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AnonymousInactiveLaser vs. Ink – The Changing Printer
Market6, 2005
Five years ago, the consumer printing environment was relatively simple.
Personal color printers dominated the retail market, all-in-ones (AIO) were just
beginning to pick up shelf presence, and page printers were specifically sold
through dealer channels to larger businesses. Although personal color printers
still dominate retail unit sales, the consumer printer landscape has changed
with such speed that personal color is quickly becoming the underdog. With
hardware pricing now low enough to compete in retail and selling into businesses
increasingly complex, page printer manufacturers that once leveraged strong
channel relationships are now finding that this strength is also a cost
liability. Printer manufacturers, traditionally strong in consumer sales, are
now finding the retail channel chock full of a variety of printer form factors.
As page printer, AIO, and snapshot printer sales continue to infringe on
personal color market share, the importance of creating a formula for success
couldn’t be higher. With printer manufacturers rolling out their latest
consumer-focused page printers into retail this summer, inkjet and page printer
manufacturers will need to make defending their market share against these new
entrants the top priority.New Home: Low-End Color Page Finds Way to Retail Shelves
In 2000,
the lowest-priced entry-level color page printer was approximately $1,300.
Today, that cost is down to a post-rebate price of $249 for a printer such as
the Konica Minolta 2400W. With price points this low, personal color inkjet
manufacturers are beginning to see these models affecting inkjet sales. This
year’s entry-level laser offerings from manufacturers such as HP, Oki Printing
Solutions (Oki) and Konica Minolta will not only come with an affordable price
(nearly 50% less than comparable models in May 2004), but they will also tout
smaller footprints and photo-printing capabilities to breach the historic line
between color page and inkjet. The following chart depicts the dramatic pricing
decline of entry-level color page printers and how it pricing is quickly
catching up with personal color and inkjet photo:In the second half of 2005, retail color page printer unit sales will be
dominated by HP, Oki, and Konica Minolta, however while HP has a strong hold on
market share, it will be threatened by a new breed of consumer-friendly
offerings from Oki and Konica Minolta. HP will leverage its strong brand name to
drive its new single pass Color LaserJet 2600N onto the desktops of today’s home
office consumers. At eight pages per minute (ppm) in color, the CLJ 2600N is
faster than many competing color page products; however, its identical 8-ppm
monochrome print speed will limit its appeal to SOHO users as small and medium
businesses will demand faster monochrome print speeds to accommodate day-to-day
printing needs. Regardless of current print speed barriers, page printers are
finally finding users in the SOHO consumer segment, thus presenting a
significant opportunity for these manufacturers.Oki is another example of a manufacturer that has crossed the line from
business to consumer with a new breed of printers. The manufacturer’s current
C5150N has experienced significant market share growth over its predecessor, the
C5100N, in the past year. Oki will now leverage its success with the C5150N to
launch photo-capable printers that, due to the LED technology, will offer faster
color print speeds than competing page models. Further, by consistently
utilizing a promotional strategy that combines free gifts (such as an office
paper shredder or extended warranty) with significant mail-in rebates, Oki will
continue the success plan it developed for the C5150N with its new products.
This strategy has assisted Oki in targeting SMBs with the free gifts, low price
points and faster print speeds than competing models. Oki will use its marketing
strategy to tout its new models as perfect printers for the retail buyer.However, it is Konica Minolta that first pushed the envelope with the recent
introduction of the Magicolor 2430DL, which is marketed as a threat to inkjet
printers. The manufacturer hopes that the Magicolor 2430DL’s PictBridge port
will help promote the printer as an option for those consumers who feel that a
“disposable” photograph is sufficient for their home printing needs. Konica
Minolta was first to market with a color page printer promoted as photo capable,
but it by no means will be the last to attack this space as Oki and others are
expected to follow suit with their own offerings by the end of 2005. However,
pricing will be paramount to the potential success of these models. As color
page printer vendors continue to target the inkjet photo space, they must keep
in mind that price-conscience SOHO consumers will demand pricing that is similar
to that of their inkjet choices. The following chart depicts the current average
price of inkjet and color page printers that include PictBridge and our
forecasted estimate of average pricing by January 2006:Once thought of as a printer exclusive to the workplace, the page printer has
now reached price points and performance thresholds that place it directly
within reach of the average consumer. The number of different page printer
products on retail shelves increased by nearly 100% between 2004 and 2005.
