"The way we define imaging and printing business is that we are in the conversation business"

Twenty-two years ago, he joined Hewlett-Packard as an R&D engineer for pen plotters. Today, as its Executive Vice President, the 48-year-old Vyomesh Joshi heads HP's imaging and printing group (IPG) worldwide. Joshi, or VJ as he is known in HP circles, recently returned to India after a 10-year gap. In Mumbai, BT's Roshni Jayakar caught up with the man for his vision of digital technology in the printing and imaging business. Excerpts:

These days, everybody talks of paperless office. If that happens, where do you see the future of printing and imaging business?

I don't think paperless office is ever going to happen. The reason is simple. There is a tremendous explosion of information, and as long as information grows people are going to print. If you think of a piece of paper, there are many applications than just transferring information. It is really a medium to do the conversation, because if I want to talk to you about my ideas, the only way you can do conversation in a cheap way is through a piece of paper. The other important part paper plays is of the cheapest storage medium. There is an interesting book called Social Value of Information Technology and it talks about why certain technologies, once they have the right value proposition, are never going to die. It is just not the conversation part but also the social interaction or social aspect of paper that one cannot change. I will give you an example. A lot of people thought that with digital cameras around nobody will print photos. If you have a digital picture you could view it, share it. But the thing is there is something about having a hard copy. There are a number of social aspects of paper that are not going to change.

Would you say that you are looking more into managing of paper?

The way we define imaging and printing business is that we are in conversation business. Technologies can come and go, but the basic principles remain. Just think: 15 trillion pages are printed every year, and the way I think about it is that there is a lot of conversation going on. It could be a newspaper, a magazine, a photo, a catalogue or a book, but only 4 per cent of 15 trillion pages go through our printers. So the other 96 per cent is our opportunity. For instance, digital imaging is a big opportunity for us. A person takes a picture at home with the digital camera, prints it on an HP photo printer without having to develop it. That's one of the reasons why we bought Indigo of Netherlands for high-end digital colour printing solutions.

How do you tap the other 96 per cent?

To my mind, out of the 96 per cent we are going to go into the value pages, customisation, and personalisation. We are going to convert them using HP's imaging and printing technology. The other part of the conversation is the projector business. Now people are using digital displays instead of transparencies for making presentations. You have slides on your laptop and a projector. We are talking about taking a projector home and watching digital video discs on a big screen that could be a wall. You don't need to buy a big television. So the way I think about my business is that it is all about digital conversation. How do we make it radically simple, how do we personalise and customise conversation. That's the business we are in.

"What we want to do now is to make any appliance that comes into market to be able to print"

Does that mean you would be moving from boxes to solutions and services?

I don't think we are going to walk away from box business, because it is a very profitable, very high-growth business for us. We ship 30 million ink jet printers every year, and we ship 67 million laser jet printers every year. Like in India, where the PC connect rate is low, as more and more people buy PC, they buy printers. So we will continue to grow our box business. But when you think about new opportunities, it will go in the direction of services and solutions. The way I see it is that the company's core business will continue to grow through innovation, we will continue to build better and better products. The desk jet and laser jet business and corresponding supplies are part of our core business. In the emerging business like digital imaging, you go after completely new customers, change the technology and change the way they do the conversation. Third is going after completely new businesses like commercial printing and that's where services and solutions will be important. So you need a portfolio just like a financial portfolio, where you have the core business, emerging business and new business.

So how does the merger with Compaq fit into this design?

The first thing that comes to mind is that when we merged the two companies, we really have a much bigger base in terms of presence globally. The resources we had from the consumer business point of view have now been integrated. From both the PC and server and storage sides, we are now a much bigger company, and so the conversation we want to have is with respect to the connect rate of printing to the PCs, now that we have both pre-merger HP and pre-merger Compaq PCs. Also, now we have a big $80-billion company, a very focused organisation to run end-to-end business. If you look into our 3rd and 4th quarter results, imaging and printing business grew by more that 10 per cent in a tough economy. To grow a $20-billion business at 10 per cent is adding $2 billion every year.

