H-P Firm Sells Its Printers in Unusual Retail Outlets
Who would have thought five years ago that consumers buying a Big Gulp at 7-Eleven could also buy a pre-paid cell phone?
Just as unimaginable a few years ago, consumers can now also pick up a computer printer while filling their prescription at Rite Aid.
After a year in business, San Diego-based Apollo Consumer Products has found success selling its colorful, hip, low-cost printers in atypical locations, such as drug stores.
A wholly owned subsidiary of dominant printer maker Hewlett-Packard Co., Apollo offers its printers , priced below $89 , through stores like Rite Aid, Wal-Mart, FredMeyers and CompUSA. Apollo printers are also sold at Nebraska Furniture Mart, owned by mogul Warren Buffett.
Consumers who purchase an Apollo printer receive free Internet access and E-mail from Juno.
“Nobody believed printers would sell in drug stores,” said Apollo general manager Mohan Garde, who predicted PCs will also be sold in drug stores one day.
Seeing is believing, he said.
Earlier this month, Apollo reached its goal of selling 800,000 printers in its first year. The company plans to increase the number of printers sold by 30 percent a year, every year.
Apollo, which has 18 employees in the United States, Singapore, Switzerland and India, outsources a lot of its sales and marketing.
‘Phenomenal Job’
“I think they’ve done a phenomenal job coming from nothing to something,” said Paula Bursley, principal analyst for Dataquest, a San Jose-based analysis and market research firm. “It’s a very, very competitive market out there. Now it’s a matter of expanding the business and seeing where they go from here.”
Bursley said inkjet sales in the United States grew 33 percent from 1998 to 1999, with most of the growth fueled by lower-end printers.
In 1999, 19.3 million inkjet printers ($3.5 billion worth) were shipped in the United States.
Apollo plans to represent 11 percent of the low-end printer market.
Bursley, who has been covering H-P for about eight years, said Apollo’s success will further expand H-P’s market reach.
“They have pulled themselves away from H-P, and to H-P’s advantage,” she said. “H-P was rather resistant to participating in this low-end segment of the market. H-P has a certain brand and a reputation to live up to. Apollo gave them an opportunity to play in this market while not jeopardizing their brand.”
Garde stressed that Apollo is separate from H-P. The small firm, located above a sushi restaurant in a Rancho Bernardo plaza, is about two miles from the main H-P site.
Own Brand And Identity
“We are not caught up in the day-to-day going-ons at H-P,” Garde said. “We have our own brand and our own identity.”
Garde said Apollo is targeting consumers who are driven by price. He said as technology becomes pervasive, product perceptions will change from being a technology purchase to being an appliance purchase.
“Let’s say you go buy a new toaster because your toaster broke,” Garde said. “They start at $15. What’s the difference in these toasters? You know that every single toaster is going to toast bread. But you want some reassurance it’s going to work. Do you want a white one, a plastic one, a colored one? It’s not about which heating element technology it has.
“That’s exactly what we see happening with printers. It’s a printer. It prints. For reassurance, we tell you it’s powered by H-P technology.”
Garde compared Apollo to Old Navy, a clothing store chain owned by the same company that owns The Gap. Old Navy sells less expensive but similar clothing as The Gap.
“The old school of thinking is, if it’s inexpensive, it had to be drab and gray,” Garde said. “Old Navy changed that completely. They’re offering inexpensive merchandise that has a hip, colorful design.”
But unlike Old Navy, Apollo doesn’t plan to launch a big marketing and advertising campaign.
Color, Attractive Printers
“We do not have plans to be a destination brand,” Garde said. “Our strategy is we want to offer you an alternative that’s colorful and attractive.”
Apollo printers come in mist gray with translucent blue and deep blue and mist gray with translucent teal.
One Apollo printer comes in pink, and that’s the Barbie printer, first introduced last April. The printer was sold with the Barbie PC, made by Patriot.com Computer Corp.
“The market is still evolving,” Garde said about children’s printers. “It’s still not a huge market. With the advent of the Barbie PC it’s become more popular. But I think it needs another two years.”
Although Apollo has fared well in the market during its first year, the question now is, will the company survive long-term?
“In the long run, the supplies are what make this market profitable,” Bursley said. “The instant that they’re able to capture a significant part of that low-end marketplace, they need to be able to harness some significant channel partners. They have to be able to supply products that provide the reseller with an attractive return.
“They also need to look better than their competitors,” she added, pointing to Canon and Lexmark.
Apollo plans to expand its market reach by eventually offering products like PCs, scanners and digital cameras.
