'Some people believe they can represent themselves as HP, which is a violation of trademark, copyright and our intellectual property.' –Paul Anthony, Business Manager, HP, Asia Pacific

Paul Anthony is Business Manager, Peripherals Supplies, Hewlett-Packard, Asia Pacific. Paul’s role involves driving the supplies and consumables business related to HP’s hardcopy solutions in the region. One of the key challenges of Paul’s role is driving the educational campaign to increase channel and customer awareness of the disadvantages of using counterfeit supplies such as re-fill and re-manufactured products. 



In India recently, he spoke to DATAQUEST, about HP’s strategies and programs to check counterfeit supplies
of consumables in India, including the Corporate Engagement Program.

Why

does counterfeit supply of consumables happen in the first place and is there a

way to prevent it?

Essentially, the supplies market

is fairly large and widespread as you can well imagine. We have a huge installed

base of printers, and when you take into account the installed base of Canon and

Epson, it’s a very huge after market out there. I think lots of people are

very opportunistic, in certain countries only. So this problem is very specific

to India, China, the Philippines and to some extent Thailand and Malaysia. But

it’s almost non-existent in the rest of the world, except for a few countries

in Latin America. The reason being that everyone is looking for market share and

an opportunity to make an easy buck. They tend to target software piracy and



counterfeiting of our products.

Some people believe they can

represent themselves as HP, which is a violation of trademark, copyright and our

intellectual property. So we are looking at strengthening our legal structure in

India, taking these people to court if necessary, monitoring the market for

incidence of counterfeit and protecting our customers. So we are going to set up

of hotlines for large customers for being given an assurance that they are

buying genuine products. We will also introduce new technologies in our

packaging to differentiate our products We are fully committed and have also

talked to other printer vendors.

Is there some

way you can ensure that you can prevent counterfeit itself?

My answer to that question will

be no because whatever measures we take, there will still be people out there

looking at ways and means and loop holes to work around. But it’s certainly

possible to restrict it to a small part of the business.

You mentioned

that counterfeit of products happens in certain markets or specific countries

only. What are the reasons why it happens only in these markets?

It’s certainly a function of

the players, the channel members involved in the market place and their openness

to indulge in what essentially amounts to criminal activity. It’s also a

function of the level of IP protection in countries. If you look at China and

India, India certainly has a fairly impressive record, its not as strong as say

a place like Australia or Singapore. So people feel that intellectual property

can be violated and that’s another reason why it’s happening in these

countries. It could also be that the customers are price sensitive and are

asking for alternatives. So opportunistic people are offering them products.

How does it

affect your business, in terms of revenue loss and reputation?

Yes, the most obvious one is

revenue loss. Because people believe they are buying HP when, in fact, they are

not. So we lose revenues there.

Can you

substantiate this revenue loss with actual figures or data to indicate its

impact on your business?

We don’t have any specific data

to corroborate how much we have lost. In my mind it’s significant and that’s

why we plan to do something about it. The other thing is what it does is to the

reputation of the product. People believe that the HP products they bought is of

low quality. Sometimes they think it’s a problem with the printer, because the

printer can also get damaged in case the cartridge leaks or does not perform its

function. So they come to the warranty center. At times they are also forced to

pay a cost because the damage has been attributed to a non-original product.

The channel, I think, is impacted

because there is uncertainty at times. Am I buying genuine products? Am I buying

counterfeit products? And so there could be a loss of confidence.

How long have

you been tackling this problem at HP?

I would say we were made aware of

this problem during the end of 1997 or early 1998. It cropped up in Thailand and

in China, and started to crop up in India, Philippines and Malaysia in 1998. So

it’s been about 2-3 years.

Have you

evolved a strategy or program to go about it in a methodical way?

In countries where there is a

legal recourse, we have employed the best legal advice to set up a strategy for

identifying counterfeits, making jack purchases, and prosecuting them in courts.

In addition, we are also focusing on our customers who might be victims of

counterfeit and are going to evolve programs and hotlines to reassure customers

that they are buying genuine products. Some of the large corporates are

protected through our Corporate Engagement Program (CEP). So we will do audits

of their products to ensure they are genuine. We’ll also audit the channel as

much as we can to make sure their stocks are all genuine.