So how are you doing that?

The first key strategy is really winning at the lower end. We believe that a customer won't be interested in buying a stand-alone printer. They want to buy a photo printer, they want to buy all in one. So that they can print, fax, scan. And so do small and medium businesses. In June, we introduced our biggest line-up of consumer products and we actually innovated 50 new products with a single platform and that will help us shift into photo and shift into all-in-one. That has created a number of opportunities to grow our business, including new geographies such as Asia-Pacific. The second strategy is to make digital imaging mass market. Right now high-end customers buy it. We want to make it mass market. In India we are trying to help small entrepreneurs who could really do a photo shop work in rural communities. The third opportunity is to take our reliability of laser jets and apply it to the higher end. It is a $18-billion market that we are going after. The next growth initiative is about digital publishing. Lastly, there are some markets where we cannot go with our branded product. So we go with a partner who OEMs our technology to mail printing and label printing.

Talking about new technology, 10 years ago when you came to India, you talked about photo printers and people were aghast. Where do you see the future of printing technology going?

Ten years from today you will see personalised magazines, where people will be saying this is my interest and can you send the content that could be printed right there. I am convinced that there will be very interesting applications. Small and medium businesses will have what I call agency-in-a-box. At the moment, if you are a small and medium business, you can't afford a big ad agency or marketing programme. We are working on a machine that will be built from standard PC components and contain special software that would automate the process behind printing booklets or catalogs and that too in the convenience of your office. They can have customised marketing programmes that will look like they come from a big company. The third thing is projectors will be a home device. Customers will buy a projector to watch their home movies and video movies, and it will be an entertainment device. Right now, it is a business device.

Do you see more convergence in the printing and imaging business? In terms of the business evolving around the internet?

What we want to do is to make any new appliance that comes into the market to be able to print. I will give you an example. The new mobile phones have cameras. And you can just use it as a camera, take pictures, come back home and print it. Or you could just take a picture and beam it to a printer. We have the technology today to do that, but it is not yet a mass market. Then you can go and check into, say, Taj Mahal hotel, switch on your laptop at 9 in the night, work on it and say I want to get it printed. Right now, there is no easy way to do it. But we are working with Hyatt in Seattle to do this kind of mobile printing. We are also working with Starbucks. You go to a coffee shop, you can take your environment there and if you want to print right there you will be able to do so. So anytime, anywhere you will have access to information and print from there.

Coming to technology and patents, I read somewhere that HP's IPG business files the highest number of patents.

In my mind, if you want to grow your business, you need to innovate. Innovation is fundamental to profitable growth. In the last 18 years, we have acquired 6,000 patents in imaging and printing, and we add 1,000 patents every single year. We file patents on business processes, or on displays. We basically believe that we continuously need to innovate. We are putting a lot of R&D to innovate, understand the customers and build business. We believe these patents will help us sustain our marketshare and continue to give results in terms of profitable growth.

Is there an inverse correlation between hardware prices and patent applications?

This is a very important part of big bang product launches. When you look at the IT industry, what people do is to innovate for the high end. What we asked is can we design for low end, but innovate so that we can actually build a complete line up? The advantage of this is that you leapfrog your competitors. You come up with a portfolio of products with completely new technology. Second, because you are designing for low end, you have much higher volumes, so your learning curves are shorter and you have a cost structure where profitability improvement is right away. We want to get to cost through innovations. So a $79 printer had only 29 patents. With new technology we developed a $49 printer that had 150 patents. We improved 8 points gross margins by this approach. That's why in the fourth quarter the revenue grew 12 per cent, but profitability grew 89 per cent. That growth in profitability is because of the innovation we have done.

How do you view Indian market for HP?

India is a big opportunity for us. PC connect rate is low. We see tremendous opportunity in the education market, in helping young entrepreneurs. It's all about conversation and conversation is key part of people and India has a billion people. IPG can help these billion people to have better conversation and we will continue to have wonderful opportunities again and again. We can appeal directly to the masses.