*NEWS*MAJOR STORES TO REFILL INK CTGS

Major stores offer to refill ink cartridges
LEXMARK AND HP WOULD SUFFER AS CONSUMERS SAVE
Even
as computer prices have steadily dropped, the cost of one high-tech
necessity has remained stubbornly high. Printer cartridges are so
costly that printer giant Hewlett-Packard Co. has long made more than
two-thirds of its profit from selling them.
Now, in a move that
could save consumers hundreds of dollars in replacement costs, several
major retailers are starting to offer speedy refill services that
replace the ink rather than the entire cartridge.
The new services
strike a blow at a major profit center for companies such as
Lexington-based Lexmark International Inc. and HP, which rely heavily
on ink for recurring revenue and profits.
Early next week, drugstore
chain Walgreen Co. plans to announce an ink-refill service — at less
than half the cost of buying new cartridges — in 1,500 of its stores,
with the rollout starting in mid-March.
With an eye toward launching
a national service, office-supply chain OfficeMax Inc. is pilot-testing
an ink-refill service in 40 stores in the Chicago area. And Office
Depot Inc. is also testing an ink-refill service in 15 stores in
Minnesota and North Carolina. In addition, smaller ink-refill services
are planning to open more storefronts in malls and hotels.
The new
services allow consumers to get their cartridges refilled quickly while
they shop, rather than having to fill the cartridges themselves as the
do-it-yourself kits on the market require.
Matt Davidson, 46, a
pharmaceutical salesman in Norwalk, Iowa, says he has been going to a
Walgreen store that has pilot-tested ink refills for the last six
months. The drugstore, a mile from Davidson’s home, refilled his
black-ink HP cartridge within minutes at “half the price it would
normally cost me for a new cartridge,” he says. “It was easy.”
Davidson says he has returned for four other ink refills and has stopped buying new HP cartridges.
The
cost of ink has long been a source of frustration for computer users.
The price of ink per milliliter from big printer manufacturers has been
rising at about 1 percent a year, according to market watcher Lyra
Research.
Many of the big printer makers are also getting stingier
with the amount of ink in a cartridge. For example, while a popular
older HP black-ink cartridge, the 45A, cost $29.99 and had 42
milliliters of ink, its newer counterpart, the HP 96, costs the same
but has only 21 milliliters of ink.
Indeed, HP actually loses money
on its printers — money that it recoups through new ink and toner
sales. HP won’t say what its margin on cartridges is, but analysts
estimate the margin to be at least 60 percent on both ink and toner
cartridges.
Each year, about 1.3 billion ink cartridges are sold
worldwide, according to Lyra. Such sales generated $30.1 billion in
revenue in 2005. But the market share of refilled and re- engineered
ink cartridges is now projected to hit nearly 29 percent in North
America by 2009, up from 23 percent in 2005, according to Lyra.
Tuan
Tran, an HP vice president of ink and toner supplies, says the
technology giant is “closely monitoring” the new retail refill
services. Tran says consumers should be wary of refills, however.
Since
HP designs its printers and its ink cartridges to work together as one
seamless system, a refilled cartridge may not be as reliable and can
cause streaking on printouts, he says. With a refilled cartridge,
“there’s a big sacrifice in terms of quality,” Tran says.
Consumer
Reports magazine, for one, has said that consumers should “be wary of
off-brands” and has “found brand-name cartridges to have better print
quality overall.” A 2003 study by research firm QualityLogic Inc. found
that 54 percent of the remanufactured cartridges it tested had
problems, compared with just 1 percent of HP color-ink cartridges and 6
percent of HP black-ink cartridges.
Walgreen is offering a 100 percent satisfaction guarantee for its ink-refill service.
At
Walgreen stores, consumers can drop off their empty cartridge while
they shop and get a refill within 15 minutes, says John Sugrue,
Walgreen’s general manager of photofinishing. The stores will charge
$12.99 to $14.99 for a black-ink refill, around 60 percent less than
the price of some black-ink cartridges from HP, Canon Inc. and others.
OfficeMax
is charging a flat $14.99 for a black-ink refill, and $21.99 for color.
An Office Depot spokesman declined to be specific about what it
charges, but one of its stores in Minneapolis says pricing for an ink
refill ranges from $9 to $18.
The savings could add up. If a
consumer who uses the HP 96 black-ink cartridge buys five new
cartridges over the course of the year, the cost will be $149.95
excluding tax. But a consumer who refills HP 96 black-ink cartridge
five times at an OfficeMax, which is charging a flat $14.99 for a
black-ink refill, would spend only $74.95, excluding tax, in the same
period. The savings over five years will approach $400, more than
enough to pay for a new color inkjet printer at current prices.
Over
the past few years, other cheap options have emerged. These include
used cartridges that have been refurbished to work as if they are new,
specialty franchise stores such as Cartridge World and Island Ink-Jet
that refill used cartridges on the spot, and do-it-yourself refill kits.
Some
smaller firms are also planning to put refill services in mainstream
retail locations. Save On Inks, a Boston-based ink-cartridge provider,
says it will put ink-refill machines in hotels and in strip malls
around Boston and in Florida later this year. And makers of ink-refill
equipment, such as TonerHead Inc., SME Inc. and InkTec Zone America
Corp., say other deals with retailers are in the works.
Other
retailers haven’t yet committed to wider rollouts. An OfficeMax
spokesman says the retailer is “very optimistic” about launching a
national ink-refill service, but declined to be more specific. An
Office Depot spokesman declined to comment on whether it would convert
its ink-refill pilot into a national service.