HP’s ink subscription model: A strategy of customer ‘lock-in’ raises eyebrows and revenues

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HP’s chief financial officer, Marie Myers, recently discussed the company’s controversial ink subscription service at the UBS Global Technology conference, highlighting its success in “locking” in customers. This term, however, has sparked criticism, especially considering HP’s history of firmware updates that block non-HP ink usage.

The service, known as HP Instant Ink, operates on a subscription basis, with plans ranging from 99 cents to $25.99 per month. As of May last year, it boasted over 11 million subscribers. Despite its popularity, HP has faced backlash for its practices, including a price increase in printer hardware in 2019 and a focus on Smart Tank and Neverstop printers pre-loaded with a two-year ink or toner supply.

A significant point of contention has been HP’s dynamic security policy, introduced in 2016, which prevents the use of third-party ink cartridges in their printers. This policy aims to protect HP’s intellectual property and ensure customer experience quality, but it has led to further customer dissatisfaction. In August, HP faced a class-action lawsuit over claims of shutting down multifunction printers when ink levels were low, even if printing was not required.

Despite the controversy, these policies have been financially beneficial for HP, with the printing division’s margin increasing from 14.8% in fiscal 2020 to 18.9% in fiscal 2023.

Sources include:TechSpot


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