*NEWS*HP & XEROX’s WAR OF WORDS

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Print War! HP Rips Xerox’ Solid Ink, Xerox Says HP Supplies Wasteful
The normally low-key marketing by printer manufacturers took on a heated turn yesterday, as Hewlett-Packard called rival Xerox’ technology flawed and inefficient, while Xerox said HP color technology was more expensive and wasteful.The sparring between the two giants started Monday, when Xerox unveiled new printers and multi-function printers that it said made the cost of color printing the same as printing black-and-white documents — citing its patented solid-ink technology as a differentiator against a comparable printer from Hewlett-Packard. Late Monday, a spokeswoman from Hewlett-Packard said the Palo Alto, Calif.-based company was working on a response, and HP fired it off at about 11 p.m. that night.”There is a huge growth opportunity in the color market, so it’s no surprise our competitors are aggressively pursuing this space to try to capture market share. Over the years, we’ve seen many competitors attempt what Xerox is trying to do — give up margins in order to gain market share — but to date no one has been successful with this strategy,” HP said in a corporate statement. “It is somewhat surprising Xerox would choose to use solid ink technology as their play for the color market considering the inherent issues with solid ink for general office printing needs, its limited success in the market to date, and its environmental challenges,” HP said. It added that the Xerox solid ink — which includes black and color ink “sticks” instead of more traditional toner cartridges — simply took a lot of energy and heat to melt and “as such, the process uses approximately triple the power consumption similar products require.”

HP, the printer market share leader, said it considered using its own solid ink technology but dropped the idea “long ago” because of the extra energy needed to make it work. It also derided the quality of Xerox’ solid ink, saying, “the output from solid ink also has quality and durability issues ” it can melt in extreme heat and the waxy surface makes it harder to write on, highlight, archive and more prone to scratches.”After the lengthy and detailed criticism leveled by HP, Xerox, Stamford, Conn., responded with its own corporate statement.”Xerox has been continually evolving and enhancing solid ink,” said Xerox in a statement sent via email. “Today, the solid ink sticks not only produce vibrant colors on virtually any media type — including recycled paper stock — with no bleeding, they create substantially less waste than ever before.”

Then, in another shot at HP, Xerox said:
“While a typical color laser printer generates about 157 pounds of waste (packaging and cartridges) after 100,000 prints, the Phaser 8860 printer, (which has no cartridge) produces only 5 pounds of waste after 100,000 prints. Many agree that such results outweigh the nominal increase in energy that’s required to run the device (12.6 kilowatt hours/week, vs. 4.9kilowatt hours/week for the HP 4700),” Xerox said.While HP has enjoyed a strong run in the market share leadership position, worldwide as well as in the North American solution provider channel, Xerox has been making an aggressive play over the past year to steal business. Earlier this year, in an initiative led by Xerox Chairman and CEO Anne Mulcahy, Xerox began an initiative to boost its channel sales through solution providers in the small and mid-sized business segment and the company has launched several new color printers and MFPs this year. Xerox also is working to boost what it calls its PagePack program, in which solution providers can sell solid ink and supplies contracts to customersAs part of Monday’s announcement, Xerox said that it would price a package of solid ink at $216 for a black ink stick and $72 for each of three color sticks — a combination that yields 14,000 printed pages.”They are different technologies,” said Brian Seelinger of Erie Computer, an Erie, Pa.-based solution provider whose company sells both Xerox and HP products. “Solid ink technology is relatively decent technology, relatively cost-effective. It gives people who have any (environmental) slant the warm fuzzies, because of the waste issue.”He added, “We’re always going to sell what’s best for the customer, whether it’s Xerox solid ink or a laser printer.”

Xerox aims to challenge HP with new color printers
NEW YORK – In a move aimed at chipping away at Hewlett-Packard Co’s dominance, Xerox Corp  on Monday launched a system promising to slash the cost of color printing for high-volume users willing to pay more initially for machinesXerox introduced five printers, including the Phaser 8860 which features new solid-ink technology, saying the system puts the cost of color pages on par with that of black-and-whiteSolid ink uses wax ink sticks rather than the cartridges of powdered toner found in laser printers. The process works like that of a high-end offset press to create richer colors, the company says, and has significantly fewer disposable parts, which leads to lower maintenance costs.”If you compare HP color toner to what our inks will be, we will be one-fifth the price. We think it’s going to help us grow our market share and attract a lot of customers who maybe don’t consider Xerox today,” said Jim Rise, a Xerox vice president.

