HP CEO: We'll shift PC business to subscriptions, like printers

HP CEO Enrique Lores has said he wants to sell PCs using the same subscription model that the company uses for printers. In a highly outspoken interview with CNBC, the HP boss also described customers who use third-party ink cartridges as “bad investments”.

Subscriptions have become the modus operandi for the tech industry in recent years, with both software and hardware now routinely sold for a monthly fee instead of an up-front cost. HP has transformed its printer business along those lines, by increasingly selling ink as a subscription service, rather than offering cartridges on demand.

HP is currently facing a federal lawsuit in Chicago, with the plaintiffs claiming customers are being forced to pay artificially high prices for HP printer ink because the company disables its printers when they detect third-party inks being used.

Asked about the lawsuit during his interview with CNBC, Lores remained unapologetic for disabling customers’ printers. “This is part of the business model that has been developed over time,” he said, when asked if printers were following the razor-blade model of making a loss on the razor, but recouping that loss on sales of blades.

“We sell our printers – and we make it very clear on the box of the printers that they were for HP supplies, we made it very clear from the beginning,” he said. “We lose money on the hardware, we make money on supplies.”

When asked if those people who use third-party supplies are “bad customers”, Lores nods his head before elaborating. “This is something we announced a few years ago – that our goal was to reduce the number of what we call unprofitable customers,” he replied.

“Because every time a customer buys a printer, it’s an investment for us. We’re investing on that customer, and if this customer doesn’t print enough or doesn’t use our supplies, it’s a bad investment.”

Shifting the HP PC business to subscriptions

Although there’s no direct comparison between the printer and the PC business models, Lores made it clear he wants to see PCs sold on subscription too – perhaps to increase the notoriously poor profit margins on PC hardware.

When a presenter jokingly asked Lores whether he could fix a paper-jam problem with his printer, the HP boss replied: “IT is very difficult. One of the roads we see is how do we make it easy to connect? Make it easy to solve problems like yours? And we have a service to enable that, but also as we shift the business to a subscription – not only for printers, but PCs and the rest of the products we build – that will be an even better way.”

Of course, with Microsoft increasingly intent on selling businesses Windows desktops as a subscription service, accessed via the cloud, it’s questionable whether the future entails any requirement for local PC hardware at all. One way or another, however, it seems we’re destined to shell out for yet another subscription.