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 user 2013-06-23 at 9:17:11 am Views: 130
  • #2173

    Cartridge Demand, Aftermarket Share Increasing 

    As We near the end of 2004, the aftermarket toner and ink cartridge industries are healthy and growing. The reasons for this are twofold: (1) demand for both toner and ink cartridges is growing at a faster rate than the world economy, and (2) the remanufacturing industry has developed its processes and practices sufficiently that there are no longer doubts about the quality of its products and, as a result, demand for its products has increased.

    Overall demand for monochrome toner cartridges, both OEM and aftermarket, grew more than 12 percent annually from 2000 to 2004. That growth rate cannot be sustained, and we expect the annual growth rate between 2004 and 2008 to slow to a bit under 4 percent, but that is still faster than the economies of most countries. Demand for ink jet cartridges, including OEM and remanufactured cartridges, compatibles, and refill kits, grew at a 17 percent annual rate between 2000 and 2004 due to the rapid increase in the installed base caused by the advent of sub-$100 and sub-$50 printers. We expect the compound annual growth rate for ink cartridges to average more than 9 percent annually between 2004 and 2008.

    There is no question that the aftermarket has been gaining share. In the monochrome toner cartridge market, Lyra estimates that the aftermarket currently has close to a 30 percent share of shipments and that its share will grow to more than 36 percent by 2008. The reasons for this growth are many, but are primarily: improved quality, increased awareness on the part of end users, and good value.

    The aftermarket has a smaller share of the ink cartridge market, primarily because of problems associated with collecting good empties for HP and Lexmark cartridges, which make up more than 60 percent of the installed base. There have also been quality problems with some Epson and Canon compatibles, as dozens of companies rushed to enter the market with cheap compatibles. Every consumer who has a bad experience with a compatible is a consumer whom the aftermarket has lost.

    Nevertheless, Lyra forecasts the aftermarket to have close to a 17 percent share of the ink cartridge market this year, growing to 23 percent by 2008. The reasons for this growth are increased awareness, good value, and increased availability, as retailers like Staples, Office Depot, OfficeMax, Best Buy, and others offer private-label brands.

    Overall, we see a fairly rosy future for the remanufacturing and compatibles industry. It is an industry that always seems to rise to new challenges, as OEMs design cartridges that are increasingly complex and difficult to remanufacture. The suppliers to the industry have clever engineers who always seem to be able to come up with the parts and processes required for new cartridges. And the entrepreneurs that make up the industry are willing to work the long hours and make the hard decisions required to grow market share.

    * Post was edited: 2004-09-30 10:41:00