INK IS THICKER THAN WATER

[Anonymous]

Ink is thicker than water
Printer
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
business.

[Author]

September 11, 2006 at 11:26 AM