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 user 2006-10-12 at 11:32:00 am Views: 121
  • #16581

    think your printer is inexpensive? Think about how much you spend on
    ink or toner each year. We report on why it costs so much to print, and
    what’s being done about it.

    you’re like me, you feel the same raw, burning, sinking sensation every
    time your inkjet printer notifies you that it is out of ink. Didn’t I
    just change the ink cartridge last month? Probably. But households and
    small businesses can print hundreds of pages and photographs a month –
    and enterprises can go into the thousands. That’s a lot of ink. Which
    translates into a lot of dollars.No matter how you cut it, ink is
    expensive. Consider a personal example: Last year, I spent
    approximately $160 on inkjet replacement cartridges for my Epson
    CX6600. The printer itself only cost $200, making it hard to not feel
    ripped off on a yearly basis.The typical inkjet printer owner spends
    about $80 per year, although that experience varies greatly, says Jim
    Forrest, a senior analyst at Lyra research and a 35-year veteran of the
    printing and digital imaging field. “It’s difficult to create an
    overall average across all printer brands, because of the different
    designs and cartridge types printers use,” he explains. He adds that
    “the average inkjet printer owner uses about four cartridges per year,
    and the average price of a [first-party manufactured] cartridge is
    about $20.”Eighty dollars a year multiplied by hundreds of millions of
    inkjet printers is a whole lot of money. Is it any wonder that a number
    of tech-savvy consumers have embraced ink replacement techniques such
    as third-party cartridges and syringe refills in the pursuit of reduced
    costs (despite the possibility of damaging either their print heads or
    their clothing)?

    Rubbing Ink Into The Wound
    the Epsons and Hewlett-Packards of the world, the so-called aftermarket
    of replacement ink (and paper and other supplies) represents a shiny,
    happy profit center. Total inkjet cartridge shipments will reach 1.5
    billion units worldwide in 2006, including 514 million in North
    America, according to Lyra Research. At an average of $20 a pop, that’s
    a whopping 32 billion-dollar market.Until recently, manufacturers like
    HP, Canon, and Epson have held an iron-fisted monopoly on ink
    replacement, leaving consumers with little choice but to pay premium
    prices for the privilege of printing.According to Mike Duffett,
    director of CIG printer marketing for Canon USA, the high prices are
    justified by the costs of research and development. “We spend a
    significant portion of our overall dollars — over 10% of our revenue
    – on R&D,” he explains. “It is very important to us that we give
    consumers the best possible photos under a variety of conditions for a
    very long time.”

    Looking For Alternatives
    where there’s a profit, there’s somebody to try to grab a piece of it.
    In years past, a minority of consumers dead set on avoiding outrageous
    prices resorted to desperate measures, including purchasing third-party
    cartridges from online vendors. Another resource was the purchase and
    use of hypodermic-style needles to draw and inject ink into empty
    first-party cartridges.Many of these alternatives were so technically
    difficult, inefficient, or defective that, with some notable
    exceptions, they remained under the radar of printer manufacturers.
    However, the last five years have seen the emergence of more mainstream
    third-party ink resellers such as Cartridge World and Rhinotek. By
    offering generic ink replacement at prices that cost as little as 30%
    of brand-name supplies, these third-party ink resellers have generated
    mass appeal with consumers who are sick of paying exorbitant prices for
    ink. Recognizing this, even major retailers like Staples and even
    Walgreens have begun to offer third-party ink as a more affordable
    replacement option.Cartridge World is the best example of how
    third-party resellers have profited handsomely off the growing demand
    for lower-priced ink. Launched in 1999 in Australia, Cartridge World
    offers ink cartridge refills at significant discounts over first-party
    printer manufacturers. Over the past five years, the brand has
    blossomed to the point where it accounts for over 50% of the entire ink
    refill market. In 2004, the franchise was so strong in North America
    that it opened an average of one franchise a day for the entire
    year.This slice of the inkjet pie has experienced stellar growth over
    the last five years. According to Lyra Research, third-party ink will
    account for 31% of worldwide ink sales in 2006, with the North American
    market accounting for 8% to 10% of worldwide third-party sales.By way
    of comparison, estimated growth of the entire market of third-party and
    first-party sales is pegged at about 7% a year for the next three
    years. The third-party market, however, is expected to grow at double
    this rate over the same time period. Hello, Lawsuit.Not surprisingly,
    printer manufacturers have aggressively protected their perceived right
    to be the exclusive purveyors of ink refills. A quick Google search on
    printer ink lawsuits will turn up hundreds of results. So how in the
    world have these resellers been able to even get into the market at
    all?The most common method has been to avoid reverse engineering ink
    cartridges in favor of simply refilling original ink cartridges with
    generic ink and reselling or trading the refilled cartridges. But
    although the Cartridge Worlds and Rhinoteks have been able to gain a
    critical toe-hold in the market, numerous lawsuits have been filed by
    the major printer manufacturers in repeated attempts to protect
    copyrights. .    

