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 user 2005-06-10 at 10:32:00 am Views: 36
  • #9869

    Laser vs. Ink – The Changing Printer


      6, 2005


    Five years ago, the consumer printing environment was relatively simple.
    Personal color printers dominated the retail market, all-in-ones (AIO) were just
    beginning to pick up shelf presence, and page printers were specifically sold
    through dealer channels to larger businesses. Although personal color printers
    still dominate retail unit sales, the consumer printer landscape has changed
    with such speed that personal color is quickly becoming the underdog. With
    hardware pricing now low enough to compete in retail and selling into businesses
    increasingly complex, page printer manufacturers that once leveraged strong
    channel relationships are now finding that this strength is also a cost
    liability. Printer manufacturers, traditionally strong in consumer sales, are
    now finding the retail channel chock full of a variety of printer form factors.
    As page printer, AIO, and snapshot printer sales continue to infringe on
    personal color market share, the importance of creating a formula for success
    couldn’t be higher. With printer manufacturers rolling out their latest
    consumer-focused page printers into retail this summer, inkjet and page printer
    manufacturers will need to make defending their market share against these new
    entrants the top priority.

    New Home: Low-End Color Page Finds Way to Retail Shelves
    In 2000,
    the lowest-priced entry-level color page printer was approximately $1,300.
    Today, that cost is down to a post-rebate price of $249 for a printer such as
    the Konica Minolta 2400W. With price points this low, personal color inkjet
    manufacturers are beginning to see these models affecting inkjet sales. This
    year’s entry-level laser offerings from manufacturers such as HP, Oki Printing
    Solutions (Oki) and Konica Minolta will not only come with an affordable price
    (nearly 50% less than comparable models in May 2004), but they will also tout
    smaller footprints and photo-printing capabilities to breach the historic line
    between color page and inkjet. The following chart depicts the dramatic pricing
    decline of entry-level color page printers and how it pricing is quickly
    catching up with personal color and inkjet photo:

    In the second half of 2005, retail color page printer unit sales will be
    dominated by HP, Oki, and Konica Minolta, however while HP has a strong hold on
    market share, it will be threatened by a new breed of consumer-friendly
    offerings from Oki and Konica Minolta. HP will leverage its strong brand name to
    drive its new single pass Color LaserJet 2600N onto the desktops of today’s home
    office consumers. At eight pages per minute (ppm) in color, the CLJ 2600N is
    faster than many competing color page products; however, its identical 8-ppm
    monochrome print speed will limit its appeal to SOHO users as small and medium
    businesses will demand faster monochrome print speeds to accommodate day-to-day
    printing needs. Regardless of current print speed barriers, page printers are
    finally finding users in the SOHO consumer segment, thus presenting a
    significant opportunity for these manufacturers.

    Oki is another example of a manufacturer that has crossed the line from
    business to consumer with a new breed of printers. The manufacturer’s current
    C5150N has experienced significant market share growth over its predecessor, the
    C5100N, in the past year. Oki will now leverage its success with the C5150N to
    launch photo-capable printers that, due to the LED technology, will offer faster
    color print speeds than competing page models. Further, by consistently
    utilizing a promotional strategy that combines free gifts (such as an office
    paper shredder or extended warranty) with significant mail-in rebates, Oki will
    continue the success plan it developed for the C5150N with its new products.
    This strategy has assisted Oki in targeting SMBs with the free gifts, low price
    points and faster print speeds than competing models. Oki will use its marketing
    strategy to tout its new models as perfect printers for the retail buyer.

    However, it is Konica Minolta that first pushed the envelope with the recent
    introduction of the Magicolor 2430DL, which is marketed as a threat to inkjet
    printers. The manufacturer hopes that the Magicolor 2430DL’s PictBridge port
    will help promote the printer as an option for those consumers who feel that a
    “disposable” photograph is sufficient for their home printing needs. Konica
    Minolta was first to market with a color page printer promoted as photo capable,
    but it by no means will be the last to attack this space as Oki and others are
    expected to follow suit with their own offerings by the end of 2005. However,
    pricing will be paramount to the potential success of these models. As color
    page printer vendors continue to target the inkjet photo space, they must keep
    in mind that price-conscience SOHO consumers will demand pricing that is similar
    to that of their inkjet choices. The following chart depicts the current average
    price of inkjet and color page printers that include PictBridge and our
    forecasted estimate of average pricing by January 2006:

