unlikely that Windows 7 tablets are going to give Apple and Google much of a challenge in the tablet space, but some Microsoft partners are still confident that devices like the Slate 500 will find their niche.
Page 2 of 2
Andrew Brust, CEO of Microsoft (NSDQ:MSFT) analyst firm Blue Badge Insights, based in New York City, says Windows 7 tablets can deliver value in highly customized environments with applications explicitly designed for touch.
Brust cites the example of Silverlight line-of-business applications built in the upcoming Visual Studio LightSwitch product using a touch-friendly shell extension, something Microsoft has already demoed in prototype form. “In this context, and in a situation where field portability were required, the Slate 500 could work very well,” he said. “Building apps in LightSwitch would be far more productive than, say, building a native iOS app for the iPad.”
Microsoft’s massive developer army means anything is possible when it comes to the apps that run on Windows 7 tablets. But HP is also urging its partners to build applications in WebOS, and it’s planning to offer market development funds, volume programs, big deal registration and practice development to the VARs that heed its call.
At APC last month, Todd Bradley, executive vice president of HP (NYSE:HPQ)’s Personal Systems Group, described WebOS as a strategic asset that HP plans to use to build an ecosystem around consumers, small business and enterprises. “WebOS is an opportunity to leapfrog the traditional Wintel ecosystem,” Bradley said at the event.
Seen in this light, it’s tough to see HP becoming a major cheerleader for Windows 7 tablets. Bob Venero, president and CEO of Future Tech, a Holbrook, N.Y. solution provider, says the touch limitations of Windows, and the impressive design and functionality of WebOS, suggest that devices like the Slate 500 will always occupy second tier status within HP’s product portfolio.
“Is HP going to tie its success in tablets to Microsoft? Obviously not,” Venero said. “HP placed a big bet on WebOS and I think that’s the horse they’re going to back.”
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More HP Toner Cartridge Shortages Beginning to Materialize
What is hampering manufacturing at Canon toner cartridge production lines such as this one?
Many industry publications and websites, including Actionable Intelligence, have been following news of toner cartridge shortages for months now. Word of a shortage of the HP CE285A, or 85A, black toner cartridge emerged early this year, and in March we learned that HP and its manufacturing partner, Canon, also had difficulty meeting demand for the HP CE278A, or 78A (see “HP Toner Cartridge Shortage: It’s Not Over”). HP publicly confirmed the shortage of the 85A, attributing it to a stronger-than-anticipated spike in demand for the HP LaserJet P1102W and the HP LaserJet M1212 MFP printers, but neither HP nor Canon have provided much in the way of specifics on why Canon’s manufacturing facilities were having trouble meeting demand for this SKU. But then the situation for Canon and indeed many Japanese printer OEMs grew much more dire roughly three months ago, when northeastern Japan was devastated by an earthquake and tsunami on March 11 that shuttered some production facilities, including not only OEM facilities but those of crucial components suppliers, limited power supply, and disrupted transportation systems. Our premise has been that this natural disaster would exacerbate manufacturing difficulties for Canon and lead to further shortages of HP/Canon SKUs as well as lead to potential hardware and supplies shortages for other vendors. This thesis seemed to gain some credence in April, when HP announced that it would be restricting distribution of some toner cartridges (see “HP Warns Distributors That Japanese Earthquake Will Impact Toner Cartridge Availability”).
In recent weeks, we have been interviewing various industry participants to see what they have actually been experiencing in terms of OEM product shortages and have published some insight from ILG and MSE (see “MSE Says Reman Cartridge Industry Is Healthy, Currently Unaffected by Japan Quake” and “ILG Ups Reman Cartridge Production, Expands Empties Collection”). Interestingly, these two competitors have divergent ideas about what the industry is already experiencing in terms of shortages, although both remanufacturers have made preparation to cope with any shortages that may materialize. Recently, we had the opportunity to speak with research firm Gap Intelligence about toner cartridge shortages. Gap Intelligence regularly monitors prices for inkjet and toner cartridges (as well as PC, printers, and other peripherals) in numerous retail and e-tail channels. Thus, the firm can provide valuable perspective on which products may be in short supply.
