IS KODAK STARTING AN INKJET WAR ?

[Anonymous]

Is Kodak Starting an Inkjet War?
Kodak
may have fired the first shot in the inkjet wars. Analysts said the
introduction of three printers that use much cheaper ink will pressure
rivals to respond.
Unveiled in New York, the three
All-in-One EasyShare printers boast black and color ink cartridges
priced at$9.99 and $14.99, respectively. Brand name inkjet cartridges
usually cost around $30. The ink prices will allow consumers to produce
10-cent prints.Kodak said the three printers, priced $149.99, $199.99
and $299.99, will be offered in March first exclusively at BestBuy,
then online.But beyond the consumer impact, Kodak’s entry into the
inkjet market could reshape a high-profit industry analysts say is
worth $32 billion worldwide.”After today, the inkjet market will never
be the same,” Kodak CEO Antonio Perez said. The company believes the
high cost of ink limited more printing. The announcement comes as a
long-successful “razor and blades” sales campaign is under increasing
threat.Like the companies that made more money selling replacement
blades than selling the razor, market-leading printer companies,
including Hewlett-Packard Epson and Canon have enjoyed up to a 70
percent profit selling ink.But that revenue is under threat by
lower-cost, after-market ink. Charles LeCompte, president of Lyra
Research, said after-market ink represents 30 to 40 percent of the
market. In China, non-brand-name suppliers sell 90 percent of the
ink.HP was a “little perplexed” by Kodak’s “unproven” technology, Tuan
Tran, vice president of marketing for the printer maker’s Imaging and
Supplies division, said.For consumers, the Kodak announcement will
result in less hesitancy in printing digital pictures at home. The cost
of home printing, which is now around 25 cents per photo, will equal
that of online printing services, said LeCompte. Kodak’s entry into
inkjet printing forces competitors to act, he added. “They can’t stand
still,” he said. “We’ll likely see a price war.”While we won’t likely
see cheap inkjet printers jump $100, “they’ll fade out lower-priced
products over time,” said the analyst.One result of the Kodak decision
will be less bundling. Ian Hamilton, printer analyst with Current
Analysis, said 40 percent of inkjet printers are now bundled with a
computer or other device. Kodak decided to forgo bundling, an area that
rarely translates into ink sales.Other vendors have tried similar price
cuts, but the cartridges contained less ink, InfoTrends Director Bob
Palmer said.Can Kodak gain market share? Palmer said Dell bought its
second-place status in the inkjet market by undercutting
competitors.It’s “absolutely vital” Kodak succeed in its inkjet printer
bid, said Lecompte. Revenue from film for Kodak has shrunk to 25
percent. Without digital SLRs — the only profitable segment in the
digital camera market — printers become increasingly important for
Kodak.”They’ve bet the ranch on this.”

Kodak’s consumer printers aim to chop ink costs
Eastman
Kodak announced a new line of inkjet printers on Tuesday that are
geared toward everyday consumers and designed to cut down on ink costs.
The
Kodak EasyShare All-In-One machines, as they are called, mark the
company’s first entry into the consumer market for inkjet printers.
Kodak is touting them as “revolutionary,” based on their ability to
print both high-quality photographs as well as documents while chopping
ink costs almost in half.Citing a study by market research firm
InfoTrends indicating that consumers consider the cost of ink and
supplies an obstacle to printing documents and photos from home, Kodak
has centered its All-In-One line around cutting down on ink costs. The
printers use Kodak’s own ink, which costs $9.99 for a black-and-white
cartridge and $14.99 for a color cartridge.According to Kodak, an
All-in-One printer with this ink will be able to produce twice as many
documents or photos as a competitor’s printer and ink would at the same
cost. The company also sells a “Kodak Value Pack,” which it claims will
reduce the expense of printing a 4×6-inch photo to 10 cents.”You are
throwing that (technology) away and buying a new one every time you buy
one of their cartridges, which is pretty expensive stuff, said Cheryl
Pohlman, a marketing director at Kodak. “With our system, we have put
that print head right into the printer…so all you have to buy is
ink.”She notes that the products close a loop, of sorts, for Kodak,
such that customers can now use Kodak services to print in any of the
three most common ways: online, at one-stop-shopping machines at retail
stores, or at home.”What we want to do is give people who want to print
at home a choice,” she said in interview with Reuters. “We believe that
this is a profitable business model for Kodak and that for a consumer,
it is freeing the way they can print at home.”Analysts, who had been
told since late 2003 to look for an inkjet strategy from the Rochester,
N.Y.-based company, are already skeptical about how Kodak will be able
to compete with companies that have millions of printers sitting
alongside personal computers owned by families and small businesses.”We
remain concerned that the up-front costs of establishing an installed
base will be high, and that the mature and competitive nature of
consumer inkjet requires considerable research and development, and
(operating cost) commitments,” analyst Shannon Cross of Cross Research
said in a client note published in anticipation of the inkjet launch.

Kodak
EasyShare All-In-One printers will be sold at Best Buy stores beginning
in March and on Kodak’s Web site beginning in April.
The
All-In-One line consists of three models, all of which have printing,
scanning and copying capabilities. The 5100 model ($149.99) is the most
basic, with the ability to print 32 pages per minute in black and white
or 22 in color, and it can connect to PictBridge-compatible digital
cameras for photo printing.The second model, the 5300 ($199.99), adds a
3-inch color LCD display for photo viewing and cropping, as well as
several memory card slots to better enable photo printing without
needing to use a PC. The highest-level All-In-One, the 5500 ($299.99),
is geared toward the home office “prosumer” market with a built-in fax
machine, an automatic document feeder and a duplexer attachment.

[Author]

February 8, 2007 at 11:24 AM