HP might finally be changing its printer business plan according to a new note by Morgan Stanley analysts. Typically HP sells printers for super cheap and then charges exorbitant prices for the required ink, leaving consumers paying hundreds a year if they want to keep this printer printing well.
This style of doing business, which nearly all printer businesses engage in, is called the “razor blade model” after the practice of razor companies selling the handle for cheap but charging high prices for the required blades.
Kif Seward of CNBC first tweeted this morning that HP is considering moving away from this business model. Gizmodo confirmed the contents of the Morgan Stanley note and an HP spokesperson told us they’re looking into the report.
HP is moving away from the “razor/blade” model for printers because 20% of their customers don’t print enough or buy enough ink to be profitable, according to Morgan Stanley analysts in a note today
— kif (@kifleswing) January 9, 2020
According to the note, 20-per cent of HP’s customers aren’t printing enough or buying enough ink to make the business model profitable. Which makes sense. As other home office stuff, like your computer, monitor, and mouse, have improved exponentially since the 90s, the printer has kind of stayed stuck. It’s good for printing a term paper or a travel itinerary, but affordable printers aren’t nearly as good at printing photos, and a lot of the other things we once printed, like directions, plane tickets, or tickets to movies or shows, can be stored much more easily on a phone.
Two years ago HP recognised that printers weren’t everyday devices anymore and released the very lovely HP Tango X. This printer was designed to be packed up and stuck in a closet when not in use.
However, it has a flaw. The ink dries up. Back in 2018 HP told me the ink should last over a year, but I found issues with ink clogs within months. Here’s a picture printed after just six months of very minimal use.
Why on earth would anyone want to buy a printer if this is what’s happening after six months? Especially if the best solution is to restock the expensive ink cartridges.
The bad news—for anyone looking to buy a new printer—is that Morgan Stanley claims the price of HP hardware will be going up.
HP’s move, if true, just makes a helluva lot of sense. We’ll update this post once we learn more from HP.