DELL TO LIVEN PRINTERS

[Anonymous]

Dell to Liven Printers

The PC maker, turned printer
manufacturer, has been gaining in corporate color printers. Meanwhile
it plans to add new features to its consumer models for the holidays.

Dell wants to ride the
wave of color-both in photos and corporate documents such as
brochures-to greater market share in printers.

The Round Rock, Texas, company, which has been making a run at the
printer market since 2003, will emphasize the photo-handling
capabilities of its all-in-one inkjet photo printer line for consumers,
this holiday season.

It’s expected to roll out two new all-in-one inkjet photo printers,
which also sport a new look, within weeks, sources familiar with the
company’s plans said.

Dell Inc., which has been selling printers and marketing flat screen
televisions, along with music players and other electronics goods as
part of its efforts to grow revenue, is planning a major refresh of its
consumer-oriented products in time for the 2005 holiday season.

It’s expected to launch the bulk of the line, which includes new Dell
XPS-brand Media Center PCs, upgraded Dell DJ music players-including a
new flash-based model called the Dell DJ Ditty-as well as several
televisions, later this month.

It may not completely fill out the new product lines until later in the season, however.

Dell representatives declined to comment for this story. However, some
of the products are expected to be unveiled as soon as next week, while
others, including the PCs and televisions, are likely to be discussed
at an event New York on Sept. 28.

The event, Dell said in an e-mail to reporters, will be hosted by Michael Dell, its chairman and founder.

Given its goal to quickly grow its printer market share-it sold more
than 5 million printers in its fiscal 2005, which ended last
January-Dell has said it has been operating the business at or near
break-even and offering low-prices on its stand-alone printer models.

It also frequently bundles its consumer-oriented inkjet printers with its PCs for little or no extra cost to customers.

The combined strategy has, thus far, netted Dell market share gains in the United States, according to analysts.

The company says it has also established a base of customers that will return to it to purchase supplies, such as ink.

Given a large enough base of customers, sales of ink, toner and other
supplies can be worth millions or even billions in annual revenue.

The one danger of the low-price strategy, however, comes if customers do not return for supplies.

One analyst, for example, reported seeing numerous low-end Dell inkjet
printers in their original packaging on eBay Inc.’s online commerce
site.

Although strictly anecdotal in nature, the sighting suggests that at
least some customers who received their printers in bundles might not
use them and thus won’t return for supplies.

However, inkjets are just one portion of Dell’s printer effort. The
company has made inroads in color lasers for business, a relatively
small but important market segment, said Peter Grant, an analyst with
Stamford, Conn.-based Gartner Inc.

Dell captured a market share of 15.8 percent in the color laser
workgroup printer space in the United States during the second quarter,
up from 13.2 percent in the first quarter.

HP’s share, meanwhile, dropped to 37.9 percent from 41.9 percent,
Gartner figures show. Others, such as Xerox Corp., also made smaller
gains in the category during the second quarter.

“It’s apparent that Dell saw the wining strategy,” Grant said. “If you
look at that workgroup space, the typical pricing [for a printer] was
round $2,000 to $3,000. Dell priced its color workgroup [laser printer]
at $999.”

Grant said that, at $999, he believed Dell was offering the printer for
less than its cost and hoping to recoup the resulting loss in supplies
over a period of time.

However, at that price, “Any small or medium business that likes doing
business with Dell will buy it. It’s just hard to say no,” he said.
“That’s the threat of Dell.”

Meanwhile, Dell, which has been selling its monochrome Dell Laser
Printer 1100 for $99, jumped to 13.1 percent market share in the second
quarter from 8.5 percent in the first quarter, in monochrome printers
shipped in the United States.

HP had 56.6 percent market share in the second quarter, down from 63.1 in the first quarter, the Gartner figures show.

This holiday season, Dell will continue to pursue consumers by boosting
the features available on models such as its photo all-in-one inkjet
printer line. It’s likely to continue offering aggressive prices and
bundling inkjets printers with its PCs as well.

Among the new photo all-in-one models due shortly is the Photo
All-In-One Printer 964, sources said. The high-end machine will gain a
2.4-inch LCD screen, a feature that’s not present in Dell’s All-In-One
Printer 962, sources familiar with its plans said.

The company will also update its mid-range inkjet, releasing the Photo All-In-One Printer 944, the sources said.

Both printers, which are expected to be speedier than their
predecessors, will adopt a new silver and white color scheme and
include a compliment of ports and memory card slots that allow them
download photos directly from a camera, conduct basic editing and print
them, all in the absence of a PC. Dell’s current inkjets include
similar features.

Giving customers an idea of how the new inkjets will look, Dell has
already introduced the speedier Photo All-In-One Printer 924, which
sports the silver and white design and starts at $89.

It can turn out 20 pages per minute in black and white ink and print 16 color pages per minute, Dell’s Web site says.

Given its approach to the market thus far, Dell has also gained share
in inkjets and monochrome laser printers in the United States, Gartner
figures show.

Although its U.S. inkjet market share dipped somewhat in the second
quarter, slipping to 15.4 percent from 16.4 percent in the first
quarter, while HP’s rose from 45.8 percent to 47 percent, the Gartner
figures show.

Thus Dell is “claiming it has found a success story with low-end
users…and that they’re buying [supplies] in quantities,” Grant said.
“That’s the Dell model and it appears to be working.”

Although “Can it sustain that? Is there any value add around it?” he asked. “Those are the questions.”

Meanwhile, despite the fact that he said competitors like HP have
already begun to respond with moves of their own, such as dropping
prices, on business printers, “Dell has strategically picked itself a
nice little spot to compete as the industry turns from monochrome to
color” printers, Grant said.

[Author]

September 20, 2005 at 10:07 AM