Consumers can now easily obtain a quality printer that is not only fast, but
also prints basic photographs–all for a low total cost of ownership (TCO) and
hardware cost slightly more than that of mid-range inkjet devices. As page
printers continue to boast consumer-centric functionality such as PictBridge,
while at the same time shrinking in size and price, the models are starting to
find themselves at consumer electronics stores (CES) where shelf space was
traditionally reserved for personal color inkjets. The retail shelf presence of
page printers increased by more than 40% between January 2004 and in year over
year in January 2005 in the U.S., and this growth trend is expected to increase
dramatically as these printers expand in the CES channel. The CES retail market
represents a significant, and relatively new, opportunity for consumer-focused
page printers. Further, this shift in shelf presence is expected to come with an
estimated threefold page printer unit sales increase over the next 12 months—all
at the expense of personal color inkjet unit sales.Sitting Pretty? Inkjet Reacts to Change
With consumer printer
pricing dropping dramatically and the sudden increase in functionality, personal
color and inkjet photo printer manufacturers are forced to defend market share
from not only the AIO segment, but also from low-end color page printers.
Knowing there is only so much that inkjet manufacturers can do to retain market
share for their personal color printers, Canon, Epson, HP, and Lexmark have
turned to a combination of improved performance, new form factors, and branded
inks as the solution to offset gains made by the color page segment. In the past
year, inkjet manufacturers have increased monochrome print speeds in a handful
of personal color models; boosted photo functionality by including borderless
photo printing in entry-level models; increased all-around marketing efforts to
focus on cost per photo, ease of use, and branded inks; and, most importantly,
created the snapshot printer phenomenon.With increased competition knocking at its door, the first reactive measure
taken by inkjet manufacturers to retain shelf space and unit sales was to
increase print speeds and offer borderless photo functionality. HP and Canon
exemplify these increases in print speeds with their respective DeskJet and
Pixma lines. Last summer, HP launched the 30-ppm DeskJet 6540 for $149; it is
consistently the number three selling DeskJet in the retail channel. While it’s
not too surprising to see HP boost speeds to laser printing levels, Canon
impressed the industry with its summer 2004 Pixma introduction, in which the
entry-level iP1500 is priced at $49 and features 18-ppm printing in monochrome
and borderless 4”x6” photo printing in less than a minute. The iP1500 is also
consistently offered free after rebates in PC bundles at retailers including
CompUSA. While recent improvements in speed and photo printing at low price
points make inkjet printers affordable for even the most budget-conscious
consumer, manufacturers innately understand that performance can only take
personal color so far and have therefore initiated aggressive marketing
strategies targeted at female and young demographics.With the omnipresent threat of color page printers coupled with a highly
competitive photo printer market, manufacturers have tailored their marketing
strategies specifically to women, ease of use and entertainment value. HP has
shifted marketing to the 12-34-year-old age demographic in hopes of instilling
the fun and entertainment value that photo printing brings. Lexmark is
attempting to change its entire brand image with its “Uncomplicate” ad campaign
that targets ease of use. However, it is Epson that pioneered the marketing
shift from document printing to photo sharing. Epson was the first manufacturer
to market to women with its spring 2004 launch of the PictureMate. The company
coined the term “Chief Memory Officer” (CMO) in an effective effort to pull at
the heartstrings of women and mothers across the world by stating that women are
responsible for capturing and saving sentimental moments for their household.
The manufacturer was also the first company to hone in on cost per photo and
launched $0.29 photos to compete with retail and online photo finishers. This
strategy paid off in gold for Epson, as its popular PictureMate dominated
holiday season 2004 inkjet printer sales as the number one selling printer. In
fact, the snapshot printer comprised 11% of all inkjet printer sales, 18% of all
photo printer sales, and 48% of all snapshot printer sales during the period.
