Walgreen Co. Reports 20.1 Percent Earnings Increase, Record Sales In Third Quarter 2005
"We had another terrific quarter with improved gross margins and higher than expected prescription numbers and non-pharmacy sales," said Chairman and CEO David Bernauer. He added that Walgreens investment in chainwide digital photo labs has improved the overall profitability of the company's photofinishing business. "We're well positioned for the fast-growing demand for printing digital photos," said Bernauer
Every cent spent on lab printing is a cent and a quarter not spent on HP/Canon/Epson/Lexmark ink, printers, and paper.
How soon the tipping point?
By the way, the send-away on-line paradigm,Snapfish, kinda shoots a hole in the digital-instant results value prop.
Well, I've replaced all carts once, (6) and photo magenta and photo cyan twice. So, I guess I saved 4 carts.
I have a Canon i960. The ink management is great. It warns, but will print until there just is no ink left in the cart. It won't print from a 'no ink' condition: you won't get a CM_K print, i.e. no yellow.
I've seen an aftermarket for Epson that prints black and white archival, full tone photographs: it uses 7 different black inks.
Snapfish doesn't hurt the home print market really that much and neither does Walgreens. I print 8x10s and small quantities of 4 x 6s at home all the time. I have also used on-line print companies for larger quantities. I also have friends that do the same thing.
Snapfish was probably a good pickup by HP to gain ground in the online market. Walgreens, etc. are just regaining some of the large amount of lost business over the last 3 or 4 years for 1 hour processing from film.
Processing of retail photos is pretty labor intensive even with the machines. Bad leverage on capital, especially human capital. Every hp exec knowledgeable in retail should be bolstering up the retail computer & imaging business. On the other hand, Snapfish top exec's likely cannot fit into hp's business.
Typical example of over-reach for meager returns. Management distraction.
I think movement to photo-lab as printer of choice will have a grave impact on HP's business.
Everybody hates spending $40 on ink, but won't hesitate to spend $14/48 prints.
HP will continue to sell printers, but the profitable ink/paper business will be cut dramatically.
Retail photo printing is relatively labor intensive. Not worth the human capital investment for the meager returns to a huge tech company like hpq.
Any exec with retail knowledge should be invested in the marketing of its retail computer/imaging products. Not likely that Snapfish exec's can do much for hpq's other products. They'll just jump lst chance they can.
I havn't seen a good justification yet. Classic case of pasteur looking greener on the business you'r not in!