The following appears in The MFP Report by Brian Bissett bbissett@mfpreport.com

Granted, the consumer inkjet market today isn’t as exciting as it used to be, and HP isn’t as dy- namic as it once was in the world of printing, but something quietly happened in the month of October that affects both of them. And it could potentially have a profound impact on much of the rest of the hardcopy business over time.

I’m talking about the long overdue arrival of HP’s Instant Ink program as a fully functional, no-longer-in-perpetual-beta offering. Unfortu- nately, as is sometimes the case in the technol- ogy world, HP made its boldest claims for In- stant Ink — “50% off original HP Ink delivered right to your door!” — back when it was barely avail- able and still evolving. Now that the program is officially rolled out with even bigger savings likely for most users, HP has nary a word to say.

The promise of big savings is not what’s so revo- lutionary about Instant Ink. What’s truly unique is that the program is predicated on the decep- tively simple idea that a page is a page is a page. Customers sign up for a monthly allotment of 50, 100 or 300 pages, as the program is cur- rently offered. And there’s no distinction whatso- ever between color pages and monochrome pages, and that indeed is a breakthrough.

Screen Shot 2013-11-26 at 3.18.27 PMTo the best of my knowledge, Instant Ink is the very first product or managed service offering anywhere in the hardcopy business — from consumer to office to production — in which the customer pays no explicit premium for color.

I’m not talking about the kind of slight-of-hand Xerox tried with solid ink a few years ago in which a pack of black ink sticks cost the same as a pack of cyan or magenta or yellow ink sticks. That still meant a given color page was at least four times the price of a monochrome page.

Screen Shot 2013-11-26 at 1.58.44 PMAnd to its credit, HP hasn’t opted for artificially inflated unitary page prices that would mean Instant Ink customers pay more for mundane black pages than they would in a pay-as-you-go scenario. The fact that Instant Ink currently covers just three AIOs that use the same four ink cartridges makes the math very easy to see.

With Instant Ink, customers prepay either $2.99 for 50 pages, $4.99 for 100 pages, or $9.99 for 300 pages. That works out to 6¢, 5¢ or just 3.3¢ for every page. The best a customer can do out- side the program is to buy HP’s “XL” black and tricolor inks. Those cartridges work out to pay- ing 5.8¢ for a black page and 14.9¢ for a color page. But — and this is a big caveat — those pay- as-you-go page prices reflect cartridge yields which are based on ISO test pages that average 5% coverage per ink. If a customer’s real page coverage and ink usage is higher, the savings with Instant Ink are even greater.

Screen Shot 2013-10-08 at 9.14.31 AMNor do there seem to be any subtle “gotchas” in Instant Ink. Customers can add, drop or change their plan participation pretty much at any time. There’s no cost to join or penalty to cancel, and shipping is free, as is postage to return the empty cartridges. If a customer exceeds the se- lected allotment in a given month, the pricing for overages is not at all harsh. It’s based

on the plan in place and ranges from a high of 6.7¢ per page and a low of 4¢ per page … for every page. And if a cus- tomer doesn’t print his full allotment, he can roll over up to a month of pages.

So why is HP offering consumers such a sweet deal with Instant Ink and why now?

Certainly HP isn’t selfless. Possible explanations are that Instant Ink is a desperate response to declining consumer printing, an answer to competitive pressures, or a way to undermine rising use of aftermarket inks. While the initial idea for Instant Ink arose back when Kodak was loudly making the case that inkjet printing was too expensive, they’re long gone now and so is Lexmark for that matter. That leaves the other two explanations, and I’d say both are factors.

Regardless of the specific causality, HP clearly seems with Instant Ink to be field-testing a new mode of business. And this is what raises all sorts of interesting questions and possibilities.

In a consumer printing business that for several quarters has been shrinking, the focus has shifted from growing the pie to protecting the supplies for one’s current slice of the pie. Given that inkjet supply margins have always been obscenely high, HP certainly has room to experi- ment. Although the magnitude of savings con- sumers experience with Instant Ink is significant, HP has judiciously limited the program so far to just three recent sub-$100 consumer AIOs. Time will tell if, when and how fast HP opts to expand Instant Ink to cover higher-end AIOs, let alone its more serious Officejet Pro inkjet MFPs

But this also begs the question whether there’s anything about Instant Ink or inkjet printing that precludes HP or someone else from offering an “Instant Toner” program. Some might argue that’s what HP and other vendors have been doing in the office market for several years with MPS. But MPS is different in two important ways. It relies on after-the-fact billing rather than pre- paying for a block of pages. And its maintains the crucial distinction between color and black pages. But could it be that offices will need an Instant Toner type of program before they’ll ever agree to print a lot more color? Time will tell.