*NEWS*INK IS THICKER THAN WATER
*NEWS*INK IS THICKER THAN WATER
2006-09-11 at 11:26:00 am #16422
Ink is thicker than water
Printer manufacturers have a rather interesting business model when it comes to inkjets and lasers. Like Gillette which makes money on blades and not razors, these vendors make their moolah on cartridges, not on the printers themselves. This has led to considerable gnashing of teeth in the past with consumer organisations pointing out that printer ink costs seven times more than vintage champagne .
That was in 2004. As the poet Longfellow said, ‘Let the dead Past bury its dead! Act,—act in the living Present!’ After all manufacturers are entitled to build any business model that the market will accept. Unfortunately for printer manufacturers there’s a fly in this particular ointment and it’s the emergence of a breed of remanufacturers who offer refilled cartridges of a hitherto unavailable quality, to wit stuff that won’t ruin your printer by clogging the head and leaking all over your letterheads.Faced with the thorny problem of how to deal with undercutters, OEMs have resorted to embedding smart chips in their cartridges so that only cartridges sporting these chips work with a given printer. Unfortunately there are third-party companies re-engineering these smart chips so that remanufactured cartridges work with printers that would otherwise have nothing to do with them.One way out is to take these third parties to court which is what Lexmark did back in 2003 to Static Control Components (SCC) invoking the DMCA (Digital Millennium Copyright Act). That didn’t fly however and the 6th US Circuit Court of Appeals in Cincinnati, Ohio allowed SCC to sell microchips to be used in old Lexmark toner cartridges. Then the US Supreme Court rejected Lexmark’s bid to hear its case against SCC.So the legal option seems to be a bit of a non-starter. Worse yet, from an OEM’s standpoint, governments are starting to legislate that cartridges must be recyclable. The European Union’s law on electroscrap has been the trendsetter here.To their credit, OEMs do try. They recycle returned toner cartridges. Some even offer rebates for special cartridges that the consumer promises to return after one use (Lexmark’s Return Programme).Printer makers argue that a lot of R&D goes into formulating their inks and that the quality in terms of richness of output etc is far superior to what any refill can achieve. That is true if you are talking about taking high-resolution colour prints. It doesn’t stand up quite as well if the printouts in question are office documents in black ink on white paper which is what most printouts tend to be.So where does that leave a beleaguered printer manufacturer faced with stiff competition from low-cost substitutes for its biggest money-spinner? The radical, but remarkably effective, way out would be to stop subsidising the acquisition cost of inkjets and lasers by raising prices of hardware while slashing that of cartridges. That will leave the remanufacturers looking rather silly as their raison d’etre will cease. What OEMs have done is come out with products aimed at emerging markets that offer slightly lower quality (black ink that’s not as dark as the ‘real’ stuff) at a 50 percent premium over remanufactured cartridges. HP’s ‘Simple Black’ initiative is a good example of this.Thanks to the printer OEM brigade’s wholesale adoption of the razor-blade model, there’s more money in selling cartridges than printers. Estimates put cartridge sales at 90 percent of the global printer market. Consider that the 2005 figures for the printer, copier and MFD market totted up to $58.4 billion and you’ll see that we’re talking big money. It’s going to be a fierce fight with no quarter given and the winner can only be the consumer—both individual and business.