New Shortages
According to Katie Hess, a senior program manager for Gap Intelligence who is responsible for tracking channel inventories, HP and Canon have made some headway in solving one product shortage. Ms. Hess says that supply of the 78A “is no longer constrained.” However, Ms. Hess says, “The 85A is still in short supply.” Moreover, Gap Intelligence has seen supply shortages for some additional cartridges.
The cartridge that seems to be scarcest is the CE250X, a black toner cartridge compatible with the Color LaserJet CP3525 printer series and Color LaserJet CM3530 MFP series. This cartridge was not in stock when we visited the HP Shopping website (see screen capture below). Ms. Hess says that there are “huge back orders” for this SKU. “Channel inventories are basically dry,” she says, with many retailers not expecting more inventory until July. Indeed, the SKU was also out of stock at both Staples and Office Depot (see screen captures below), although OfficeMax’s website promised to have had the SKU in stock when we visited this afternoon.
You can’t buy the CE250X at HP’s own site …
or at Staples …
or at Depot
According to Ms. Hess, inventory levels are “very low” for the C9730A (or 645A). This black toner cartridge is used in the Color LaserJet 5500 series. Similarly, inventory levels are very low, according to Gap Intelligence, for the CC530AD, a twin-pack of black toner cartridges used in the Color LaserJet CP2025 printer series and the Color LaserJet CM2320 MFP series. Ms. Hess indicates that HP recently indicated that it was temporarily out of stock of these two SKUs, although both SKUs were in stock when we visited HP’s retail website. When we spoke with David Mullen, business development manager for ILG, he mentioned the CC530AD, as well as the single cartridge version, the CC530A, as examples of SKUs that have become scarcer since the March earthquake.
Ms. Hess adds that Gap Intelligence has also seen low inventory levels of the C8061A (or 61A) black toner cartridge used in the monochrome LaserJet 4100 series and the CC364XD, a twin pack of the high-yield 64X black toner cartridges for the monochrome LaserJet P4015 series and P4515 series printers. Both SKUs were in stock at HP’s site, but Ms. Hess says that many in the channel are reporting they are temporarily out of stock.
With the exception of the C8061A or 61A, all of these SKUs were on the managed allocation list that HP sent to some distributors in April.
Why Black?
We have noticed that while HP put some color cartridges on its managed allocation list, all the SKUs for which shortages have been reported to date are black toner cartridges, some for monochrome products and others for color products. It may be that this is simply because the monochrome products in which the cartridges are used are particularly popular, the color products are popular as well, and users burn through more black cartridges even on color devices due to the large amount of monochrome-only output produced in some offices.
However, we cannot help but wonder if perhaps instead Canon is having difficulty obtaining some component for certain black toner formulations. Perhaps this component was in short supply even before the earthquake and shortages grew worse after the earthquake?
HP and Canon have yet to provide this level of detail about how its supply chain has been impacted. We doubt the manufacturing partners will do so, unless shortages grow worse and more widespread, and the companies are pressed to make explanations to investors.
We noticed that when HP launched the LaserJet M4555, which uses a chemical toner, marking a change from the previous series, it said availability would be limited in some markets due to a limited supply of machines coming from Japan (“HP Launches New M4555, Sends 4345 MFP Out to Pasture”). The LaserJet M4555 uses new cartridges. It may be that these cartridges too are available in only limited quantities, thereby restricting the supply of hardware, although HP would not confirm what specific components were limiting hardware availability for the M4555 in some regions. It is also worth pointing out that this is the first specific example we have heard of limited hardware availability following the quake.
Verdict Out
Are these shortages isolated incidents or the first harbingers of more widespread shortages to come? Will other vendors, too, be affected? The verdict is still out on how extensive and pervasive these new toner cartridge shortages will prove and if others will materialize. But, to our eyes, the steps both ILG and MSE have taken to prepare for shortages appear to be wise precautions.
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gapCon in the News – What is Tom eating?
Tom’s 15 seconds of fame….eating.
KGTV!
XETV
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