Any printer industry pundit will tell you that the colour laser market is about to take off and several channel players are already recording strong growth in sales. Since vendors such as Minolta-QMS slashed the price of their colour lasers below $2500 in Q4 last year, sales have been steadily growing.
According to figures from market analyst, Inform, monochrome lasers experienced a volume growth of 15 per cent year-on-year (2002 to 2003), with a value growth of 2 per cent, while colour lasers posted a 38 per cent year-on-year volume growth albeit for a flat value performance. Inform attributed this result largely to competitive vendor pricing on colour lasers and the introduction of several sub-$2000 models which effectively pushed colour laser printers from value to volume channels.
Inform research found that corporate dealers held a 50 per cent volume share of all colour laser sales in May and recorded a volume growth of 48 per cent in this segment year-on-year (2002 to 2003). With average prices for colour lasers slashed, not surprisingly the greatest year-on-year growth came via mass merchants, direct marketers and independent retailers who last year held a combined 13 per cent of all colour laser volumes. In May, that figure had risen to 25 per cent. The dramatic drop in the average price for colour lasers — which in May 2002 stood at $6011 and for May 2003 at $4374 — represented a discount of 27 per cent, Inform market analyst, print and imaging, Stuart James.
“With prices on entry-level colour machines now closing in on the $1600 mark, this growth can only be expected to continue as vendors vie to capture a share of this lucrative segment,” James said. “The inevitable growth trend for colour then can be attributed to the improved perception of colour’s value proposition amongst small businesses.
“Clearly we are now witnessing a definite shift to and acceptance of new printing technologies,” James said. “At monochrome laser price points, these new colour models will provide the fuel for the expected growth in this segment of the printer market.”
The price of monochrome prices has bottomed out and the mono technology itself has come to somewhat of a standstill. While there has been little opportunity left for vendors to further streamline the mono printing processes to reduce total printer costs, they have turned to colour laser technology which is still relatively immature and evolving.
The processes involved in colour laser printing are more complex than those found in mono printers and involve a number of colour toners. Vendors have been and continue to simplify these internal print processes which have brought about further cost savings that have been passed on to the consumer.
While the lower upfront cost of purchasing a colour laser printer has been and will continue to spur significant uptake of the colour laser printer in the lucrative SME sector, the technology in its own right is becoming an increasingly attractive printing option. Key improvements in both colour laser engines and print paths that enable greater colour throughput with no loss of quality at a fraction of the previous cost. Greater visibility of total printing costs, easier consumables management and remote network printing using online network printer management sites have also added to the increased value proposition of colour lasers.
“Customers are looking for ease of use and the thing lasers also give them over inkjets apart from the obvious lower running costs is network reliability at rated speeds,” Minolta-QMS Australia’s national sales and marketing manager, Garry Pendleton, said.
“For similar specifications, laser printers are far more affordable. You can buy a networked colour laser printer for less than $1800. To print at the same resolution on an inkjet would cost you a lot more in the long term. A model in Minolta-QMS’ 2300 series allows you to calculate the running costs which don’t vary due to enhanced resolution. On an inkjet the cost rises when you print at full resolution when you dramatically increase toner consumption.”
When it comes to building awareness about the savings on total print costs that colour lasers offer to an increasing variety of customers, Minolta-QMS sees itself as the Pied Piper.
“Our magicolor 2300 DeskLaser was launched on the back of an extensive ‘Who Killed The Inkjet?’ campaign. This was meant to highlight the fact that the running costs on our printer are far lower than those on a relative inkjet,” Pendleton said.
Unlike other participating vendors, Minolta-QMS do not manufacture or market inkjet products, so they are not concerned with maintaining demand for inkjet printers and consumables.
“We have drawn significant publicity to the products by using cash-back incentives for customers, therefore further reducing the upfront costs.
We’ve found success in showing people there is a very low break-even point to how many prints a client needs to produce, before colour laser comes into its own as far as running costs are concerned,” Pendleton said.
Up until recently, one of the biggest misconceptions held by consumers is the importance of the up-front cost of a printer in determining their total printing costs.
Customers are now starting to wise up to the fact that a low up-front cost does not necessarily reflect value for money and are taking into greater consideration the cost of consumables, printer productivity as well as their own usage habits.
This heightened awareness in printing costs is catalysing consumer interest in colour lasers in which their true value proposition can only be ascertained when total printing costs are assessed.
