“HP Instant Ink” – Has the Future Arrived?

By Antonio Sánchez Navarro, Founder and President of Nubeprint

The printing industry is expectant to see what the results of the HP Instant Ink program are. This program is quite unique compared to what the OEMs have done up until now. HP has implemented in this program what most other players wanted to do but never had the courage. Let’s take a deep look into what the offer from HP means.

HP Instant Ink lets the customer pay a flat fee with a cap on the number of pages printed per month. Nevertheless the customer can exceed the number of pages printed. A step payment does then apply. The program offers packages starting with volume as low as 400 pages per month and is currently limited to only two models.

Breaking into smaller pieces: auto-fulfillment + risk management + attractiveness

An analysis of the components of this program reveals the following ingredients:

• Attractive offer that solves, in a smart way, the customers fear regarding the cost of printing. The customer pays for what he prints. His costs are known from day one, and they include everything: the printer, the ink, the service, the monitoring and the delivery of cartridges.
• Risk management: there are 2 risks around this offer:
  *“free-bar” symptom: when a customer that does not perceive the cost associated to printing his tendency is to print with no auto-control. HP Instant Ink neutralizes this risk stablishing some caps to the volume of pages that can be printed per level of payment.
  *The risk of the excess of delivery of cartridges: 80% of the cost of the program is the ink. The more ink HP ships, the less profit it gets or the more money it loses. Therefore HP has to be certain that it only ships cartridges to the customer when they are needed, and that there are no duplicate deliveries. This is an absolute synch with the MPS compliance of the printer (see Nubeprint Report for MPS Compliant to know more) LINK. The offer is limited to only a those few models that rate high in MPS compliant. At the same time HP has manufactured super high yield cartridges specific to this program. HP then reduces the number of shipments and therefore its costs.
• Automatic order fulfillment: a small ticket program like this can become a huge problem if it ends up to be successful, due to the amount of small tasks that need to be performed and which cost has to be covered with monthly rents of 2 digits. Therefore the whole recurrent process of billing pages, triggering the need of a cartridge, processing the order and delivering it has to be fully automated. Should human intervention be required, the profit would be cleared. The MPS compliance of the printer influences the capacity to auto-fulfill it. This is certainly the reason why HP Instant Ink is limited to two printer models.

Limitations: only for a few concrete printer models

HP has apparently found a way to combine all the ingredients to manage this program and make a substantial profit. I say apparently because the program is limited to two models, and let’s be honest, this limitation is not the result of a marketing strategy. It is certainly in the mind of HP to expand this offer upwards in the market to the large and corporate segments. But to do so HP first must remove the limits, and open the offer to all or most of its models.

Is HP Instant Ink an MPS killer offer? Well, this is what Rich Heckelmann (HP) asks himself in a discussion published. It may perfectly be the first step to something larger than just an offer. This offer is the key to a long term contract with the end-customer, which is exactly what any company dreams of.  What would happen to the IT printing market if this program was available for any printer or copier in the market? Very simply, the individual sale of cartridges would drop down to a residual level. Instead, customers would buy page contracts: print as much as you need and pay a flat fee.

HP is not alone in the market

But HP is not alone in the market. One of the largest MSPs with operations in Spain, Portugal and LatAm, Iecisa, has its own multivendor and multi model program. The GIO program has versions for all segments, from the SMB to corporate, from one single unit contract, to tens of thousands of printers or copiers. For a flat monthly fee the customer can select from a variety of printer and copier models and manufacturers. Once again the replacement of supplies is automatically and proactively managed hassle free for the customer. What makes this program quite unique is that the customer can incorporate his existing printers to the contract, taking advantage of the automated replacement that is powered with Nubeprint yield management MPS technology.

There are more examples of this, but we shall see many more coming in and joining Iecisa and HP in the next 12 months. As a consequence, the printing distribution channel will change dramatically in the coming 5 years. If you don’t have plans for an MPS offer with auto/fulfilment in your company, you better start making them. And if you do, time has come to execute. Nubeprint is the only technology that guaranties auto-fulfilment operations free of false alerts and waste, fully vendor agnostic both for printers and cartridges.