*NEWS*THE CUT-THROAT BUSS OF PRINTER CTGS
*NEWS*THE CUT-THROAT BUSS OF PRINTER CTGS
2005-03-30 at 10:37:00 am #11171The cut-throat business of printer
The problem with cut-throat razors, as any Harvard MBA will
tell you, is that they last for ages. Disposable blades make much more sense;
sell the handles at cost price and make money on repeat sales of relatively
expensive blades from which the worst injury you can expect is a neck that looks
as though it has been chaffed by a cheese grater.
Printer manufacturers have been quick to catch on, and who
could blame them? Sell cheap printers and hook your customers on the ink
cartridges. People have long joked that HP, the mother of all printer makers, is
really just a toner or ink company with very fancy toner delivery packaging —
If you are a printer manufacturer there are some sound
business reasons for following the path cut by Gillette, not least of which is
that it makes it easier to predict (and improve) revenues several years down the
line. And, there is a lot more money to made from selling cartridges than there
is to be made from selling printers. Indeed, some estimate the cartridge
business accounts for 90 percent of the £19bn annual global printer market.
But what about the consumer? We should be winners too; buy a
cheap printer and then, with all the sources of ink cartridges available, shop
around for the best buy. After all, ink is hardly expensive. Well, that’s the
theory. In practice, the picture painted by the printer business is not quite so
Take HP. It is in the US courts defending defending the sale
of half-full ink cartridges with its printers. The three Minnesota women who are
taking HP to court claim the company doesn’t reveal that the ‘economy
cartridges’ installed on new printers are only half full of ink.
It’s not so much the practice of selling new printers with
half-full cartridges that seems to be aggravating consumers. After all, there is
life in the argument that says buyers should realise that an ‘economy’ ink
cartridge has missing something, and reason dictates that this will be ink or
cartridge. It’s the use of tactics to stop third-party ink makers from selling
cheaper cartridges to fit into printers that is raising hackles.
Lexmark was recently vilified in the press for turning to
the notorious Digital Millennium Copyright Act, which has been used (not always
successfully) by everyone from e-book software vendors to garage door remote
control makers to protect their business models. The DMCA, as it has come be
known, was intended to stop people circumventing anti-copyright technologies,
not to stop people making printer cartridges.
Lexmark is the second largest printer maker, behind
Hewlett-Packard. The reason Lexmark felt able to turn to the DMCA was that its
cartridges — in common with many of those from other printer makers — have a
“smart chip” that identifies them as the genuine article. Companies who make
smart chips so that after-market cartridge vendors can fool the printer into
accepting their products are, it is claimed, violating the DMCA.
In this case, US-based Static Control is in the dock. Static
Control’s chief executive Ed Schwarze, has written a missive on the practice of
embedding smart chips. Schwarze, naturally, is worried about his business; that
of supporting the after-market cartridge makers. If that market closes,
Schwarze’s business will be hit.
Printer manufacturers may have no duty to after-market
cartridge makers and their suppliers, but they do have a duty to their customers
– and to the environment. Consumers are hurt by the practice of using smart
chips because these chips are designed to stop after-market cartridges, which
are invariably cheaper than branded cartridges. This means you end up paying
The environment is hurt because the cartridges often cannot
simply be refilled. Some cartridges, which combine the colours into one unit,
need replacing even when there is ink still in some chambers.
Imagine, for a moment, a world where Ford bought Shell, and
suddenly started introducing technology that meant you could only use Ford
petrol in your Ford car. How would you feel?
Of course to more accurately mirror the printer market, Ford
would have to slash the prices of its cars, which would surely make many people
very happy. But as its revenue model changed, so would it also have to hike
petrol prices; that might not make people quite so happy. In this hypothetical
situation, Ford may also tell you that other petrol — even if you could get it
to work – might damage your engine.
We hear similar tales from printer manufacturers about the
adverse effects of inferior inks on a printer, and to a lot of people it is
important to know whether they are using the genuine article or an after-market
product. But nobody is being accused of passing off cartridges and ink as being
made by a major manufacturer; what they are being accused of is daring to
compete with a major manufacturer.
Well, a solution to the ink problem may be on the way. The
European Parliament recently approved a law that is expected to force printer
manufacturers to change their spots. European lawmakers have long been concerned
at the amount of electroscrap generated by the PC and electronics industries,
and one effect of the new law will be to force a redesign of the cartridges so
that they can be reused (one effect of the smart chips is to stop people
refilling the cartridges they own with after-market ink). It has been suggested
that the smart chips could be forced out of printers altogether, but this is
unlikely. However, it will be some time yet (we hope) before printer makers can
develop technology that is able to differentiate their ink from after-market