The following chart illustrates retail unit sales share by sub market and
highlights the growing spike in the snapshot printer segment at the expense of
standard personal color:It is no surprise that the third reactive measure taken by inkjet
manufacturers was the addition of the snapshot printer. This product has become
the solution for manufacturers to retain inkjet printer unit sales and keep
share from AIO and page printers. Snapshot printers combine speed, ease of use,
and long-lasting photo quality into a compact, mobile design. Each inkjet
manufacturer now has at least one in its arsenal. In fact, over the past year,
total snapshot printer retail shelf presence has doubled while those of inkjet
photo (excluding snapshot) and personal color inkjet have decreased by 8% and
19%, respectively. However, unit sales for snapshot printers have consistently
increased to the point where the segment commanded 28% of total printer sales
for the 2004 holiday period. With unit sales expected to increase further, the
snapshot printer is the silver lining for the inkjet printer segment because it
is essentially void of competition from other form factors.A Growing Divide: Laser vs. Inkjet
For printer vendors selling
into the U.S. market, pioneering the way should be the number one priority.
There will be page printer manufacturers hesitant to shift distribution
strategies because page volumes are traditionally low in the SOHO and SMB
segment. However, these manufacturers must realize that more and more of these
growing businesses are purchasing, or at least examining, printers in retail. As
these developing businesses expand, prior experiences in page printing will
provide a major portion of their purchase decisions when the time comes to
acquire a larger fleet of printers. This trend also highlights the fact that a
retail presence increases brand awareness among America’s emerging enterprise
consumers. Further, as the number of SOHO page printer consumers grows,
manufacturers will have the opportunity to enter the homes of America with
consumer-friendly devices.While page printers have enjoyed a threefold market share increase in the
past year, the segment still represents less than one out of every 20 printers
sold in the channel. Drastic increases in presence and sales for color page
printers are inevitable, but it is the strategic marketing and the growing
popularity of snapshot printers that will keep consumers engaged with inkjet for
the next three to five years–especially as second- and third-generation digital
camera buyers look for specialty photo printers. However, page printers are a
force with which to reckon, and they may eventually replace inkjet. The
following chart illustrates that although holiday 2004 unit sales increased
tremendously, color page printing is at the infant stages of its retail success:In order to steal share from inkjet, page printers must leverage their image
as the Cadillac of printers. Brother’s recently introduced monochrome HL-2040
and HL-2070N printers have performed well in retail. One reason for their
success is their small, sleek size, but there speed and print quality can also
referenced as reasons for its success. Color page printer vendors must follow
this lead. For page printers to truly penetrate the SOHO segment, they must use
the example set by compact personal color inkjet printers, where the product
complements the home office with attractive style and a small size. Further,
combining image and increased functionality, such as photo-printing capability,
will help page printers obtain retail market share in the next 18 months that
was once reserved exclusively for ink.With digital camera pricing steadily on the decline, there will always be a
market for personal color inkjet printers, and inkjet manufacturers have
answered to competing technologies by creating photo specialty printers.
Therefore, the biggest question for inkjet is not where lowest
functionality-to-price ratio is, but how to keep consumers engaged. Consumers
will remain loyal to inkjet as long as printing high-quality photos is simple,
fun and inexpensive. Manufacturers must facilitate the needs of the consumer
with improved photo-editing software, wireless photo printing and a continued
commitment to photo inks and papers.It is ultimately the consumer experience that will determine at what speed
page printers will replace inkjet. As new form factors and technologies,
emerging trends and new participants continue to shape the retail channel;
manufacturers are being forced to adjust their strategies. Boxy, off-white color
page printers that are the size of a college dorm refrigerator no longer make
the cut, as consumers more and more expect their printer to complement their
other home and office electronics. Further, consumers demand ease of use and
affordability with their printers, so the experience should be as simple as
clicking “print” while at the same time not denting their wallets. While page
printer market share continues to grow, personal color inkjet market share
continues to decline, and consumers become more and more infatuated with the
snapshot printer, don’t expect explosive consumer market share growth from the
page printer segment until page printers are able complement their consumer
friendly pricing with sleek, compact designs and photo functionality
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AuthorJune 10, 2005 at 10:35 AM
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