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Feature ArticleIMA GIN G SPE CTR UM MA GAZI NE
International Imaging Technology Council
Editor’s Note: This is the third article in a six-part series that will pro-
vide an in-depth overview of the fastest growing channel in the imag-
ing industry, the SOHO channel. This segment covers entry-level
monochrome laser.
As has been discussed in the two previous articles in this
series, across all product categories, the growth of
SOHO-based printing devices has far out-paced the
growth of workgroup/corporate-based printers. In this segment,
we will discuss how this trend is consistent with entry-level mono-
chrome laser printers.
Evaluating the Monochrome Laser Marketplace
Much has been said about the rapidly proliferating technology in all
product categories in 2004,and a good deal of this growth has been
in small office and home printing. However, according to a Lyra
Research report generated at the end of last year, despite the torrent
Luke Goldberg is responsible for developing overall market/industry analysis and sales trends,expanding
dealer channels,managing the Future Graphics sales team of professionals as part of the new product
development and marketing/promotions team.Luke has more than 14 years of experience in the imaging
supplies industry.He may be reached at 800-394-9900.
Introduction to the SOHO Market, Part III:
Entry-level Monochrome Laser Printersby Luke Goldberg, Future Graphics
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International Imaging Technology CouncilFeature Article
44 Imaging Spectrum Magazine ✴ May 2005 ✴ International Imaging Technology Council ✴ www.i-itc.org
I M A G I N G S P E C T R
U M M
A G A Z I N E
of releases for workgroup products over 80 percent of the installed
base is more than two years old. And as the Lyra report suggests,
within the workgroup segment, the older printers are more expen-
sive and highly capable. Therefore, larger businesses seem less likely
to do away with them in favor of new ones.
Visit any remanufacturer and he or she will tell you that the most
popular cartridges are still the HP 4100, HP 2100, HP 8100 andrelated models. Clearly, these printers have aged well and still offer
the functionality needed for the average corporate workgroup. So,
this is the question: “Is there enough benefit for a medium-sized
workgroup to upgrade from an HP 4200 to an HP 4250?”
How well this conversion takes place is still to be determined, but
other than Hewlett-Packard’s (HP) own efforts to shore up consum-
ables business through its direct sales efforts (HP’s print-manage-
ment strategy), there does not seem to be much incentive for
conversion. Likely, the great capabilities of older printers coupled
with more corporate business being tied up in cost-per-page con-
tracts with digital copiers are the main reasons why workgroup
monochrome printers only experienced growth of 2 percent,
according to Lyra’s year-end summary.
Conversely, according to the same Lyra summary, of 12.2 million
monochrome laser printers sold in 2004, a whopping 10.6 million
were in the entry-level segment (as classified by a sub-$500 pric
point). These numbers represented a 22 percent increase over 200
The Entry-level Conversion
The hallmark of these entry-level monochrome laser printers is th
ever-increasing price-to-performance ratio. In the early days of th
entry-level printer (HP 1100, Lexmark e210 and Samsung M
1210), customers got what they paid for: a relatively slow machinwith limited or no networking capability, basic paper handling an
no multifunctional capability.
However, with today’s offerings from Brother, Samsung, Dell, Le
mark, HP and other new players, such as Okidata and Minolta, cu
tomers pay very little and receive a lot, including average pri
speeds of more than 17 ppm and multifunctional capability for fa
ing, scanning, printing and copying. Most of these printers are cap
ble of networking and even duplexing—all for under $300.And it a
comes in a cute little package that fits neatly into the corner of th
desk. In short, these devices are ideal for an end user in a small offi
or home office who has limited space and is looking for a sing
piece of equipment that can perform several different functions.
Some OEMs believe that offering all this versatility and speed wi
motivate small businesses to switch from inkjet to laser printers.
some cases, this seems to be occurring as OEMs like Samsung ha
made huge headway in developing markets such as Russia an
China. This also may be the reason why HP is competing for th
segment with its business series of inkjet printers that have high
speeds and multifunctional capabilities.
Surveying the Major PlayersLooking back at 2004, it is clear that each OEM attempted to diffe
entiate itself from the pack either by virtue of functionality, spee
footprint or price. Here is a review of the key movers in this aren
and their product offerings.
Brother, the Multifunctional Leader
Brother has long been the multifunctional lead
in this segment and its recent offerings are n
exception. The 5100 series highlighted by th
5140/5150 offers 21 ppm, multifunctional cap
bilities and even standard duplexing, all f
under $300. Brother also offers great margin opportunity to th
remanufacturer due to the usual razor/blades OEM sales strategy.
In most cases, the collection of empty cartridges and their cost a
the biggest problem with these SOHO laser products. Howeve
once the empties do become available, they suddenly become ver
profitable to remanufacture, as is the case with the older generatio
of Brother models for the 5000 series that use the TN430/460, 56
cartridge types. These cartridge models are now readily available
new compatibles in the marketplace for as low as $25 versus a
OEM retail price of $60.
