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 user 2005-09-26 at 10:20:00 am Views: 34
  • #12926

    Dell targets overseas printer market
    Noting some momentum in
    its printer sales, Dell said it will use its server strength to muscle
    its printers into more emerging markets overseas in an effort to unseat
    Hewlett-Packard as the printer king.

    The Round Rock, Texas-based company said it will begin to offer
    high-value, all-in-one and larger-format color laser printers in the
    United States and bolster its efforts overseas, especially in South
    Korea, in 2006.

    Dell has shipped about 10 million printers worldwide, mostly in the
    United States, executives with the company told analysts on Wednesday.
    That’s good enough to be ranked No. 2 in the U.S., behind HP, whose
    market share ranges from 60 percent in some segments to 90 percent in
    some high-end categories.

    In North America, Dell managed a 13 percent market share for its
    monochrome laser printers made by Lexmark and 17 percent market share
    for its color laser printers made by Fuji Xerox. However, Dell ranks
    eighth worldwide, behind companies such as HP, Samsung, Epson, Oki Data
    and Xerox.

    The new strategy, according to Dell Senior Vice President Ro Parra, is
    to bolster Dell’s presence by offering increased same-day shipping and
    piggyback the company’s printers on top of its server sales.

    “As our non-U.S. business is growing, we have a lot of headroom to
    expand beyond our worldwide 3 percent market share,” Parra said during
    a conference call with analysts.

    Dell’s international sales force has a high bar to hurdle. About 95
    percent of Dell’s salespeople have sold laser printers to coincide with
    either PC or server sales, Parra said.

    The company unveiled its all-in-one photo printers, the Dell 924
    (priced at $89) and Dell 944 ($149), on Tuesday which the company says
    offer faster printing speeds and wireless capability alongside new
    printer software that can help manage a pool of Dell and non-Dell

    Dell Vice President Tim Peters told analysts to also expect a new
    version of Dell’s 962–a multifunction printer–before the end of the

    In all, Dell has 14 different models to choose from and supports sales to more than 40 countries.

    But Dell’s push for new corporate customers may come back to haunt it
    in the same way that its quest for PC sales did last quarter.

    Ian Hamilton, an analyst at industry research firm Current Analysis,
    notes that Dell has literally no cost margins for its printer
    divisions. The Dell 1100 is the only printer Dell has contracted with
    Samsung to manufacture. The monochrome laser printer costs $89 to
    produce, not including shipping, and retails for $99.

    “Compare that to the Samsung 2010, which is exactly the same printer
    for the same price after rebate but has more robust features than the
    printer they make for Dell,” Hamilton said.

    And while Dell has notable wins in the home office and small- to
    medium-size markets, Hamilton also notes Dell has faced resistance with
    larger corporate customers.

    “No IT manager has ever lost their job from buying an HP printer,” said
    Hamilton. “No matter how many Dell computers a company may have, people
    who purchase IT equipment look at HP as a long-standing leader in the
    printing business. It’s a hard thing for Dell to crack, but they’re
    still trying.”

    Like many other printer makers, Hamilton said, Dell has reverted to
    seeding the market with free printers to try and drum up support among
    corporate clients.

    “One or two in the back room is all it takes,” Hamilton said, noting
    that Dell promises full service on its printers to give companies a
    chance to compare the performance.

    And like all other printer companies, Hamilton said, ink and toner are
    more important, ongoing sources of revenue for printer manufacturers,
    who find they can sell the hardware at a discount and then more than
    make up for it later on in supply sales.

    Dell said its ink and toner sales (also known as consumables) make up
    42 percent of its Dell-branded printer revenue. Sales of the
    after-market products have increased year over year, Dell’s Parra said,
    by as much as 152 percent since they started selling the products three
    years ago.

    With the average purchase being three ink cartridges per order after
    point of sale, Dell said it is counting on its direct sales and
    shipping model to help increase sales of its cartridges.

    “Nobody likes going into an office supply store to purchase cartridges,” Hamilton said.

    Dell’s ink-cartridge cash cow could also be at risk, Hamilton said.
    Even though Dell recycles its own cartridges on most printers it sells
    in United States and Europe, several companies offer refilling
    services. Office Depot has even begun to sell its own Dell-branded ink
    toner, which cuts directly into Dell’s profits, the analyst said.

    “I expect Dell to limit the number of printer promotions that it does online to help balance the cost,” Hamilton said.
    Dell to focus on laser, multi-function printers
    September, 2005
    NEW YORK – Dell Inc.  on Wednesday said it plans to shift its
    printer focus to laser and multifunction devices, and away from
    stand-alone inkjet models, in an effort to score more profits from its
    printer segment.

    Dell, the world‘s biggest personal computer maker, said it has sold
    some 10 million units after about 2-1/2 years in the printer market,
    which is dominated by Hewlett-Packard Co. and includes rivals such as
    Seiko Epson, Canon InC, Xerox, and Lexmark

    “After the 10 million mark, we are shifting our focus in key
    categories…to high value products,” Ro Parra, Senior Vice President
    for the Americas at Dell, said on a call with analysts. “The lifetime
    operating income in those products is very attractive.”

    The printer market is driven by users‘ constant thirst for replacement
    ink and toner, which deliver far more profits than printer hardware
    that is often sold at break-even or a loss. Parra said that toner sales
    for laser printers, popular with businesses, are selling at three times
    the pace of ink sales.

    Dell, which does not manufacture printers and has technology
    partnerships with Lexmark International, Xerox and Samsung, said its
    target for printer sales this year is about 7-8 million units.

    To be sure, Dell‘s printer business is still dwarfed by entrenched
    players such as Hewlett-Packard Co. But the growth reaffirms the
    company‘s ability to jump into a new market, quickly establish a
    presence and grab market share.

    Ironically, Dell‘s optimism comes on the heels of news that Japanese
    electronics maker Seiko Epson Corp. (6724.T) on Wednesday slashed its
    operating profit forecast by 46 percent for this business year, due in
    part to a slide in sales of ink jet printers and ink.

    Dell said that while its business model does not compare directly to
    Seiko Epson, its Web-driven system helps users buy replacement ink and
    toner faster and more efficiently than other company who rely on
    retailers to sell supplies.

    Dell on Tuesday introduced two new printers, the Photo All-In-One
    Printer 924 and 944, which have improved photo-printing capabilities,
    designs and wireless options, the company said. Multifunction, or
    All-in-One, models typically can print, copy, scan and fax images and