Stamps.com Receives Boost from HP and Feds

Through a new deal and some new export rules, Stamps.com (Nasdaq: STMP) now has more marketing muscle both in the United States and abroad for its online postage service.

Stamps.com forged a distribution and marketing alliance with computer printer giant Hewlett-Packard (NYSE: HPQ) Co. to bundle its print-it-yourself stamp software with HP printers sold to businesses and consumers. Meanwhile, new export rules issued by the Clinton administration this week will make it easier for Stamps.com to spread the print-it-yourself gospel to post offices and companies in other countries.

The HP deal will put Stamps.com in front of new Hewlett Packard printer customers and the 100 million people and businesses already using HP printers. Stamps.com, founded in 1996, also has marketing relationships with America Online, IBM (NYSE: IBM), Microsoft (Nasdaq: MSFT), Office Depot, Quicken.com and 3M.

Stamps.com's Internet Postage service will be made available with select new HP OfficeJet products and with personal and workgroup HP LaserJet printer installation CDs. Through the installation CDs, as well as through a new co-branded Web site, HP and Stamps.com will make the Internet Postage service available to people already using HP printers.

In addition to the free software, OfficeJet and LaserJet owners will get an introductory free postage offer and a free month of service when they sign-up and install or download the software. The companies plan to offer HP customers access to Stamps.com's full-service shipping service to manage mail and parcel shipments as well.

Challenging the Competition

"This relationship gives Stamps.com a giant leap ahead of its competitors by giving HP customers the power to print postage online using only a PC, printer and an Internet connection," Stamps.com President Loren Smith said.

The company has been competing directly with at least four others since the U.S. Post Office issued permission last year for companies to start selling computer generated stamps instead of the old-fashioned lick-and-stick stamps that have been around for more than a century. Battling Stamps.com for dominance of the electronic market are E-Stamp, PC Stamp and two services operated by Neopost -- Simply Postage and Postage Plus.

E-Stamp and Postage Plus are the only competitors that, like Stamps.com, do not require special meters or other hardware to generate stamps from a computer. Postage Plus is still waiting for approval from the U.S. Post Office. E-Stamp charges $49.99 (US$) for its software, while Stamps.com's software is free.

"HP believes the future of printing lies in applications and services that turn a printer into something more," HP Imaging and Printing Systems President Carolyn Ticknor said. Ticknor is also a member of the Stamps.com board of directors.

"By supporting Stamps.com, we provide our customers with a totally new way of meeting the business need for postage and help them gain more utility from their printers through a powerful and simple printing e-service," Ticknor said.

Adding International Opportunity

As it works to increase its domestic customer base, Stamps.com is also pushing for overseas and international authorization for its computer-generated stamps. A new set of regulations from the Department of Commerce represents a personal victory for the company.

Stamps.com heavily lobbied both the administration and Rep. Sam Gejdenson (D-Connecticut) over the past several months to ease restrictions on the export of encrypted technology such as the software used to authorize electronic stamps.

Commerce's Bureau of Export Administration is now allowing U.S. companies to export any encryption product to commercial firms, individuals and other non-government end-users without a license, and "retail" encryption products that are widely available in the market can now be exported to any end-user, including foreign governments.

"This policy helps business and promotes e-commerce by adjusting our regulations to marketplace realities that U.S. companies face when they try to sell their products overseas," Commerce Secretary William Daley said. "We've also worked very hard to address privacy concerns and to ensure that our law enforcement and national security concerns are met."