Experts say color documents are seen as more effective in communications, but the cost of buying new color printers, supplies and service contracts has been a barrier to adoption.Xerox says the printers cut the cost of printing a color page to about 5 cents a page, a fraction of rival systems, which analysts peg at between 8 cents and 13 cents a page.Yet to stay profitable, the Xerox printers are priced higher. The strategy is similar to Eastman Kodak Co’s (EK.N: Quote, Profile, Research) consumer inkjet printers unveiled this year. Both represent a shift from the so-called razor/razor blade model — selling hardware at little or no profit to encourage sales of more profitable replacement ink and toner.At $2,500 to $4,000, the Phaser 8860 is roughly $1,000 more than other Xerox products with similar functions, said analyst Angela Boyd of research firm IDC. That may lead some potential buyers to think twice.”It’s targeted at the person who has made up their mind they want color. It’s not for the person who is happy with their black-and-white laser machine,” she says. “Eighty percent of the world is still buying black-and-white laser machines.”

INVESTORS LOOKING FOR A SPARK
Xerox said its new solid-ink system, five years in the making, uses long-lasting crayon-like ink sticks. By increasing the total number of color pages the ink sticks produce, Xerox says it has reduced the price of color printing.Printer makers for years have been promoting the move to color printers, mostly by cutting prices. That has prompted printer makers to battle on the idea of lower cost-per-page, which would most benefit high-volume users.Xerox’s new systems are aimed at customers that print 2,000 to 10,000 pages a month, such as real estate offices or departments inside big corporations. They come at a time when investors are looking for a spark from Xerox, whose stock closed on Friday on the New York Stock Exchange at $17.02, one penny better than its closing level on December 31, 2004.Experts credit the company with impressive additions to its office line, solid profitability and improved market share. But analysts have been disappointed by tepid sales gains — Xerox’s revenue ended 2006 at $15.9 billion, up only about 3 percent from 2003. Analysts, on average, expect a 7 percent rise in 2007 annual revenue from 2006, according to Reuters Estimates.The new system will not shift the balance of power, IDC’s Boyd says. HP  dominates the global office laser printer market with a 40 percent share, with Xerox at 10 percent, and Japan’s Canon Inc  at about 7 percent, she says.”It puts Xerox in a good competitive situation among all the others chasing that juggernaut (HP),” she says. I don’t think this is going to change things dramatically for Xerox. Xerox has been able to remain in the top tier of vendors and it will help them sustain behind HP.”

Xerox Ready To Rumble With HP In Color Printer Market
Xerox Monday continued its aggressive pace of new product rollouts this year, as it seeks to put color document production on a pricing par with black-and-white.
The Stamford, Conn.-based company unveiled a new lineup of Phaser and WorkCentre products, saying it was rolling out a “color-for-the-price of black and white” strategy that leverages its solid ink technology.Xerox said it would ship the Phaser 8860 color printer and Phaser 8860 multi-function printer priced at $2,499 and $3,999, respectively. The company said the products and the solid ink supplies would make it compare favorably on a total cost of ownership and cost of output basis with HP’s color Laserjet 4700dn printer. The Phaser 8860 ships now, the MFP version ships in November, Xerox said.”If you’ve accepted color, and you want to print the same thing that’s on your screen, we’re allowing you to do that now and this should be your default printer,” said David Bates, director of product marketing for Xerox’ office group. “You no longer have to make a decision between monochrome and color.”We’ve got a strong lineup, that lines up with the competition very well,” Bates said.

In explaining how it is bringing color printing into the same price ballpark and black and white, Xerox said that the cost of printing with black ink in its solid ink systems, on a yield of 14,000 pages, is $215 while each color stick in the Xerox solid ink lineup, which also yields 14,000 pages, is priced at $72. They compared that with the Laserjet 4700dn, which it said runs $178.99 for a back toner cartridge that covers 11,000 pages, and $253.99 for each color toner cartridge that runs 10,000 pages. The net result, Xerox claims, is that color printing on its systems is on par with the cost for black-and-white, and competitive with HP.Rivals including Lexmark announced a similar initiative about two years ago, though the Lexington, Kentucky-based printer maker has suffered a number of setbacks in its business overall since then. Hewlett-Packard has continued to dominate the printer market, after announcing its own scalable print technology also about two years ago. However, Xerox executives from Chairman and CEO Anne Mulcahy on down have been vocal this year about their technology edge with solid ink and how it compares against traditional ink and toner manufactured by rivals. And the company is also in the midst of developing a deeper business in the North American solution provider channel with added support and incentives for VARs.Xerox also announced new entry-level color WorkCentre workgroup printers, the WorkCentre 7232 and WorkCentre 7242, aimed at small and mid-sized businesses and integrated with Xerox’ Extensible Interface Platform (EIP) which supports custom applications. Xerox says the 7200 line is aimed at the “color-cautious” segment of the market — businesses that use color occasionally but focus primarily on black and white documents. The WorkCentre 7232, street-priced at $5,299, is available in January and the WorkCentre 7242, street-priced at $6299, is available in November, Xerox said. 

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September 26, 2007 at 11:56 AM