The Revolution in How Printers Work

For years, the printing business has been a cash cow for Hewlett-Packard (HPQ), Xerox (XRX), and Lexmark International (LXK). Even though these companies sell much of their technology-packed hardware well below cost, they've always made back their investments in spades, thanks to heavy users who purchase refills of their pricey toners.

This business model is being challenged as printing demand shrinks on both the corporate and consumer sides of the business. That's happening because companies are shifting to paperless routines—while slashing payrolls. At the same time, millions of consumers who once kept prints of snapshots in a drawer are uploading them to photo sites. Researcher IDC predicts the number of pages printed in the U.S. will decline this year for the first time, to 1.47 trillion from 1.5 trillion in 2008, and sees the trend continuing.

The bleak outlook is causing a dramatic shift in the way printer companies think about their business. They're trying to improve the customer experience by linking their machines directly to online services and applications. Your printer, in other words, can now take you straight to a Web site, so you don't even need to boot your computer.

The trend actually started a few years ago. But the first all-in-one printers and copiers with Web-browsing smarts generally forced the user to navigate dozens of buttons and confusing drop-down menus. To boost sales, printer companies have eliminated unnecessary buttons and made touchscreen control much simpler.

Consumer and Business Approaches In the past month, I've been testing two different approaches to the Web-enabled printer market—both quite easy to use, and likely to reduce printing costs for customers. HP's Photosmart Premium with TouchSmart Web, has a 4.3-in. touchscreen and is geared to consumers. You press icons to access applications such as news, maps, coupons, movie tickets, recipes, and personal calendars. Lexmark takes a more business-minded approach with four new home-office and professional all-in-one printers designed to be used by groups of people.

I'm betting HP's $399 Photosmart will appeal to a broad consumer audience. When it launches in September, it will feature more than a dozen applications developed by Google (GOOG), Fandango (CMCSA), Nickelodeon (VIA),, and others. With Fandango, for instance, users can view a movie trailer on a bright color screen, read reviews, then purchase and print out a ticket to a showing at the local theater—all without ever touching a PC. Yes, you can do this on your laptop, but with the new approach, you never have to fiddle with settings to get images to fit. That's all built into the Web "widget" on the printer. Over time, this kind of customization really could save money on both paper and ink. The printer also includes HP Creative Studio software, which has templates for name cards and stationery, plus the ability to upload photos straight from your digital camera to the Snapfish photo-sharing site.

Lexmark uses its 4.3-in. touchscreen in a different way. The company mainly sticks to the copy, scan, and fax icons that businesses use most. But its SmartSolutions button lets small and midsize businesses customize the home screen. Each user sharing a printer in the office, for example, can store his or her own address book, news feeds, ID cards, stationery templates, and user preferences. The $399 Platinum Pro905 model also includes business card scanning that recognizes and uploads the card's contact information into software on your PC.

Web-based printing isn't revolutionary and won't get people to print more. But as consumers shift their focus to activities on Web sites, these new capabilities will, at the least, help printers preserve their relevance.

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