Hewlett-Packard (NYSE:HPQ) and The UPS Store’s franchise network today announced that more than 4,300 UPS store locations nationwide are now part of the HP ePrint Public Print Locations (PPL) network. This is a service aimed at tapping the traveling professionals as well as retail users whose printing needs are currently met by the unorganized local photocopy vendors.  HP competes with Lexmark International (NYSE:LXK) and Xerox Corp. (NYSE:XRX) in the printing solutions space.
With approximately 80% of the U.S population living within 10 miles of a UPS store, this service will cater to small office, home market and traveling professionals. Users can access the Internet using their smartphones or tablets and submit the print order through the HP ePrint app. This will generate a secure retrieval code that the user can submit at any UPS store and receive the prints. The code is usable for a seven-day period. The HP ePrint app is available for BlackBerry, iOS and Android-based mobile devices. In addition, these stores are equipped to provide large format prints, binding, lamination, finishing and folding, which is aimed at the home and student markets.
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Synergies From Managed Print Services
HP and UPS have a long-standing partnership that started with HP providing paperless printing and shipment tracking service to UPS. With the shift from hardware sales to managed printing services, this seems to be an extension of the business model. Each UPS store is likely to have its own printing facilities already in place and HP would leverage this. The incremental cost of serving an outside customer is very low and this leads to better utilization of printers.
We don’t expect this service to become a major revenue driver for HP, and short-term gains from this arrangement would benefit UPS as it better utilizes its print resources and gains an additional income stream. This would make the in-house print solutions of UPS cheaper to run as retail prints would subsidize its own printing consumption.
Printers & Ink Cartridges constitute 19% of our $39 price estimate for HP, which is around 40% above of the current market price.Notes:
- HP and The UPS Store Help Customers Print While On the Go, pressroom.ups.com, May 01, 2012 [↩]