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 user 2007-05-29 at 2:54:00 pm Views: 36
  • #18214

    Printer cartridge battle heating up
    Refill company is suing Lexmark
    Packard, Epson, Kodak and Lexmark International have long inked profits
    by selling printers for less and toner cartridges for more.Popularized
    by King C. Gillette, the business model sells razors cheap yet scalps
    customers on blades.Of course the printer giants have always been at
    odds with those who recycle ink cartridges.Onetime mom-and-pop
    businesses during the advent of the laser printer in the mid-1980s, the
    “rechargers” have morphed into 2,500 companies worldwide,
    remanufacturing 67 million toner cartridges last year — and selling
    them for up to 30 percent less.

    Now they are having their day in court.
    Lexington, U.S. District Judge James B. Todd is presiding over the
    trial in a landmark case that pits cartridge refillers against
    Lexmark.The case of Static Control Components of Sanford, N.C., against
    Lexmark has had the industry’s leading cartridge remanufacturers
    chiming in, as well as charity groups that depend on funds from donated
    cartridges.Charging violation of antitrust laws, Static Control
    contends that Lexmark locks out recyclers with computer chips that
    render their renewed cartridges defunct. Static Control also asserts
    that it should be allowed to use chips it built to outsmart the Lexmark
    printers.Through hefty discounts, Lexmark entices customers to return
    cartridges for refilling to the “Lexmark Return” program, formerly
    known as the “Prebate” program. Static Control seeks to freely recycle
    and resell those Lexmark Return cartridges too.For the printer giants,
    this is an intellectual property case — with Static Control’s new
    chips infringing on the company’s copyrights.The bottom line for
    Lexmark is 62 percent of its $5.1 billion revenues last year. The
    company received $3.2 billion selling laser and inkjet supplies alone
    worldwide.Of the 10 million toner cartridges Lexmark shipped last year,
    cartridge remanufacturers nipped away 27 percent of the empties for
    refilling and reselling — or about $200 million worth worldwide, said
    Jim Forrest, an analyst with Lyra Research in Boston, Mass.”This is
    like the Israelis versus the Palestinians. There is no middle ground
    for these players,” Rob Enderle, president of the Enderle Group, a San
    Jose, Calif., technology advisory firm, said of the case that has wound
    through the courts since 2004.”The only thing that is going to satisfy
    one thing is the death of the other,” he added. “There is not going to
    be an out-of-court settlement.”

    the printer business, empty toner and ink jet cartridges are valuable
    commodities, priced daily on Web sites like

    the root of the supply chain are charities like the Bluegrass
    Technology Center in Lexington. The nonprofit sells donated cartridges,
    raising funds to outfit toys like Tickle Me Elmo with special switches
    so disabled children can play with them.”There is a human side to this
    too,” said Debbie Sharon, the agency’s training coordinator. The agency
    collects between 50 cents and $3 apiece for donated ink cartridges, she
    said.”For us, it’s an easy fundraiser,” she said. “I ask for people’s
    trash, and they are happy to keep it out of the landfill.”One issue in
    the dispute is how the “Lexmark Return” program removes empties from
    the global supply chain, making them increasingly expensive for
    cartridge remanufacturers to buy wholesale.Consider supplies for
    Lexmark’s popular Optra T-420 laser printer, a workhorse used by medium
    to large businesses.Optra T-420 owners can buy a black ink cartridge
    for $222 from Lexmark’s Web site. If purchased new for $193 through the
    “Lexmark Return” program, it arrives shrink-wrapped in a seal
    announcing a customer’s legal obligation to refill it only through
    Lexmark.The market price for an empty Optra T-420 cartridge last week
    was $33 on That is a high price for rechargers, said
    Forrest, because they must clean it, replace some parts and refill it
    with toner before selling to a distributor who will demand a decent
    profit margin before passing it on to a dealer.The refilled and
    refurbished cartridge retails on the Web for between $100 and $173 –
    although companies like Lexmark dispute the quality of the aftermarket
    wares.Empties “are the bread and butter of the remanufacturing market,”
    Forrest said. Companies like HP and Lexmark, he added, “get a little
    upset when they see 20 percent to 30 percent of their profit going

    Others seek to alter the low-margin ink game altogether.
    its rivals, Kodak recently announced a new strategy: selling printers
    for a little more while pricing ink at half that sold by Hewlett
    Packard.Hewlett Packard has countered with a new angle. The company is
    selling smaller ink cartridges cheaper to people who don’t print much.
    High-volume customers can save too. HP’s new, larger ink tanks cost
    twice as much but hold three times as much ink.