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Goldberg: Introduction to the SOHO Market, Part III
Due to the emergence of these compatibles,empties prices are com-
ing down. This will invariably occur as well with the TN 570,which
is used in the newer Brother 5100 models.Consider, for example,the
cost to manufacture a TN 560 toner cartridge:
Empty ............................... ................$3.50
Toner...................................................5.00
Developer roller (two cycles).. ...........3.00Labor,15 minutes ($10.00/hr.) ..........2.50
Overhead................................. ...........3.75
Packaging/misc. .................................2.00
Total: $19.75
The suggested retail price for the toner unit is $45, which offers
great margin opportunity for the remanufacturer. Additionally,
Brother drum units also offer great margin potential: The OEM
retail price on the dr400, 250/500,etc.,averages more than $150.The
average cost to remanufacture these cartridges is around $32,
including empties, material and labor. They then can sell for $110,
which clearly offers great margins.
Samsung, the Entry-level Low Price Leader
Samsung is the clear-cut price leader in the
entry level arena and until recently, before the
release of the Konica Minolta Pagepro 1350w, it
had no eager challengers. Samsung has done a
terrific job of selling the ML 1710/1740 as well
as multifunctionals, such as the scx4216, and is clearly a force to be
reckoned with in the SOHO market.
There are a number of compelling features in these Samsung printers,the first of which is the sub-$100 retail price (the first printer to reach
this milestone). Additionally, this printer offers speeds of 17 ppm and
the smallest footprint in its class, which is a benefit not only to the small
office users, but also to the retailers selling it. The Samsung and now its
price competitor,the Konica Minolta 1350w—a 21 ppm printer being
offered in retail as low as $90—have very small footprints, which make
them attractive to retailers concerned about shelf space.
As the Brother profit examples demonstrated previously, huge margin
potential is also offered by cartridges for Samsung entry-level printers.
Additionally, most entry-level printers have short cycles, which means
that their components are more likely to be reused. Here is an example
of the profits that can be realized with the Samsung 1710/1740 cartridge:
Empty ................................. ............$10.00
Toner...................................................3.00
Drum (two cycles)..............................4.00
Labor 15 minutes ($10/hr.) ................2.50
Overhead................................. ...........3.75
Packaging ................................... ........2.00
Misc. ............................... ....................2.00
Total: $27.25
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International Imaging Technology CouncilFeature Article
46 Imaging Spectrum Magazine ✴ May 2005 ✴ International Imaging Technology Council ✴ www.i-itc.org
I M A G I N G S P E C T R
U M M
A G A Z I N E
The suggested retail price for the remanufactured cartridge is $60;
therefore, based on an OEM street price of $79, the profit margin
equals 53.4 percent.
In addition to these models that can be seen everywhere in retail
outlets, from office superstores to consumer electronics stores, Sam-
sung also now is the world’s number-two provider of engines to
other OEMs, such as Xerox with the 3150 and Dell with the 1600,which are both based on the Samsung 2250 engine.
Hewlett-Packard, Banking on Quality
Looking at HP in this market, it seems that it con-
tinues to try to play the quality card. Its products
are typically the highest priced in this segment,
and its printer-placement strategy seems to be
attempting to better its own previous models. In
the case of the HP 1160 (replacement for the 1150) and the 1320
(replacement for the 1300), these printers offer faster speeds and
better networking capability. Most importantly for HP, they also
address one of the failings of these older models in the competition
with Samsung and Brother in the footprint wars. HP did away with
the bulky external paper trays in favor of an enclosed paper tray,
making these newer models much more compact. Generally, it will
be interesting to see if HP changes its pricing strategy or if it contin-
ues to take the high road.
Dell, Emphasizing Cost per Page
Conversely, as we will discuss in subsequent
articles, Dell is taking price strategy to a dif-
ferent level in this area, concentrating on
cost-per-page messages aimed at convertingsmall business users. For example, the Dell
1700 printer, which is based on the Lexmark E232, offers 30 to 40
percent savings over competing HP products. An interesting fact
about this printer is that it is actually faster at 25 ppm than its Lex
mark counterpart the E232 at 22 ppm.We will discuss Dell’s succe
in the SOHO channel and its direct-distribution model in great
detail in next month’s issue.
Opportunity Knocking for the Aftermarket
As printer prices plummet and consumables cost almost as much a
the printer,it raises the obvious question, “Are we entering the era the disposable printer?”The answer remains to be seen,but it seem
anathema to consumers to dispose of computer-related hardwar
Many garages in America have become virtual museums of ant
quated technology. In addition, a great many older computers an
printers wind up at Goodwill and are not thrown away. In the mean
time, the aftermarket must continue to seize the opportunity an
take advantage of these high-priced consumables and the stick
shock consumers are bound to experience when they go to reorde
their cartridges.
In the SOHO channel, monochrome printers are alive and we
and are well-suited to meet the needs of a growing population
small business and home office users. These users will look f
lower price points with greater performance, and they will con
tinue to seek alternate sources for supplies. In the case of sma
businesses, the owner, CFO and purchasing agent is usually th
same person. There is no gatekeeper to prevent salespeople fro
reaching the decision maker in most cases. Remanufacturers ca
offer to ease the pain of high-priced OEM consumables and kee
these printers from winding up in the trash or in cluttered garag
the world over.
Stay tuned for next month’s article that discusses the newest, moexplosive SOHO product category: entry-level color laser.
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