By Andy Slawetsky – At a recent customer event, Samsung VP Matt Smith briefly discussed HP’s acquisition of Samsung. While no one can really be sure how things will play out, Matt talks about some of the reasons HP made the move.
One of the things that isn’t be discussed much is the acquisition of Samsung’s A4 printer factories. Since day one in 1984, HP has always outsourced the engines for their printers almost exclusively to Canon. Now they can keep this in house. Over time, the savings HP gains by eliminating the need to buy printer engines could eventually pay for the entire acquisition. Wouldn’t it? HP has almost certainly spent over $1B on engines from Canon in the last 30+ years. Probably several times over at least.
Not only will the savings from not outsourcing printer engines immediately start recouping the acquisition price (as soon as HP starts using Samsung engines instead of Canon engines), but Samsung’s printer factories, valued at whatever they are with their current production numbers, will see an explosion in manufacturing as the engine business shifts from Canon to Samsung.
Surely that adds considerable value to the Samsung printer factories, which HP will then own and in turn, adds value to HP. Doesn’t it? This is where I wish I had taken economics. Damn you bowling and tennis, you seemed like such good ideas back in college.
One of HP’s problems has been their lack of consistent distribution with traditional copier dealers. With a pretty full A3 portfolio that they will own, they will not dabble in this channel anymore. Their success will depend on dealers and we’re going to see a focus on this channel from them that we’ve not seen in a long time, maybe ever. If they come into the A3 market and don’t make some noise, Wall Street will crush them and I think they’re going to be much smarter and more strategic this time around.
What about Samsung? With a strong digital display portfolio, Samsung is not leaving this channel. And surprisingly, it’s business as usual for the print group. They’re still recruiting dealers and they’re in the midst of a customer road show at dealer locations across the US. I recently attended one at Lake Business Products in Cleveland and was surprised at the level of commitment Samsung is still showing to their dealers. More than five Samsung people were there including a VP, a director and even an executive from South Korea. They wheeled in a massive display wall for the presentations (on which they watched the Indians clinch the ALCS on later that day), they gave away thousands of dollars in prizes, does this sound like they’re done? They spent a lot of money on this dealer event.
So what do you do if you’re a Samsung dealer? Is it time to jump ship? For the majority of dealers carrying other brands, I would think a wait and see attitude would be prudent. If you don’t like HP’s program, you can always get out later but why short yourself before you don’t know what it is?
Who knows where all this is going. One thing is certain, there will be a lot of great news to follow over the next year or so as Samsung and HP pull this together.
~Andy Slawetsky