    Price Comparison
    the last 12 months alone, Epson has sued ink manufacturer Madea for
    patent infringement and, in a separate lawsuit, has gone after 27
    companies—mostly Chinese manufacturers plus distributors. In October
    2005, HP filed a public complaint stating that Cartridge World’s ink
    utilizes a proprietary, HP-patented chemical formula found in its
    Vivera inks. HP also asserted in June, 2006, that generic inks sold by
    Walgreens and Office Max infringed upon proprietary patents.It’s
    relatively easy for companies like Canon to identify patent
    infringements at the chemical and mechanical level, says Forrest.
    “There are some pretty complicated proprietary chemicals that the
    first-party manufacturers have developed,” he explains, “such as
    formulas that prevent inter-color bleed and chemicals that allow the
    ink to quickly dry so it doesn’t smear. It’s fairly easy for
    manufacturers like Canon and Epson to get the ink into their labs and
    test it to make sure there’s no patent infringement.”The law is clear:
    So long as no patent infringement exists, third-party resellers are
    free to manufacture and move as much ink as they want. However,
    considering that the Canons, Epsons, and HPs of the world each have
    thousands of patents around formulas, cartridge designs, and print
    heads, this is easier said than done.But based on the popularity and
    success of other generic markets — such as pharmaceuticals — there
    should be no doubt that inexpensive ink is here to stay. As long as
    third-party ink manufacturers don’t infringe upon the printer
    manufacturers’ proprietary patents, they are free from legal
    concern.Great For The ConsumerWhen questioned, both Canon and Xerox go
    out of their way to express respect for the third-party resellers. “As
    long as our patents aren’t being infringed upon,” states Duffett, “it’s
    great for the consumer.”John Laing, Xerox’ senior vice president for
    the company’s Supplies Delivery Unit, echoes this sentiment. “Xerox
    takes no issue with third parties that are able to manufacture quality
    ink and toner that work seamlessly with our product line and don’t
    infringe on our intellectual property,” he says. That’s not surprising.
    In an ironic twist, Xerox itself participates in third-party sales,
    developing toner cartridges for HP devices as part of its “It’s
    Compatible” line.It’s also interesting to note that first-party
    manufacturers seem to be simply warning off companies when they
    perceive patent infringements rather than going straight to litigation.
    One explanation is that chain retailers like Staples are beginning to
    sell third-party ink alongside authentic products and printers. Printer
    companies seem more reluctant to take full-scale legal action if it
    could potentially affect their retail partners.But that doesn’t mean
    that they won’t head for the courtroom if necessary. And since
    third-party resellers such as Cartridge World and Staples often don’t
    manufacturer their own ink — instead they buy it from other
    manufacturers — there is now such a pervasive paranoia of lawsuits and
    litigation that, according to Forrest, “All of the ink manufacturers
    tell me that their customers are asking to be indemnified [against
    legal action].” Quality Concerns There’s another reason to oppose
    aftermarket ink, says John Laing, Xerox Supplies Delivery Unit vice
    president. “Third-party ink and toner may not stack up to the original
    vendor-developed products in terms of quality. Inferior supplies can
    result in copy and print quality issues, downtime, service issues and
    general poor printer or MFP performance,” he says.That’s a valid
    concern in some cases, but third-party inks and cartridges are adequate
    for most printing application, explains Forrest. “When I get asked
    about the quality levels of third-party inks, I tell people that 95% of
    what I print ends up in the waste basket anyway.”
    But it’s a
    different story for photographs. “They’re typically fine, but a lot of
    times they won’t last as long,” he admits. “I have a window that faces
    the sun. Every now I’ll print something with third-party ink and place
    it in the sun. Some of this aftermarket stuff is faded in two
    days.”Interestingly, when you begin to compare ink costs with regards
    to “real” photo processing, cost turns out to be a wash. Processed
    photos range from 30 to 70 cents per print, while inkjet photographs
    tend to range from 25 to 50 cents using first-party ink.

    What Does It All Mean For Me?
    of whether consumers choose to use authentic ink or aftermarket
    supplies, the pressure third-party ink suppliers such as Cartridge
    World are creating will quite likely result in increased values not
    just for generics, but for authentic inks as well.”Genuine Canon inks
    and papers offer quality and value,” Duffet explains. “The value part
    of the equation is very important to us.” To stay competitive, the
    company is putting together new packages aimed at specific retail
    customers, such as student combo packs that emphasize black inks and
    paper.Other companies have become more creative. HP recently announced
    a strategy for compete with aftermarket ink vendors aimed specifically
    at developing nations, a market where non-OEM ink is booming. The core
    of this strategy entails a brand new “value” line of ink HP calls
    Simple Black. While analysts have deemed it unlikely that HP will
    pursue this strategy in North America, tremendous success — or
    increased third-party market share — in developed nations may lead to
    a change of heart.A workable common-sense approach would include buying
    both first-party and third-party ink, Forrest says. “If you need
    perfect print quality, buy the OEM first-party ink,” he explains. “And
    if you don’t and want to save some money with third-party, make sure
    you buy it from Staples or a big brand. They’ll guarantee the ink,
    which makes it a lot safer purchase.”That is, assuming that a printer
    manufacturer doesn’t sue them first.