COMMENTARY | COLUMNISTS | PHIL BAKER

San Diego: The country's new photographic capital?

While San Diego is best known for innovation in telecommunications and biotech, it's also the home of Hewlett-Packard's (NYSE: HPQ) imaging and printing division -- the company's most profitable, contributing $24 billion in revenue this year with about 15 percent in profit

Employing 2,200 people, HP's Rancho Bernardo facility is responsible for the research and development of its inkjet and paper technology, as well as for designing some of its printers. HP's San Diego operation, headed by Vyomesh Joshi, executive vice president of imaging and printing, has been perfecting the technology of precisely putting microscopic ink droplets onto paper for about 20 years, over which time more than 200 million inkjet printers have been sold.

When HP introduced its first color inkjet printer in 1997, little did anyone imagine that the technology would progress so far so fast, or that it would overtake the silver halide photo process that's been used since the 1800s.

In the last few years, advancements in digital cameras and printing have gelled and are rapidly replacing conventional cameras and film. Digital cameras have resolution equivalent to film cameras and inkjet prints are matching the fidelity and permanency of conventional prints. This past year, the sales of film plunged 25 percent, while digital cameras outsold film cameras for the first time.

Of course, HP is not alone in the advancement of inkjet technology. Similar progress has occurred at Epson and Canon (NYSE: CAJ), both Japanese companies. Each of the three companies use different methods of placing the ink on paper, and each guard their technologies through barricades of patents. While each company approaches the problem differently, all three produce printers that provide superb results.

HP's uniqueness is putting the print head in the cartridge instead of building it into the printer. While it adds to the cost of cartridges, it provides a new head each time the ink is replaced. HP has the highest market share, 54 percent in its latest quarter, and is strongest amongst the consumer segment.

I had the opportunity this past week to visit HP and learn more about the technology and see what we can expect in the future. What's behind it all? Smart people, decades of R&D and experience, and huge capital investments. Color inkjet printers are one of the few product categories that have not been knocked off in China.

While the printers are pretty simple to use, there's lots of complexity "under the hood." Colored ink stored in a plastic box is expelled as microscopic dots of ink millions of times a second from hundreds of nozzles, all controlled by micro circuitry built into the box that forms the printhead. These boxes of ink with printheads are the cartridges we buy.

Much of the research goes into making the dots smaller, expelling them faster, creating more accurate colors and making the images last longer. The technology is spread among three key components, the ink, the paper and the printhead; they're all designed to work together as a complete system. While you may be tempted to use third-party inks to save money, it can degrade the quality of both photos and text.

The formulation of the ink is a long development process that goes through about a thousand variations before a specific formula is settled on. It must not evaporate or crust while in the cartridge; it must be ejected from the head at the precise velocity; it can't crack, wrinkle or fade on the paper; and it cannot be toxic should an infant decide to taste it.

While it's also best to use your printer's brand of paper, not doing so may have a less drastic effect. But the paper does play a role, particularly in print stability, so HP now designs its own paper here in San Diego.

What are the HP engineers' favorite printer? The HP Photosmart 7960 with a street price of about $200. It uses eight colors (including two shades of gray) in four cartridges.

With image quality so good, what's left to do? HP executive vice president Joshi said he wants printers to be even simpler to use and more fun for the consumer.

Expect to see more use of automatic paper detection that adjusts the printer settings depending on the characteristics of the paper, eliminating the need to set them on the computer. We'll likely see more intelligence in the printers to make corrections from the image files, such as redeye, and improvements in printing directly from the camera to the printer. And Joshi says HP will continue to follow Moore's Law (made famous by Intel) by doubling the print speed every 18 months. Over the last 17 years HP has gone from putting ink onto paper at 14,000 drops per second to 73 million today.

But what seemed to excite Joshi the most, even more than the statistics and the hardware, was a spectacular 10-foot long panoramic print of San Diego Harbor hanging in a corridor. It was taken by an accountant with no professional photographic experience, something any of us can do using this new technology.

So perhaps San Diego deserves to replace Rochester as the new U.S. capital of photographic technology --- as long as we don't get their weather.

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Baker has developed and marketed consumer and computer products for Polaroid, Apple, Seiko and others. He is the holder of 30 patents and was named San Diego's Ernst & Young Consumer Products Entrepreneur of the Year in 2000. He can be reached at phil.baker@sddt.com.

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