Hewlett-Packard continued to dominate the U.S. printer business in the first quarter but saw its share of the market dip to 54 percent from the 59 percent of the preceding quarter, according to market researcher IDC.
Although analysts say the drop is not necessarily the start of a trend, any decline in share is important to HP, which gets much of its profits from the sale of printers and supplies. At the same time, HP's slice of the U.S. market is still up from the 45 percent share it had in the first quarter of 2002.
"It's not really a major trend that HP is going down," said IDC research manager Claudio Checchia, saying that a seasonal shift might be the cause of the decline.
Along with HP, Lexmark also lost some share in the first quarter compared with the fourth quarter of last year, while rival Epson gained share. Lexmark's share dropped to just more than 12 percent from the fourth quarter's 13 percent-plus. Epson's first-quarter share rose to 16 percent of shipments from the fourth quarter's 15 percent. Epson, which was the No. 3 printer maker a year ago, passed Lexmark in 2002--a year ago, Lexmark had 19 percent share; Epson had 18 percent.
HP also saw a drop in the inkjet segment of the market, which accounts for most of the unit shipments, with the company's share dropping to 53 percent from 58 percent in the fourth quarter. Earlier Tuesday, HP announced a of cheaper, photo-quality Deskjets as it looks to make its products more cost-competitive.
HP noted that although it lost share in the United States, it gained overseas. The company said that in Europe its inkjet share grew in the first quarter to 46 percent from the fourth quarter's 43 percent. HP said its share in Latin America increased to 48 percent from 39 percent, and in the Asia-Pacific region, to 31 percent from 27 percent.
Christopher Morgan, vice president of sales and marketing for HP's imaging and printing business, said the company had a particularly strong fourth quarter and said he saw no reason for concern, despite the sequential drop in market share.
"I don't have any indication that there is some trend that we are falling way back," Morgan said in a telephone interview. "We had an extraordinary fourth quarter."
The first-quarter figures don't show an impact from Dell Computer, which started selling printer in March. Morgan said he expects Dell will take share from Lexmark, which manufactures Dell's printers, rather than from HP. "I don't see any indication of (Dell) impacting our market share." A Lexmark representative declined to comment.
As a whole, the U.S. inkjet market was down 15 percent in the first quarter compared with the prior quarter. However, that comes after a strong holiday season as well as amid a continued shift from single-function printers to inkjets that can act as printer, scanner and copier. The market for such combination devices, which are often called all-in-ones or multifunction peripherals (MFPs) grew 16 percent in the first quarter from the prior quarter.
As a result, all-in-ones are making up a much more significant part of the market. In the first quarter, there were 2.5 million all-in-ones sold, nearly half the number of traditional inkjets. A year ago, the ratio was more like 1 to 4, with 1.3 million all-in-ones being sold, compared with 4.1 million single-function inkjets.
"What used to be more of a niche market is now a major target of the manufacturers," Checchia said. HP's share of that market grew from 42 percent a year ago to 53 percent in the second quarter, although it is down slightly from the 56 percent share HP enjoyed at the end of last year. Lexmark is No. 2 in that market, with 31 percent share, down from 41 percent share a year ago. Lexmark, though, now ships more all-in-ones than it does traditional inkjet printers.
HP is also gearing up for its second "big bang" of product introductions, following up on last year's complete revamping of its printer line. Although the company is launching new products more gradually this year, it is expected to have its largest new product introductions around the "back-to-school" season this fall.
"Ultimately the truest reflection of our business is what gets reflected in our financial statements," Morgan said. "HP had hardware growth of greater than 8 percent in our last reported quarter. One of our closest competitors, Lexmark, had negative hardware growth."