Can you

describe CEP in a nutshell?

Our distribution model goes

through the first tier. Godrej, Redington and Kores, in the case of supplies.

And they are free to sell to anyone. However, HP certifies a certain set of

dealers with whom we do a lot of work and so are partners. In case the guy is a

corporate reseller, the company will facilitate him with corporate enclosures

and so on. This is how the program works.

Essentially in the CEP, a couple

of things are important. One is, customers prefer to buy products at fixed

prices. So HP would like to guarantee, a fixed local currency price in Indian

rupees which they feel is beneficial. And so we will put in place a system where

they can call up and verify products. We’ll ensure that our dealers are well

stocked and give quick delivery.

Are you also

in the process of introducing a program for channels or supplies?

We have identified channels. This

is about certifying the channel. The supplies business in India is pretty

unorganized and most vendors do not have an authorized channel. So HP, for the

first time, is working on that and we are the first vendors to do so. On the

first of November 1999, we announced a list of authorized dealers across the

country. We have focused activities which we have planned for this channel.

Partners have been identified based on customer segments.

What’s been

your experience in the last one year?

The channel certification

happened in the last quarter of the last year. But CEP has actually come into

place this year. And we have environment-friendly programs like Planet Partners

which we are ready to launch.

In the CEP program, the last

element is about educating customers. People under-estimate how much down time

there can be in case a toner product leaks or spoils your printer.

We are one of the largest supply

vendors in the world, have huge share in the LaserJets on a worldwide basis. And

so we have been concerned about all the toners and ink cartridges we are going

to use and get thrown. So we have actually launched the Planet Program across

APAC including India, where we will take back empty cartridges after use and

send them for recycling. We will recycle 95% of content and this will come back

to the manufacturing stream. We already recycled 1.4 million cartridges, that’s

almost 78 million pounds of waste.

What are

technological advantages you will bring to Indian customers?

In the long term, we want to make

sure that consumers will become smarter. On a micro-chip we will allow the

customer to clearly identify a genuine product, how much he’s using, who used

what and what type of pages are printed. At this point in time, we don’t have

the technology, but we are working on it. And it will be rolled out in all our

future products, starting from 2000.

Can you give a

peak into the future in terms of features we can see in HP products?

One of the features, is the

microchip. There’s going to be a micro chip in every print cartridge, and as

soon as you load it into your machine, it will be able to identify itself and

say that I am a genuine HP product, giving a few tips about how to print and

maintain your machine. And then as you print, it will keep track of how much

toner is there in the toner cartridge and warn you that you are low on print

cartridge and you can go only for so many more pages. It will also give you a

profile of what kind of pages were printed, how many pages, how many were black,

how many were color, what kind of density, how much text and how much graphics.

More importantly, these products will, in the future, be linked directly to the

channel via the internet. So the laser printer as it goes low in toner, will

automatically send a message through the internet to the channel partner asking

him to restock the customer. So there will be no human intervention. The person

can come, re-stock the cartridge, change it, take away the old cartridge and all

this will happen automatically.

So are you

talking of extranet and intranet support for your channels?

Yes, the CEP is done only with a

few select resellers whose emphasis will be to engage in these technologies,

like in a massive extranet where they are linked to HP and the customer. They

will have to give certain service levels for the same. We will involve the

channel to enable these technologies.

All vendors

are faced with this problem of counterfeit supplies and today it is an industry

problem. Are you working with other vendors to collectively minimize the

problem?

We are working with the industry.

For lasers we’d like to evolve a standard page which will help you as a

customer to measure cost per page. Now unfortunately, HP has it’s own standard

page, Lexmark, Xerox and Canon have their own standard pages and so the

customers are confused. What we are trying to do is endorse a page standard

which HP has and we’ve asked the industry–Lexmark and Xerox to endorse this

page standard. When this standard will be released publicly, on the internet,

you can download it in any format and do your own testing to see what’s your

true cost per page. What we are trying to tell customers is that its not that

substantial given the benefits that you get from a printed page. That’s

because of HP technology, the HP consumables.

Akila

Subramaniam



in Chennai