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 user 2007-01-10 at 1:05:00 pm Views: 59
  • #17110

    Epson ignites printer price war
    70 per cent ink price cut shakes industry
    2007Drastic regional price cuts from printer giant Epson could rock the
    printer industry, market observers have predicted. The Japanese printer
    maker has begun selling ink in China at nearly one third the price it
    charges in Europe and the US.The move has raised fears of a printer
    price war that could spread worldwide, potentially saving millions for
    consumers but hurting manufacturers’ profits.Vnunet.com’s analysis of
    data from Epson shows that buyers of the company’s cheapest entry-level
    printer in China can now expect to spend as little as $0.016 on ink for
    each page they print.US and European buyers of similar products are
    still paying up to three times as much.

    “The industry could be
    facing something it has quietly dreaded for years: a consumables
    pricing war that melts the ‘razor-and-blades’ model and incinerates the
    industry’s rich profit margins,” said Jiqiang Rong, director of primary
    research at US-based Lyra Research. The Japanese headquarters of Seiko
    Epson Corp has not responded to vnunet.com’s request for comment on
    plans to introduce similarly low prices outside China.”If this strategy
    sells printers, competitors will have no choice but to respond in kind,
    and not just in China,” said Rong.In common with other printer makers,
    such as HP and Canon, Epson makes most of its profit from sales of
    consumables like ink and toner.Under this so-called ‘razors and blades’
    business model, the printers may be sold at a loss which is recouped
    through high consumables pricing.Lyra Research predicts that a fall in
    consumables profits would ultimately force manufacturers to raise
    printer prices.These high profit margins have encouraged other
    companies to make copycat cartridges which are compatible with Epson’s
    printers, but which are cheaper than the official consumables.Epson has
    pursued legal action against numerous imitators, with some
    success.Epson China has explained its new ultra-low pricing as a way to
    fight cheap third-party ink cartridges and counterfeit cartridges. The
    company claims that these cheaper consumables produce poor results,
    fade over time and can damage printers.Lyra Research sees the move as
    an attempt to make inroads into China’s highly price-conscious
    consumers as fast as possible.
    A new threat looms in the shape of
    local PC maker Lenovo which is hoping to get into the printer
    manufacturing industry, possibly with government backing.

    in China, Epson has not applied price cuts across the board. The most
    cut-throat pricing applies to the Epson ME range of printers, some of
    which appear to be available only in China.For example, the $64 Epson
    ME1+, a 2880dpi inkjet printer with a claimed printing speed of 12
    pages per minute, appears to be one of the world’s cheapest inkjets in
    terms of running costs.Black ink cartridges have a recommended retail
    price of 45 Chinese yuan ($5.50), and colour cartridges sell for 72
    yuan ($9).Epson China claims that the $5.50 black cartridge holds
    enough ink to print 330 pages. This indicates an average printing cost
    as low as 1.6 cents per page for black and white printing.The ME1+ does
    not appear to be available outside China. A comparable entry-level
    Epson printer sold in the US, the Epson Stylus C88+, costs almost the
    same to buy, but appears to be three times more expensive to
    run.According to Epson, the C88′s black ink cartridges cost $19 and but
    only hold enough ink to produce about 400 pages of text, indicating an
    average cost of at least 4.75 cents per page.Colour printing costs are
    higher for both printers, as colour ink prices are higher and colour
    printing typically uses more ink.Epson’s cut-price Chinese ink
    cartridges appear to provide similar performance to products selling
    for two or three times more in the US and Europe.While this appears to
    offer an opportunity for grey market importers to buy printers and
    compatible cartridges in China and resell them overseas, there are so
    far no reports of this occurring.