    Once thought of as a printer exclusive to the workplace, the page printer has
    now reached price points and performance thresholds that place it directly
    within reach of the average consumer. The number of different page printer
    products on retail shelves increased by nearly 100% between 2004 and 2005.
    Consumers can now easily obtain a quality printer that is not only fast, but
    also prints basic photographs–all for a low total cost of ownership (TCO) and
    hardware cost slightly more than that of mid-range inkjet devices. As page
    printers continue to boast consumer-centric functionality such as PictBridge,
    while at the same time shrinking in size and price, the models are starting to
    find themselves at consumer electronics stores (CES) where shelf space was
    traditionally reserved for personal color inkjets. The retail shelf presence of
    page printers increased by more than 40% between January 2004 and in year over
    year in January 2005 in the U.S., and this growth trend is expected to increase
    dramatically as these printers expand in the CES channel. The CES retail market
    represents a significant, and relatively new, opportunity for consumer-focused
    page printers. Further, this shift in shelf presence is expected to come with an
    estimated threefold page printer unit sales increase over the next 12 months—all
    at the expense of personal color inkjet unit sales.

    Sitting Pretty? Inkjet Reacts to Change
    With consumer printer
    pricing dropping dramatically and the sudden increase in functionality, personal
    color and inkjet photo printer manufacturers are forced to defend market share
    from not only the AIO segment, but also from low-end color page printers.
    Knowing there is only so much that inkjet manufacturers can do to retain market
    share for their personal color printers, Canon, Epson, HP, and Lexmark have
    turned to a combination of improved performance, new form factors, and branded
    inks as the solution to offset gains made by the color page segment. In the past
    year, inkjet manufacturers have increased monochrome print speeds in a handful
    of personal color models; boosted photo functionality by including borderless
    photo printing in entry-level models; increased all-around marketing efforts to
    focus on cost per photo, ease of use, and branded inks; and, most importantly,
    created the snapshot printer phenomenon.

    With increased competition knocking at its door, the first reactive measure
    taken by inkjet manufacturers to retain shelf space and unit sales was to
    increase print speeds and offer borderless photo functionality. HP and Canon
    exemplify these increases in print speeds with their respective DeskJet and
    Pixma lines. Last summer, HP launched the 30-ppm DeskJet 6540 for $149; it is
    consistently the number three selling DeskJet in the retail channel. While it’s
    not too surprising to see HP boost speeds to laser printing levels, Canon
    impressed the industry with its summer 2004 Pixma introduction, in which the
    entry-level iP1500 is priced at $49 and features 18-ppm printing in monochrome
    and borderless 4”x6” photo printing in less than a minute. The iP1500 is also
    consistently offered free after rebates in PC bundles at retailers including
    CompUSA. While recent improvements in speed and photo printing at low price
    points make inkjet printers affordable for even the most budget-conscious
    consumer, manufacturers innately understand that performance can only take
    personal color so far and have therefore initiated aggressive marketing
    strategies targeted at female and young demographics.

    With the omnipresent threat of color page printers coupled with a highly
    competitive photo printer market, manufacturers have tailored their marketing
    strategies specifically to women, ease of use and entertainment value. HP has
    shifted marketing to the 12-34-year-old age demographic in hopes of instilling
    the fun and entertainment value that photo printing brings. Lexmark is
    attempting to change its entire brand image with its “Uncomplicate” ad campaign
    that targets ease of use. However, it is Epson that pioneered the marketing
    shift from document printing to photo sharing. Epson was the first manufacturer
    to market to women with its spring 2004 launch of the PictureMate. The company
    coined the term “Chief Memory Officer” (CMO) in an effective effort to pull at
    the heartstrings of women and mothers across the world by stating that women are
    responsible for capturing and saving sentimental moments for their household.
    The manufacturer was also the first company to hone in on cost per photo and
    launched $0.29 photos to compete with retail and online photo finishers. This
    strategy paid off in gold for Epson, as its popular PictureMate dominated
    holiday season 2004 inkjet printer sales as the number one selling printer. In
    fact, the snapshot printer comprised 11% of all inkjet printer sales, 18% of all
    photo printer sales, and 48% of all snapshot printer sales during the period.
    The following chart illustrates retail unit sales share by sub market and
    highlights the growing spike in the snapshot printer segment at the expense of
    standard personal color:

