*NEWS*INK REFILL SRVC,GAINING MRKT SHARE

[Anonymous]

Printer cartridge refill services gaining market share
Even
as computer prices have steadily dropped, the cost of printer
cartridges are so costly that printer giant Hewlett-Packard Co. has
long made more than two-thirds of its profit from selling them.
Now,
in a move that could save consumers hundreds of dollars in replacement
costs, several major retailers are starting to offer speedy refill
services that replace the ink rather than the entire cartridge.
Early
next week, drugstore chain Walgreen Co. plans to announce an ink-refill
service — at less than half the cost of buying new cartridges — in
1,500 of its stores, with the rollout starting in mid-March. With an
eye toward launching a national service, office-supply chain OfficeMax
Inc. is pilot-testing an ink-refill service in 40 stores in the Chicago
area. And Office Depot Inc. is also testing an ink-refill service in 15
stores in Minnesota and North Carolina.
The new services allow
consumers to get their cartridges refilled quickly while they shop,
rather than having to fill the cartridges themselves as the
do-it-yourself kits on the market require. Matt Davidson, 46 years old,
a pharmaceutical salesman in Norwalk, Iowa, says he has been going to a
Walgreens store that has pilot-tested ink refills for the past six
months. The drugstore, located a mile from Davidson’s home, refilled
his black-ink H-P cartridge within minutes at “half the price it would
normally cost me for a new cartridge,” he says. “It was easy.” Davidson
says he has returned for four other ink refills and has stopped buying
new H-P cartridges.
The new services strike a blow at a major profit
center for companies such as Lexmark International Inc. and H-P, which
rely heavily on ink for recurring revenue and profits. Indeed, H-P
actually loses money on its printers — money that it recoups through
new ink and toner sales. H-P won’t say what its margin on cartridges
is, but analysts estimate the margin to be at least 60 percent on both
ink and toner cartridges.
Each year, about 1.3 billion ink
cartridges are sold world-wide, according to market watcher Lyra
Research. Such sales generated $30.1 billion in revenue in 2005. But
the market share of refilled and re-engineered ink cartridges is now
projected to hit nearly 29 percent in North America by 2009, up from 23
percent in 2005, according to Lyra.
Tuan Tran, an H-P vice president
of ink and toner supplies, says consumers should be wary of refills,
however. Since H-P designs its printers and its ink cartridges to work
together as one seamless system, a refilled cartridge may not be as
reliable and can cause streaking on printouts, he says. With a refilled
cartridge, “there’s a big sacrifice in terms of quality,” Tran says

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February 7, 2006 at 10:36 AM