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Business in Vancouver: News that works for you

    Hewlett Packard establishes the standard for laser printers--without making any enemies

    by Alan Zisman (c) 1995 First published in Business in Vancouver ,  Issue #294  June 13, 1995 High Tech Office  column

    At their best, standards seem invisible--part of the environment. You take for granted that the pedal on the right is for the gas and the one on the left is for the brake. Imagine the accident rate if each car manufacturer set its own interface standards.

    Some standards, like the B.C. Building Code, have been legislated and others are codified by industry groups. But often, standards are created accidentally by companies which are successful in the
    marketplace.

    More than a decade ago, IBM's success in marketing its initial Personal Computer, combined with its tolerance of those who made "clone" computers, created the informal IBM-PC compatibility standard which now accounts for 80 per cent or so of all microcomputers sold.

    Along the way, IBM slid from holding the majority of the market to become merely one of many vendors of "IBM-compatible" computers. In 1987, it attempted to regain control of the standard, releasing a line of PS/2 computers using tightly-controlled MicroChannel technology, but the result was a further shrinkage of market share.

    Instead, control of the informal standards passed to chip-manufacturer Intel and software-producer Microsoft. It's in the interests of both companies to see as many companies as possible manufacturing PCs, and while some feel those interests have slowed innovation, the result has been the sales of over 140 million PCs worldwide.

    At the other extreme, Apple has tightly controlled the Macintosh standard. While the company has remained profitable, its strategy has confined it to a niche market. Recently, Apple has started to license clones in an effort to break out.

    But one company has so far managed to set de facto standards while avoiding the fates of both Apple and IBM. Hewlett Packard, with its LaserJet series, has about 80 per cent of the market for laser printers. It hasn't done this with proprietary technology, either: LaserJets are built around printing engines developed by Canon. Similar models are marketed by a wide range of HP's competitors, including Canon itself.

    HP's laser printers use a printing language (PCL) developed by Hewlett Packard, but it has been successfully cloned by HP's competitors, who are able to market HP-compatible printers. And in any event, Adobe's Postscript page-description language is widely regarded as superior, and is itself the standard in the graphics and page-design industries.

    So HP makes products that are solid and reliable, priced at a level the market regards as fair, but that's also true of many of its competitors, who often offer competing products with more features at a lower price.

    However, HP has managed to define the PC laser-printer market, and has kept that position for about a decade now. The first LaserJet sold for about $10,000, and by today's standards was severely limited in capability. But at the time, both price and print quality seemed almost miraculous. And every two years or so, HP has offered newer models with the winning combination of more features and a lower list price.

    Even when it's not the very first to offer a particular feature, HP's printers have managed to continue to be perceived as the standard--competitors are forced to scramble to match HP's feature-set, and forced to sell their products for a lower price.

    The past few months have seen the introduction of yet another generation of products from Hewlett Packard, and its publicists have kept my fax machine busy with multipage product announcements. LaserJet Series 5. New Deskjet colour inkjet printers. Scanjet Series 3 scanners. More announcements detailing price reductions on many models.

    The result is continued pressure on the competition, while HP holds its position as the standard setter. At the same time, with controlled small price-drops, it has managed to keep prices in its markets from taking the sorts of dramatic plunges that have seen hard-drive prices drop to as little as 35 per cent of what they were a year ago.

    In an earlier era, a business cliché stated that "nobody ever got fired for purchasing from IBM." Their products weren't the cheapest, but they were solidly conservative, and they set the standard. But at the same time, IBM's market dominance created a generation of resentment and U.S. government antitrust actions. More recently, Microsoft, the standard setter for the current generation of PCs, has found itself the target of spiteful gossip and government watchdogs.

    Despite its overwhelming dominance in several of its chosen markets, HP seems to have avoided becoming a victim of its own success. By pursuing a strategy that has combined innovation and reliability, and increased features with slightly lowered prices, it has continued to define the market for PC laser printers, while remaining well-regarded by both customers and competitors.



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Alan Zisman is a Vancouver educator, writer, and computer specialist. He can be reached at E-mail Alan