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 user 2005-05-12 at 11:13:00 am Views: 32
  • #9400
     The kiosk desk
    : May 05
    This past holiday season in the US
    was a merry one for printer manufacturers. As families transitioned from
    traditional 35mm cameras to digital cameras, they sought ways to print these
    digital images. US retailers were well aware of this trend. Three of the top
    five best-selling personal colour printers were sold as part of bundles during
    that week. These bundles included such items as PCs, digital cameras, paper and
    flash memory. Approximately 5 per cent of all the rebate promotions for personal
    colour printers during the holiday season were for PCs; 14 per cent of these
    promotions bundled digital cameras.

    Bundles were a major focus of
    retailers in the consumer electronic superstore (CESS) channel during the
    holiday season. Best Buy, Circuit City and CompUSA reflected this trend. The
    more business-oriented office superstores such as Office Depot and Staples
    focused more on instant savings promotions, but supported the photo printer
    craze nonetheless.

    Personal colour printer sales have boosted revenue
    for printer manufacturers while providing consumers with the convenience of
    printing pictures whenever they want. Even though printing these pictures on
    inkjet models can cost $1 or more per
    page when the prices of cartridges and paper are factored in, most consumers
    have been blissfully unaware of the actual expenses involved in the process.
    Given their dominant market share, Hewlett-Packard (HP), Epson and Canon have
    been the major beneficiaries of this trend because it is predominately their
    customers who have been purchasing high margin printing supplies.

    manufacturers, it was just too good a situation to last. Retailers such as
    RadioShack, CVS and Rite Aid have begun adding printing kiosks. Customers can
    use their digital camera memory cards to print professional-quality pictures at
    prices as low as $0.24 per picture.

    That’s a blow to printer
    manufacturers because, ironically, the people who use US kiosks are the
    financially savvy ones who could best afford the price of a new printer or the
    cost of printing digital images on their current
    inkjet or photo printers. A close look at the
    results of MetaFacts’ 2004 Technology User Profile report reveals the following:

    • Kiosks are a family affair. Around three-quarters (73 per cent) of
    users are married.

    • Game players and users of MP3 players use kiosks in
    disproportionate numbers – double the national rate.

    • Women,
    particularly those between 20 and 29, use kiosks at a 30 per cent higher rate
    than their population would predict.

    • Kiosks are not the province of
    the poor. While people with household incomes of $75,000 or more comprise 25 per
    cent of US home PC households, they constitute 36 per cent of households using
    kiosks. A subgroup with household incomes of $150,000 or more uses kiosks at
    twice the national average.

    Retailers want this affluent group’s
    photography business because they want them in their stores. Wal-Mart and
    Costco, as well as other chains, have another option for these upscale customers
    who would rather not print out their own pictures, but don’t want to wait for
    online services such as Shutterfly and Ofoto to mail back finished pictures. It
    is possible to upload digital pictures to these companies’ websites then pick up
    finished pictures at their brick-and-mortar stores within one hour. The price
    per photo is very attractive. Recent promotions have seen the prices per photo
    drop to $0.24 at Wal-Mart, $0.18 at Sam’s Club, and even $0.14 at Costco.

    Capturing this group’s loyalty is even more important right now, given
    the explosive growth of camera phone popularity. While it is one thing to save
    and view these pictures, the rubber hits the road for printer manufacturers and
    retailers when these customers decide they want prints of the photos. Yahoo!
    reports that its Mobile Photos site gets the most traffic of any online photo
    site. For people who don’t want to wait for pictures to be shipped back to them,
    Fujifilm and Sprint have partnered to allow Sprint camera phone users to upload
    their pictures via the latter’s Picture Mail service, then pick up finished
    pictures at Fujifilm retail photo finishing locations. Kodak has gone a step
    further by equipping its G3 family of photo printing kiosks to receive camera
    phone images via Bluetooth wireless or infrared transmission. Customers in Asia
    are already printing photo camera images on Kodak kiosks thanks to the company’s
    long-standing partnership with Nokia.

    Printer manufacturers have
    countered retailer efforts to erode their customer bases by engaging in a very
    public war of words. Epson fired the first round by advertising its PictureMate
    printer at $0.29 per photo and HP responded at this year’s PMA tradeshow with a
    bundle that brings the cost of photos down to $0.24 per picture. This approach
    is self-defeating, and neither company will win. By focusing the customer’s
    attention on cost per page rather than benefits such as convenience and absolute
    control over what
    ink and paper are used for
    quality prints, the printer manufacturers have waged a war on terrain that is
    far more favourable for retailers.

    Imagine Wal-Mart’s delight in being
    able to ignore questions about quality and be able to focus on just the cost, an
    area where it knows it can win. With its sheer volume, Wal-Mart can wring out
    concessions from film processing partners and paper suppliers to keep lowering
    its prices. Film processing represented only about 2 per cent of Wal-Mart’s
    store revenue this past year, while printing accounted for around 75 per cent of
    HP’s revenue.

    As HP and Epson look for cheaper sources of paper and ways
    of re-engineering their printers to be more cost-effective, even decreasing the
    size of print cartridges to save on
    ink, they
    face a no-win situation. Lowering prices to stay competitive with Wal-Mart and
    Costco hurts their bottom line profits far more than it hurts the retailers
    which can count on impulse buying by customers, lured into their stores by cheap
    photo processing prices. What printer manufacturers should do is focus on the

    • Photo finishers do not routinely remove problems such as
    red eye. They should improve their free editing tools to give unsophisticated
    users an easier way to improve the quality of the printed photos. They should
    also emphasise that no one is in line behind them impatiently urging them to
    hurry (as might be the case at a kiosk).

    • Accelerate the offering of
    wireless interfaces for photo camera printing and mount an extensive education
    campaign to show how easy it is to do.

    • Printing a picture at home
    means total control over the type of
    ink and
    quality of paper used.

    • Focus on longevity. Smaller retailers tend to
    use dye-sub machines that have very poor image permanence (as low as five to
    seven years for some, according to Wilhelm Imaging Research).

    • Focus on
    the environment. Large volume retailers like Costco or Sam’s Club tend to use
    silver halide-based printing techniques. While longevity is good (50 to 60
    years), the process produces hazardous waste water

    • Focus on
    convenience. You can print at any time – including the middle of the night.

    For the long term, it appears that printer manufacturers are fighting a
    losing battle, and the only question is how much they can slow their rate of
    customer attrition when it comes to printing photos outside the home. IDC
    seconds Current Analysis’ view and, in fact, forecasts a drop in home photo
    printing from 69 per cent this year to 42 per cent in 2007. Keep in mind that
    the overall photo printing market will be far larger in 2007 because camera
    phones and digital cameras are both likely to be ubiquitous.

    Perhaps the
    most likely scenario is that consumers will have far more options and be far
    more selective when it comes to photo printing than they are today. When it
    comes to printing dozens of pictures for an event such as a wedding, where it is
    impossible to determine which pictures friends and relatives will want, an
    online service where website visitors can select the specific photos they want
    to print makes a lot of sense. However, for the majority of situations,
    uploading pictures before heading to a major retailer is likely to become part
    of the normal shopping process for many people.

    Finally, there will
    always be occasions when people will want to print out a few pictures from their
    digital cameras and camera phones immediately in order to show people, and that
    situation will always favour the home printer. The degree with which printer
    manufacturers can turn their customers’ attention away from cost per page and
    toward quality and immediacy will determine how much they can slow retailers’
    inevitable advance toward photo printing dominance.