Toner News Mobile › Forums › Latest Industry News › *NEWS*PRINTER SUPPLY REVENUE TO TOP $100B
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AnonymousInactivePrinter Supply Revenue To Top $100B
New
York -Global digital imaging supplies revenue is expected to pass the
$100 billion mark in 2006, but traditional printer companies could miss
out on the windfall, according to imaging analysis firm, Lyra
Research.Digital imaging supplies, also called “consumables,” include
ink, toner and cut paper for copiers, printers and digital presses. In
2004, global supplies revenue was $89 billion. In 2005, it jumped to
$96 billion. By the end of 2006, Lyra predicts, it should be about $101
billion.But printer makers (also known as original equipment
manufacturers or OEMs) like market leader Hewlett-Packard , Lexmark,
Seiko Epson and Canon , which charge premium prices for their brand
name ink and toner cartridges, could lose out on revenue as other
companies provide supplies cheaper.”The biggest threat to OEMs is this
third party issue,” says Rodger Reis, research analyst at Lyra. “It
goes right to their [revenue] base.”Three privately-held concerns,
Emeryville, Calif.-based Cartridge World, Caboodle Cartridge of Palo
Alto, Calif. and Springfield, Oregon’s Rapid Refill sell remanufactured
and refill cartridges at 30% to 60% less than the printer hardware
companies.For example, a brand name HP 45 black inkjet printer
cartridge, which works in over 200 HP printers, retails for about $20.
Rapid Refill sells a similar third party cartridge for $16.50.
Similarly, a self-branded Canon E40 cartridge can cost more than $140.
Rapid Refill charges $70.”People are furious about paying $40 to $50
for an ink cartridge,” says Kelly Cahill, marketing manager for Rapid
Refill. “That’s just too much money.”In the past, consumers have been
somewhat reluctant to buy third-party ink because of quality concerns.
But that perception is changing. And as reputable retailers like
Staples , Office Depot and Office Max have begun offering their own
self-branded cartridges for about $5 less than brand name supplies, the
stigma is fading instead of the ink.”These stores have strong
established brands, with a reputation for quality,” Reis says. “And
they stand behind their products.”But the real money is in the
business-to-business market. “People are still trying to figure out the
refill business,” Reis says. “The model is to go out to these
businesses and provide printer services, providing a working contract
to manage an entire printer fleet.”Dell Computer has its eye on this
market and offers its own printers, consumables and service contracts
to businesses at 20% to 25% less then other OEM printer companies. But
since printer hardware is a very mature market, the strategy hasn’t
been entirely successful. And the company has no plans to enter into
the third-party consumables market, according to Tony Mara, senior
product marketing manager in Dell’s Imaging and Printing Group. Staying
focused on the hardware market could be a misstep for Dell. Lyra’s
research indicates that worldwide revenue for printers has essentially
flat-lined at about $60 billion. There are still growth opportunities
in emerging markets in the Pacific Rim, the Middle East and South
America, but printers, which are already being sold at a 30% discount,
can’t go much lower.That leaves the printer companies in a bind. They
have to compete for printer sales while relying on the “razor and razor
blades”–or in this case, printers and ink–business model for profit.
“No one is willing to lower the price on supplies because that’s where
the revenue is,” Reis says.However, HP is adamant that the company has
been working hard to bring overall printing costs down and insists that
its products are simply better. “It is up to customers to decide which
solution is best for them,” says Tuan Tran, vice president of
marketing, HP Imaging and Printing Supplies. “There will always be some
segment of the population that is willing to accept trade-offs in
quality and reliability to save a little money.”HP, Lexmark and Epson,
all of whom realize a majority of their imaging revenue from supplies,
aren’t taking the challenge sitting down. Over the years, the three
companies have sued many third-party supplies companies for patent
infringement–not always successfully. Epson is currently pursuing
legal action against another 24 companies.In some cases, the legal
pressure has paid off.”We have seen aftermarket competitors come and
go, all while we maintained a healthy business and market share,” says
Tran. -
AuthorJuly 2, 2006 at 9:03 PM
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