    It is no surprise that the third reactive measure taken by inkjet
    manufacturers was the addition of the snapshot printer. This product has become
    the solution for manufacturers to retain inkjet printer unit sales and keep
    share from AIO and page printers. Snapshot printers combine speed, ease of use,
    and long-lasting photo quality into a compact, mobile design. Each inkjet
    manufacturer now has at least one in its arsenal. In fact, over the past year,
    total snapshot printer retail shelf presence has doubled while those of inkjet
    photo (excluding snapshot) and personal color inkjet have decreased by 8% and
    19%, respectively. However, unit sales for snapshot printers have consistently
    increased to the point where the segment commanded 28% of total printer sales
    for the 2004 holiday period. With unit sales expected to increase further, the
    snapshot printer is the silver lining for the inkjet printer segment because it
    is essentially void of competition from other form factors.

    A Growing Divide: Laser vs. Inkjet
    For printer vendors selling
    into the U.S. market, pioneering the way should be the number one priority.
    There will be page printer manufacturers hesitant to shift distribution
    strategies because page volumes are traditionally low in the SOHO and SMB
    segment. However, these manufacturers must realize that more and more of these
    growing businesses are purchasing, or at least examining, printers in retail. As
    these developing businesses expand, prior experiences in page printing will
    provide a major portion of their purchase decisions when the time comes to
    acquire a larger fleet of printers. This trend also highlights the fact that a
    retail presence increases brand awareness among America’s emerging enterprise
    consumers. Further, as the number of SOHO page printer consumers grows,
    manufacturers will have the opportunity to enter the homes of America with
    consumer-friendly devices.

    While page printers have enjoyed a threefold market share increase in the
    past year, the segment still represents less than one out of every 20 printers
    sold in the channel. Drastic increases in presence and sales for color page
    printers are inevitable, but it is the strategic marketing and the growing
    popularity of snapshot printers that will keep consumers engaged with inkjet for
    the next three to five years–especially as second- and third-generation digital
    camera buyers look for specialty photo printers. However, page printers are a
    force with which to reckon, and they may eventually replace inkjet. The
    following chart illustrates that although holiday 2004 unit sales increased
    tremendously, color page printing is at the infant stages of its retail success:

    In order to steal share from inkjet, page printers must leverage their image
    as the Cadillac of printers. Brother’s recently introduced monochrome HL-2040
    and HL-2070N printers have performed well in retail. One reason for their
    success is their small, sleek size, but there speed and print quality can also
    referenced as reasons for its success. Color page printer vendors must follow
    this lead. For page printers to truly penetrate the SOHO segment, they must use
    the example set by compact personal color inkjet printers, where the product
    complements the home office with attractive style and a small size. Further,
    combining image and increased functionality, such as photo-printing capability,
    will help page printers obtain retail market share in the next 18 months that
    was once reserved exclusively for ink.

    With digital camera pricing steadily on the decline, there will always be a
    market for personal color inkjet printers, and inkjet manufacturers have
    answered to competing technologies by creating photo specialty printers.
    Therefore, the biggest question for inkjet is not where lowest
    functionality-to-price ratio is, but how to keep consumers engaged. Consumers
    will remain loyal to inkjet as long as printing high-quality photos is simple,
    fun and inexpensive. Manufacturers must facilitate the needs of the consumer
    with improved photo-editing software, wireless photo printing and a continued
    commitment to photo inks and papers.

    It is ultimately the consumer experience that will determine at what speed
    page printers will replace inkjet. As new form factors and technologies,
    emerging trends and new participants continue to shape the retail channel;
    manufacturers are being forced to adjust their strategies. Boxy, off-white color
    page printers that are the size of a college dorm refrigerator no longer make
    the cut, as consumers more and more expect their printer to complement their
    other home and office electronics. Further, consumers demand ease of use and
    affordability with their printers, so the experience should be as simple as
    clicking “print” while at the same time not denting their wallets. While page
    printer market share continues to grow, personal color inkjet market share
    continues to decline, and consumers become more and more infatuated with the
    snapshot printer, don’t expect explosive consumer market share growth from the
    page printer segment until page printers are able complement their consumer
    friendly pricing with sleek, compact designs and photo functionality.