LEXMARK:CAMPAIGN IN LONG RUNNING INK WARS

[Anonymous]

New campaign in long-running ink wars
LATEST INKJET PRINTERS PART OF COMPANY’S RETURN PROGRAM
When Lexmark International announced its new lineup of wireless-enabled inkjet printers last week, it meant not only the addition of a line that could be pivotal to the company’s growth but also the expansion of a program that observers say intends to ward off competition from ink cartridge remanufacturers and refillers.All three wireless-enabled or optional printers, as well as two entry-level printers, will feature ink cartridges that are part of the Lexmark Return Program.The program, which Lexmark says is a way of offering more choice to consumers, offers customers $4 up-front discounts on the cartridges if they agree to mail them back to Lexmark and not get them refilled elsewhere.

If consumers have the return-program cartridges refilled and then attempt to reinsert them into the printer, a chip on the cartridges will disable them.The expansion of the program is the newest chapter in a long unfolding saga that pits printer makers against remanufacturers and refillers in a struggle for the lucrative ink market, the most profitable piece of the printer industry.Industry tracker Lyra Research estimated last fall that consumers would pay $32 billion for inkjet cartridges in 2006. Of that, remanufacturers and refillers were expected to have about 21 percent of the market.The availability of remanufactured cartridges has exploded in recent years, as franchises like Cartridge World expand rapidly, and top retailers like Staples, OfficeMax and Office Depot offer self-branded ink and toner. Walgreens has announced it plans to place in-store ink refill services at 1,500 stores.When Lexmark announced the return program last September, it applied only to the Z845 single-function inkjet printer, a low-end device that sells for under $50.With the addition of the lineup of all-in-ones and single-function inkjets announced last week, the return program is now targeting customers who might not be as price sensitive as those who would have purchased the Z845.Larry Jamieson of Lyra Research said the program helps Lexmark lower its cost of printing, making it more competitive with rivals’ costs per page.It’s also, he said, another way to rebuff remanufacturers. He said he doubted Lexmark would actually remanufacture the cartridges and resell them.The program is similar to one offered for years on laser toner cartridges, which Lexmark does remanufacture.
A remanufacturing group challenged the legality of that return program in a lawsuit in 2001. The Ninth Circuit Court of Appeals upheld the program in 2005.In other Lexmark news, the company was ranked No. 442 in the Fortune 500, which was announced last week. The company dipped from ranking 415 last year.It’s the fifth-largest Kentucky-based corporation on the list behind Humana (110), Ashland (248), Yum Brands (262), and Omnicare (353). 

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April 25, 2007 at 11:15 AM