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We estimate that HP's (NYSE:HPQ) Printers and Ink Cartridges business constitutes 24% of the company's stock price. HP's printer business makes money primarily through the sale of ink and toner supplies for its printers.

HP's market share in printers has gone from 35% in 2005 to 40% in 2008. We expect HP's share gains to continue over the Trefis forecast period due to HP's strong relationships with large business buyers and its traction with consumers through its PC business which has also gained share in recent years.

However, HP's printing business is continuously at risk of commoditization. The company has been able to maintain share and some pricing power in this market through printing technology designed to limit the use of low cost (non-HP) ink and toner supplies, with HP printers. As low cost printers and printing supplies become increasingly capable, HP's printing market share along with its printing profit margins will be at risk.

If HP's printing market share were to decline to 2005 levels of 35%, the company could lose $6 billion of its value or about $2 per share.

Discloure: No positions

Source: Will HP Remain the Leader in Printers and Ink?