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Date: Monday September 11, 2006 11:26:00 am | Views: 90
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    Ink is thicker than water
    manufacturers have a rather interesting business model when it comes to
    inkjets and lasers. Like Gillette which makes money on blades and not
    razors, these vendors make their moolah on cartridges, not on the
    printers themselves. This has led to considerable gnashing of teeth in
    the past with consumer organisations pointing out that printer ink
    costs seven times more than vintage champagne .
    That was in 2004. As
    the poet Longfellow said, ‘Let the dead Past bury its dead! Act,—act in
    the living Present!’ After all manufacturers are entitled to build any
    business model that the market will accept. Unfortunately for printer
    manufacturers there’s a fly in this particular ointment and it’s the
    emergence of a breed of remanufacturers who offer refilled cartridges
    of a hitherto unavailable quality, to wit stuff that won’t ruin your
    printer by clogging the head and leaking all over your
    letterheads.Faced with the thorny problem of how to deal with
    undercutters, OEMs have resorted to embedding smart chips in their
    cartridges so that only cartridges sporting these chips work with a
    given printer. Unfortunately there are third-party companies
    re-engineering these smart chips so that remanufactured cartridges work
    with printers that would otherwise have nothing to do with them.One way
    out is to take these third parties to court which is what Lexmark did
    back in 2003 to Static Control Components (SCC) invoking the DMCA
    (Digital Millennium Copyright Act). That didn’t fly however and the 6th
    US Circuit Court of Appeals in Cincinnati, Ohio allowed SCC to sell
    microchips to be used in old Lexmark toner cartridges. Then the US
    Supreme Court rejected Lexmark’s bid to hear its case against SCC.So
    the legal option seems to be a bit of a non-starter. Worse yet, from an
    OEM’s standpoint, governments are starting to legislate that cartridges
    must be recyclable. The European Union’s law on electroscrap has been
    the trendsetter here.To their credit, OEMs do try. They recycle
    returned toner cartridges. Some even offer rebates for special
    cartridges that the consumer promises to return after one use
    (Lexmark’s Return Programme).Printer makers argue that a lot of R&D
    goes into formulating their inks and that the quality in terms of
    richness of output etc is far superior to what any refill can achieve.
    That is true if you are talking about taking high-resolution colour
    prints. It doesn’t stand up quite as well if the printouts in question
    are office documents in black ink on white paper which is what most
    printouts tend to be.So where does that leave a beleaguered printer
    manufacturer faced with stiff competition from low-cost substitutes for
    its biggest money-spinner? The radical, but remarkably effective, way
    out would be to stop subsidising the acquisition cost of inkjets and
    lasers by raising prices of hardware while slashing that of cartridges.
    That will leave the remanufacturers looking rather silly as their
    raison d’etre will cease. What OEMs have done is come out with products
    aimed at emerging markets that offer slightly lower quality (black ink
    that’s not as dark as the ‘real’ stuff) at a 50 percent premium over
    remanufactured cartridges. HP’s ‘Simple Black’ initiative is a good
    example of this.Thanks to the printer OEM brigade’s wholesale adoption
    of the razor-blade model, there’s more money in selling cartridges than
    printers. Estimates put cartridge sales at 90 percent of the global
    printer market. Consider that the 2005 figures for the printer, copier
    and MFD market totted up to $58.4 billion and you’ll see that we’re
    talking big money. It’s going to be a fierce fight with no quarter
    given and the winner can only be the consumer—both individual and

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