Direct Answer
HP Inc. is the PC and printing half of the original Hewlett-Packard, generating strong free cash flow from a razor-and-blades printing business (ink/toner supplies) and navigating a mature PC market with share buybacks and subscription model expansion.
HP Inc. (HPQ): Personal Computers and Printing Hardware
Company Snapshot
| Ticker | HPQ |
|---|---|
| Exchange | NYSE |
| Sector / Industry | Information Technology / Technology Hardware, Storage and Peripherals |
| Headquarters | Palo Alto, CA |
| Founded | 2015 (split from HP; Hewlett-Packard origins 1939) |
| Revenue (FY2024 approx.) | ~$53B |
| CIK | 0000047217 |
| SEC EDGAR | View filings |
What does HP Inc. do?
HP Inc. is a global technology company that sells personal computers, printers, and related supplies and services. It was created in November 2015 when the original Hewlett-Packard separated into two companies: HP Inc. (personal computing and printing) and Hewlett Packard Enterprise (enterprise IT infrastructure). HP Inc. kept the original HP ticker symbol (HPQ) and the iconic Hewlett-Packard brand name.
HP Inc. is one of the world's largest PC manufacturers and the leading seller of consumer and commercial printers in the United States. The company's fiscal year ends in October and is headquartered in Palo Alto, California, near the original HP garage where Bill Hewlett and Dave Packard founded the company in 1939.
Business segments
- Personal Systems (~65-70% of revenue): Laptops and desktops (EliteBook, ProBook, Envy, Spectre, Pavilion consumer lines), workstations (HP Z-series), displays, and accessories. Serves consumers, small/medium businesses, and large enterprises. HP competes with Lenovo, Dell, Apple, and others.
- Printing (~30-35% of revenue): Consumer and commercial inkjet and laser printers, multifunction devices, large-format printing for signage and graphics, and 3D printing. Crucially, supplies (ink and toner cartridges) are the segment's profit driver -- the printer itself may be sold at thin margin, but the cartridges generate substantially higher gross margins on an ongoing basis.
Razor-and-blades model in printing
HP's printing business relies on one of the most durable razor-and-blades dynamics in consumer hardware. Printer hardware is often sold near or below cost to drive installed base expansion. Ink and toner cartridges, which are proprietary and must be repurchased repeatedly, carry estimated gross margins of 50-60%+. The aftermarket supplies business generates most of the printing segment's profit and provides relatively predictable recurring revenue as long as the installed printer base remains active.
HP actively defends this aftermarket through proprietary chip technology embedded in cartridges, HP+ connected platform requirements, and firmware updates that limit compatibility with third-party inks. These measures have periodically drawn criticism from consumer groups and regulators concerned about repair rights and competition.
Capital allocation and shareholder returns
HP Inc. has been an aggressive capital returner, spending most of its free cash flow on share buybacks and dividends. From 2015 through 2024, HP Inc. reduced its share count by more than 40% through buybacks. The company targets returning 100% of free cash flow to shareholders over time. This approach makes HP Inc. more of a value/yield investment than a growth story -- the PC and printing markets have relatively mature long-term growth profiles, but the cash generation supports consistent returns.
Warren Buffett's Berkshire Hathaway took a significant position in HP Inc. in early 2022 (~$4.2B), citing HP's value and cash return profile, though the position was subsequently reduced.
Frequently asked questions
How does HP Inc. make money?
HP Inc. earns revenue through two segments: Personal Systems (roughly 65-70% of revenue, selling consumer and commercial PCs, workstations, and displays under the HP and Omen brands) and Printing (roughly 30-35%, selling printers, multifunction devices, and related supplies including ink and toner cartridges). The Printing segment's profitability is structurally higher because ink and toner supplies (where HP controls the proprietary supply chain) carry significantly better margins than hardware. HP also offers Instant Ink, a subscription service providing ink auto-replenishment for a monthly fee.
Why is HP's printing supplies business so profitable?
HP's ink and toner cartridges are proprietary consumables that customers with HP printers must buy repeatedly. The razor-and-blades model -- sell the printer at modest margin, earn high margins on ink and toner -- generates reliable, recurring revenue with gross margins estimated at 50-60%+ on supplies. HP invests significantly in anti-counterfeit technology and proprietary chip designs to protect this aftermarket. The shift toward higher-priced Original HP ink (vs. third-party alternatives) through technology updates and subscription models like Instant Ink and HP+ is a key profitability driver for the printing segment.
What is Instant Ink and how does it change HP's business model?
Instant Ink is HP's ink subscription service that automatically ships replacement ink cartridges before they run out, based on page usage tracking via HP's connected printers. Customers pay a monthly fee (from a few dollars for low-volume users to $25+ for high-volume plans) in exchange for never running out of ink. HP benefits because Instant Ink locks customers into the HP ecosystem for the life of the printer, generates predictable recurring revenue, and captures consumers who might otherwise buy third-party cartridges. As of 2024, HP had over 12 million Instant Ink subscribers.
How did the HP split in 2015 affect HP Inc.?
HP Inc. was created November 1, 2015, when Hewlett-Packard split into HP Inc. (personal computing and printing) and Hewlett Packard Enterprise (enterprise technology). HP Inc. retained the iconic HP brand along with the legacy PC and printer businesses. While the enterprise businesses in HPE faced disruption from cloud computing, HP Inc. became a focused cash flow generator in relatively mature markets. Under CEO Enrique Lores (since 2019), HP Inc. has emphasized sustainable growth, cost discipline, share buybacks, and expanding recurring revenue through subscriptions and managed print services.
What are the main risks for HP Inc. investors?
Key risks include: structural decline in consumer printing as digital alternatives reduce print volumes; PC market cyclicality tied to corporate refresh cycles and consumer discretionary spending; competition from Lenovo, Dell, Apple, and others in PCs; commoditization pressure on PC hardware margins; Chinese PC and printer manufacturers posing long-term market share risk; third-party ink and toner suppliers eroding the aftermarket supply business; and the broader question of whether the printing business has sustainable long-term demand given digitalization trends.