*NEWS*THIN MARGINS ON COLOR PRINTERS

[Anonymous]

Thin margins on color printer
Historically,
printer manufacturers have looked to the color segment of the market
for growth, and with good reason. While Hewlett-Packard Co. is the
reigning king in the monochrome segment, color’s hierarchy is still
undecided. Those who invest in companies that produce color page
printers think the outlook is bright, because the printers use four
times the toner-cyan, magenta, yellow and black-of a monochrome
printer, thus painting a picture that is four times as brilliant as the
current billion-dollar industry. But some manufacturers have been slow
to jump into the color printer market.
Until Lexmark introduced its
C52X series, which included the C524n, last June, the manufacturer had
a huge gap in its color lineup. The low-end C510 printed eight color
and 30 monochrome pages per minute. The high-end C762 was significantly
faster, but also more expensive. With nothing in between, competitors
enjoyed the advantage.
Lexmark’s new C524n rounds out the
manufacturer’s color page printer assortment with a price point that
seems unhealthily low but still provides a profit.
This
network-ready color laser printer offers 1,200 x 1,200-dpi resolution
and brilliant color output at speeds up to 20 pages/minute. The C524n
produces its first page in as little as 13 seconds and has a monthly
maximum duty cycle of 65,000 pages.
Its 437.5MHz processor and 128
Mbytes of memory, the latter of which is expandable to 576, reduce the
amount of time network users have to wait for print jobs. Color Care
Technology and the Lexmark Coverage Estimator help manage the cost of
using color toner.
The C524n is 17.3 inches wide x 19 high x 20.2
deep and weighs 57 pounds. It’s packaged with a power cable, a CD that
includes the user guide and printer software, a paper-exit extension
tray, setup sheet and toner cartridges for cyan, magenta, yellow and
black. The C524n comes with a one-year on-site repair warranty.
Many
of us are aware of the lower manufacturing costs that result when IT
and consumer electronics products are outsourced. But how razor thin
must margins be for manufacturers to stay competitive in today’s
printer market?
Current Analysis Labs examined the C524n at a
product volume of 120,000 units under the premise that the model was
produced in China. To do that, we estimated the purchase costs of
commodity components, manufacturing costs of fabricated components and
location labor rates. The result was a production cost of $473.60 per
unit. The electronics and assembly of the machine account for $107.10.
The printer mechanism and its assembly account for $100.63.
At the
time of the product’s release, the suggested price was $699. With a
production cost of $473.60 per unit (not accounting for tariffs and
taxes), there is still profit to be made. However, Lexmark does not
seem to care about profit margins on its hardware. To create buzz for
the C524n, Lexmark discounted it by as much as 50 percent in some
places. To maintain its revenue stream at the low price, Lexmark
outfitted the printer with different toner cartridges. The
more-expensive models, targeted at the enterprise segment, came with
more toner. The less-expensive models, which the company saw as perfect
for small-office and home-office users, came with low-yield cartridges.
The
Lexmark C524n was an important introduction. Whereas its predecessor,
the C510, was ill-fitted to take share of the profitable color page
printer market, the C524 series is perfectly positioned to compete.
Lexmark claims the print quality of the C524 is “photorealistic”
because of its new toner and printhead. The chemically processed,
spherical toner delivers 1,200 x 1,200-dpi resolution, and the new
printhead synchronizes four lasers in one unit with a mirror
The
C524n fronted Lexmark’s completely new C52X product line, leaving
little for customers to ask for. The machines perfectly position
Lexmark to attack the enterprise market as well as the manufacturer’s
competitors, specifically HP

[Author]

February 17, 2006 at 10:14 AM