“I think we’re in that third or fourth generation of printers now, where people are more aware of buying a product that actually suits them,” Harvey Norman’s national product manager, computer hardware, Paul Schnell, said.
“A lot of SMEs have a mono laser and a colour inkjet for when they need to print colour which they think they only use every now and again,” Schnell said. “But before they know it they’re replacing cartridges at $56 a pop every two or three weeks. So when you actually add it up — they’re really printing twice, they’re printing on the mono anyway, and then printing colour over and above — it’s actually an expensive proposition.”
However, Schnell said that while consumers were no longer buying the $99 inkjets, the inkjet printer market still performed strongly and growth in volume sales of colour lasers had not negatively impacted the segment.
“The inkjet customer is generally a different customer to the laser customer,” he said. “It’s a very different product for a very different segment.
Colour laser customers are less concerned about things like print resolution than inkjet users. Their colour requirements are more basic — for things such as powerpoint presentations.”
While the inkjet market remains strong monochrome laser printers have been steadily losing market share to their more attractive colour cousins.
The A4 monochrome laser market has contracted, according to Inform’s James, but there is still a market for monochrome laser printers, particularly among large education and government bodies, and will continue to be so long as monochrome printing speeds increase.
“The smart resellers are really concentrating on colour because the monochrome market is basically owned by three companies — Lexmark, HP and Kyocera,” sales manager for printing distributor, Alloys International, Phil Gibbs said. “Subsequent to this relative lack of competition in this market, there have not been significant changes to monochrome printers or the cost of the technology. The black and white technology is quite old and primarily only differs in terms of running costs. So monochrome customers often say just give me exactly the same printer you gave me before at your lowest possible price.
Impossible to replicate
“That’s not very exciting for anybody, except for the vendors and cartridge remanufacturers that make a mint off the consumables. When you start talking colour, the technology can be startlingly different depending on the vendor and the product. This gives smart resellers the opportunity to give the client a solution he really needs.”
According to Gibbs, margins on monochrome and colour laser printers are higher than on inkjets, although not significantly and they can vary widely depending on the vendor.
“The margins on some vendors’ laser printers are between three and five points, while other vendors, such as Minolta-QMS, offer twice as much margin on their laser printers,” he said.
Like inkjet consumables, the colour laser consumables business was a lucrative cash cow for resellers, offering even greater revenue opportunities than their counterparts, Gibbs said.
However, resellers that beef up their margins by selling third-party inkjet consumables do not have the same opportunity in the colour laser market as the majority of third-party laser cartridges currently on the market are only designed for HP colour lasers. Third-party cartridge remanufacturers are also plagued by copyright issues. Printer vendors have increased the complexity of their laser cartridges making it more difficult for remanufacturers to replicate and in some cases impossible to replicate without breaching vendors’ copyrights.
While mass merchants such as Harvey Norman have experienced strong growth in colour laser printer sales, other channel players, such as print distributor Alloys International, have seen strong and steady sales this year and are expecting a marked increase in sales over the next six to 12 months.
Gibbs said that colour laser printer sales across the board had been slow and steady, and he had not experienced a manic growth in sales.
However, Gibbs said he expected the colour laser market to really take off over the next six to eight months as a result of further price drops.
“What I’m waiting for is people upgrading their monochrome lasers with colour laser,” he said. “I don’t think these people are there just yet, but they’re nearly there.”
Gibbs said that this migration would really pick up momentum after the next price drop.
“Prices are always going to drop. Whenever you think they can’t drop the prices any more, they drop it,” he said.
Gibbs predicted that print quality of colour lasers would improve and the pricepoints would drop further — down to about $999 — in the next six to 12 months.
Minolta’s Pendleton said that performance parameters on the laser printers would increase before the pricepoints would be cut. “When single-pass engine colour lasers become available at monochrome pricepoints, the colour laser market will explode,” he said.
“In the next generation of colour laser printers we’ll see the same price difference between four-pass and single-pass printers, but the engine speeds of single-pass printers will increase dramatically, from 16ppm (pages per minute) to 24ppm. The next generation after that will see the engine speeds increase again and the prices will be lower.”
According to Inform’s latest forecast projection for 2003, the colour laser segment is expected to increase 29 per cent by volume and 31 per cent by value.