In–HomE Insecurity for Inkjets (via Photo Industry Reporter)

From Photo Industry Reporter: In–Home Insecurity for Inkjets
Photo Printing Shifts from Home to Retail and Web
by Mark Lapin

A rising tide lifts all boats, but the opposite is also true. For almost 10 years, the oceans of colored ink consumed by millions of people happily printing photos at home have lifted sales and generated reliable profits for printer manufacturers and retailers alike. Now, home printing is losing ground at a quickening pace to retail and online services, and sales of inkjet consumables are stagnating.To encourage home printing, leading manufacturers and retailers are offering attractively priced “value packs” of ink and paper, targeted especially at snapshot printers. Consumer response has been positive, and experts validate the savings.


But most analysts agree the inkjet industry will struggle with flat home-front demand until technology opens a huge new frontier: general-purpose inkjets that can rival lasers in the office.


Robert Palmer, director of Printer Research, InfoTrends, says, “Inkjets were originally introduced as general-purpose devices for the home. Then photo printing began to take over, making phenomenal advances in technology and really growing the market for a long time. But the retail infrastructure for digital printing was also maturing. Now it’s often less expensive and more convenient to print at retail or online, especially when you’re printing a big batch of photos. It’s a huge problem for vendors who are trying to convince folks to print more images at home. That’s why home inkjets are starting to revert back to their origins as general-purpose devices.”


The numbers gathered by Andy Lippman, Inkjet Consumables analyst at Lyra Research, document the inkjet dilemma(See Fig.1). “In 2004,” he says, “home printing generated 61 percent of digital print revenues, with some 40 percent coming from retail or online. Now the shares are reversed. Retail and online generate close to 60 percent and home printing is down around 40 percent.”


Despite that shrinking share, home printing still generates big bucks. According to John Shane, director, Communi-cation Supplies Consulting Service at InfoTrends, sales of ink 
cartridges rose from $16 billion in 2007 to $16.5 billion in 2008, and will reach $16.9 billion in 2009. “From then on, things will be pretty flat,” Shane says. “But we don’t expect an absolute decline because the increase of population and people purchasing a second inkjet for the home leave some potential for slow growth.”


Will Value Packs Lead to Happier Homes?
The high cost of ink and inconsistent image quality are consumers’ two most common complaints about home printers. Vendors are trying to address both issues with value packs. HP has been pushing the strategy hard and has been most successful at gaining visibility and growing sales. “Value packs have had a big impact,” says Shane. A recent InfoTrends survey showed that 65 to 70 percent of respondents printed photos at home, and 20 percent of them used value packs.


Most packs combine a multicolored ink cartridge and photo paper. “Vendors have created photo packs to drive overall cost per print down,” says Robert Palmer of InfoTrends. “The industry standard is still hovering around 23¢–24¢ cents per 4×6 print, but Kodak has packs that bring it down to 15¢ per print, with the caveat of using thinner film paper.”


Cost aside, photo packs can contribute to better print quality because manufacturers fine-tune their printers to produce optimal results with their brand of ink and paper. Independent studies document claims of greater longevity with branded media. Nonbranded ink and paper can also produce good images, but there’s more trial and error for consumers who have to find the right three-way combination.


Razor Blades Face a Tougher Battle
Even if value packs lead to somewhat lower margins, vendors love them “because they’re always looking for ways to convince consumers to buy their brand of supplies,” says Andy Lippman. “That’s the business model. It’s still razor blades and it will be for the foreseeable future. Especially at the consumer level, where people are not printing that much, they’re willing to pay a fairly high price for the convenience of getting good quality prints at home.”


If imitation is any sign, photo packs are a big hit. Competition from third-party brands is heating up: Office equipment giants Office Depot, OfficeMax and Staples, who account for the overwhelming volume of ink and paper sales, have all developed photo packs under their own brands. On the Internet, there is abundant competition from independent ink vendors, notably in China. According to John Shane, independents own 12 percent of the HP cartridge market, 20 percent for Canon, and were up to 25 percent for Epson.


The majors have responded with strategies and lawsuits to keep off-brands off the shelves or out of the country. Epson has successfully blocked imports of new third-party cartridges on the grounds of patent infringement. The new competitive battleground has become collecting used cartridges, then remanufacturing and reselling them as compatibles.


Trendsetters in Photo Value Packs
HP offers a variety of packages, discounts and promotions to convince consumers to double down on their ink and paper purchases. Its Custom 95 series 200-sheet photo value pack includes two Vivera ink cartridges and 200 sheets of borderless 4×6-inch glossy premium photo paper. Priced at $47.99, it delivers prints for as low as 24¢ each. HP claims the media will maximize ink efficiency, produce superior fade resistance, resist smudging and fingerprints, and last for generations.


Kodak’s premium photo value pack is designed for snapshots but works with the company’s lineup of all-in-one printers. Priced at $19.99, it includes 135 sheets of 4×6 premium Kodak photo paper and a color ink cartridge with matching capacity. When you do the math, that works out to around 15¢ per print. Kodak has a $17.99 photo value pack that includes color ink and 180 sheets of 4×6 photo paper. MacWorld commented, “These packs are a super value.”


Canon’s BCI-16 photo value pack works with the company’s popular Selphy snapshot printers and the Pixma iP90, a general-purpose inkjet. Priced at $39.99, it includes two color tanks and 140 sheets of 4×6 photo paper for a per-print cost of slightly less than 29¢.


Epson packs include “all you need to make about 150 beautiful glossy images that are scratch, smudge, water and fade resistant.” Epson’s PictureMate 200 series print pack is priced at $37.95. It yields 4×6 prints at about 25¢ per pop and is compatible with Epson’s line of compact PictureMate snapshot printers.


Industry analysts agree that value packs reduce printing costs to the consumer, contribute to higher image quality and simplify the nagging process of keeping home printers stocked with ink and paper.


(And, of course, making consumers happy with home-printing even a portion of their images creates a repeat customer that will return again and again to your store to buy consumables—and better, create foot traffic.)


Whether those advantages will be enough to outweigh the convenience and consistency of retail or Web printing, especially for big batches of photos, remains an open question. “Consumers typically print about 100 photos per year at home,” says Robert Palmer of InfoTrends. “If they’re only saving a couple of pennies per print over the course of the year, that may not be enough to keep them from going to retail.” Either way, you can cash in.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s