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 user 2008-04-21 at 1:09:18 pm Views: 53
  • #19704

    Best Buy drops Lexmark printers
    ‘Disturbing sign for the future of inkjet’
    Best Buy is no longer selling Lexmark printers in its 1,200-plus stores, dealing a blow, some say, to the Lexington-based company’s plan to revive its struggling inkjet brand by focusing on tech-savvy people who print more.Lexmark has prominently pushed its lineup of wireless inkjet printers at stores, trying to shed its dependence on low-end printers whose owners don’t use enough ink — a printer company’s key profit driver.”It’s a disturbing sign for the future of inkjet,” said Tom Carpenter, vice president and senior equity analyst at Hilliard Lyons in Louisville, noting the company also has a limited presence in Staples stores.Lexmark has boasted in recent months about the popularity of its wireless inkjet printers, telling investors it held 30 percent of the domestic market for the products in December.”If you’re doing as well in wireless as Lexmark claims, it’s kind of surprising that Best Buy would not want to carry your products,” Carpenter said. “Part of it is they might be able to see that Lexmark’s inkjet business might not be around in a couple of years, and they prefer to work with other manufacturers that are going to be around.”Lexmark’s inkjet printer division has struggled since the latter half of 2005. To adjust to its shrinking demand, the company has shuttered plants and eliminated or shuffled thousands of employees worldwide.

    In 2006, it began producing 20 percent fewer inkjet printers, mostly low-end products that were sometimes given away for free as part of bundles. Late last year, it announced a second restructuring, saying it would cut an additional 30 percent of inkjet shipments and tailor its marketing to customers who print more.Carpenter said some of those consumers who would print a lot of pages would likely shop at Best Buy.”The person that shops at Best Buy is generally going to be more tech-savvy than a person that buys at Wal-Mart who is more concerned about price,” he said.Best Buy still sells seven Lexmark printers on its Web site, though they are clearly marked as online-only buys. The stores, including the chain’s two in Lexington, continue to stock a wide variety of Lexmark ink cartridges.A Best Buy spokesman did not return a call to discuss the chain’s decision. Lexmark is in a so-called “quiet period” before Tuesday’s announcement of its first-quarter earnings and declined to discuss Best Buy’s decision.And even though Lexmark printers are gone, Best Buy is selling at least one Dell-branded inkjet printer in some stores. Many of Dell’s printers are manufactured by Lexmark and then sold under the Dell brand.

    Larry Jamieson of industry tracker Lyra Research downplayed the significance of Best Buy’s decision.Jamieson said Lexmark is better off looking for customers at office superstores such as Staples and OfficeMax, where people may use the inkjet printers at businesses and be more likely to print a lot.”I don’t think they’re happy about it,” he said of Lexmark on Best Buy’s move. “You want to be everywhere that people want to buy products, but the demographic of the people in Best Buy are kind of some of the people Lexmark wanted to get away from, anyway.”

    And as another analyst noted, Lexmark printers could be back in Best Buys within a few months.”It usually takes six months for a change …” Shannon Cross of Cross Research wrote in a note to clients of her market research firm. She added that Lexmark’s newest inkjets could be back on the shelves as early as back-to-school shopping time.”However, this is the first time we can remember that Lexmark has not been represented on Best Buy shelves,” she wrote.