LEXMARK BUYS SOME GOOD NEWS
LEXMARK BUYS SOME GOOD NEWS
2006-02-17 at 10:12:00 am #14233
Thin margins on color printer
Historically, printer manufacturers have looked to the color segment of the market for growth, and with good reason. While Hewlett-Packard Co. is the reigning king in the monochrome segment, color’s hierarchy is still undecided. Those who invest in companies that produce color page printers think the outlook is bright, because the printers use four times the toner-cyan, magenta, yellow and black-of a monochrome printer, thus painting a picture that is four times as brilliant as the current billion-dollar industry. But some manufacturers have been slow to jump into the color printer market.
Until Lexmark introduced its C52X series, which included the C524n, last June, the manufacturer had a huge gap in its color lineup. The low-end C510 printed eight color and 30 monochrome pages per minute. The high-end C762 was significantly faster, but also more expensive. With nothing in between, competitors enjoyed the advantage.
Lexmark’s new C524n rounds out the manufacturer’s color page printer assortment with a price point that seems unhealthily low but still provides a profit.
This network-ready color laser printer offers 1,200 x 1,200-dpi resolution and brilliant color output at speeds up to 20 pages/minute. The C524n produces its first page in as little as 13 seconds and has a monthly maximum duty cycle of 65,000 pages.
Its 437.5MHz processor and 128 Mbytes of memory, the latter of which is expandable to 576, reduce the amount of time network users have to wait for print jobs. Color Care Technology and the Lexmark Coverage Estimator help manage the cost of using color toner.
The C524n is 17.3 inches wide x 19 high x 20.2 deep and weighs 57 pounds. It’s packaged with a power cable, a CD that includes the user guide and printer software, a paper-exit extension tray, setup sheet and toner cartridges for cyan, magenta, yellow and black. The C524n comes with a one-year on-site repair warranty.
Many of us are aware of the lower manufacturing costs that result when IT and consumer electronics products are outsourced. But how razor thin must margins be for manufacturers to stay competitive in today’s printer market?
Current Analysis Labs examined the C524n at a product volume of 120,000 units under the premise that the model was produced in China. To do that, we estimated the purchase costs of commodity components, manufacturing costs of fabricated components and location labor rates. The result was a production cost of $473.60 per unit. The electronics and assembly of the machine account for $107.10. The printer mechanism and its assembly account for $100.63.
At the time of the product’s release, the suggested price was $699. With a production cost of $473.60 per unit (not accounting for tariffs and taxes), there is still profit to be made. However, Lexmark does not seem to care about profit margins on its hardware. To create buzz for the C524n, Lexmark discounted it by as much as 50 percent in some places. To maintain its revenue stream at the low price, Lexmark outfitted the printer with different toner cartridges. The more-expensive models, targeted at the enterprise segment, came with more toner. The less-expensive models, which the company saw as perfect for small-office and home-office users, came with low-yield cartridges.
The Lexmark C524n was an important introduction. Whereas its predecessor, the C510, was ill-fitted to take share of the profitable color page printer market, the C524 series is perfectly positioned to compete. Lexmark claims the print quality of the C524 is “photorealistic” because of its new toner and printhead. The chemically processed, spherical toner delivers 1,200 x 1,200-dpi resolution, and the new printhead synchronizes four lasers in one unit with a mirror
The C524n fronted Lexmark’s completely new C52X product line, leaving little for customers to ask for. The machines perfectly position Lexmark to attack the enterprise market as well as the manufacturer’s competitors, specifically HP