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HP’s ILLICIT PROFIT MOTIVE

HP’s ILLICIT PROFIT MOTIVE. HP’s Documents suggest the “smart chip” and SureSupply implementation were based on the desire to increase ink sales. HP00058758.

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HP’s ILLICIT PROFIT MOTIVE

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  1. HP’s ILLICITPROFIT MOTIVE HP’s Documents suggest the “smart chip” and SureSupply implementation were based on the desire to increase ink sales.

  2. HP00058758

  3. “Vendors sell consumer printers at cost, or even sometimes at a 20 percent loss, say financial analysts at Bear Stearns who track Epson and HP. But on the flip side, both firms earn a 60 percent gross margin on ink jet and toner cartridges, says Bill Hand, financial analyst with Bear Stearns.” – Why Do Ink Cartridges Cost So Much? Tom Spring, 9/28/03

  4. 4.6 + 5.8 = 10.4 Cartridges Over Life of Printer

  5. Speed of Ordering • Nearly two-thirds of surveyed consumers place an order immediately or shortly after they are alerted that a supply is low: HP00000738?

  6. Amount Ordered • Half of surveyed consumers buy what SureSupply suggests or more. HP00000738?

  7. DAMAGE MODEL

  8. Per HP’s Mediation Brief 2 Million Subject Printers 3% of total inkjet printers 10.4 Cartridges over printer life 20.8 Million Subject Cartridges $16.8 Average Profit per Cartridge Total = $350 Million Independently Verifiable Analysis 62 Million Subject Printers 100% of total inkjet printers 10.4 Cartridges over printer life 645 Million Subject Cartridges $16.8 Average Profit per Cartridge Total = $10.8 Billion Damage Model

  9. N = 977 Damage Model • Household Ink Jet Printer Installations by Brand Source: Lyra Research, Inc., 2005 U.S. Ink Jet Supplies Survey

  10. Damage Model • HP’s Ink Jet Cartridges and Revenue 2002-2005 $20,134,000,000

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