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The Crown Prince of Prints

The Crown Prince of Prints

Worldwide printer shipments jumped 19 per cent last year, reaching 71.6 million units. However, despite Dataquest reporting that Asia-Pacific shipments showed the greatest growth, up 33 per cent, the Australian market was apparently left behind.

Local figures compiled by International Data Corp (IDC) showed printer shipments here down 9 per cent, thanks mainly to a massive 21 per cent drop in the value of inkjet sales in the last quarter.

Since then, however, the local market has recovered strongly. In the first quarter of 2000, inkjet sales were up 26 per cent on the same period last year and 50 per cent higher than for the last quarter of 1999.

According to IDC Australia's printer analyst, Les Champkin, the market gyrations can be attributed in part to Y2K.

"The businesses which did lock down spending in Q4 99 did so at the expense of printers, largely because the muted hysteria surrounding Y2K in the general community affected the purchasing behaviour of the all-important consumer segment.

"But Y2K is only part of the story. We [IDC] noted when the data first became available, the decline could be attributed to the fact that many consumers were spending their hard-earned dollars on some of the sexier new technologies, like scanners and multi-function peripherals, at the expense of the inkjet, which is no longer the novelty it was.

"What happened in Q1 was that consumers had bought their toys, played around with them until they were no longer novel, then realised that they really did need a printer after all."Champkin added that some aggressive pricing and marketing from the vendors who were stung into action by the poor Q4 performance also helped the revival. In addition, the launch of several new product lines helped reinvigorate the market.

Japanese vendors Canon and Epson were particularly aggressive as their financial year ended on March 30 and strong Q1 this year was crucial if their annual figures were to be restored.

"Their efforts clearly paid off, with Epson taking the top spot for the quarter over HP, which was relegated to third. Canon came second and Lexmark fourth," Champkin said.

Canon executives reported a record quarter with particularly strong sales of their new consumer/SOHO BJC 3000. The company recently chartered a giant Antonov aircraft to FedEx 11,000 units to Australia to meet orders.

However, intense competition in the inkjet market means vendors are trimming margins to the bone and are relying on consumables for their profits.

Champkin, who surveyed the Asia-Pacific consumables market last year, estimated it to be worth about $US1.6 billion and growing steadily, with ink cartridges recording growth of about 30 per cent.

IDC described the consumables market as "a license to print money" and said it predicted the laser and inkjet consumables shipments to grow by 20 per cent over the next five years.

While inkjets dominate the printer market (75 per cent of total shipments) other, high margin sectors are beginning to show strong growth.

Paula Bursley, principal analyst for Dataquest's Printers Worldwide program, says the colour laser market showed the greatest growth of all printer sectors last year. While it only accounts for 1 per cent of the total printer market in the US and Australia, the segment grew 71 per cent last year and accounted for more than 9 per cent of total printer revenue in the Australian market. Vendors are now confident of similar growth for the next few years.

As the market drives forward, Champkin expects the competition to heat up.

"Currently, colour lasers represent the most equitable segment of the total printer market and therefore the most open to competition.

"The laser market is forecast to go the way of the inkjet market and three years from now we'll all be sitting around wondering what ever happened to the mono laser printer."HP was the leader in the market last year because of its success with the Colour LaserJet 4500 and Colour LaserJet 8500 printers and captured 52 per cent of the worldwide market in 1999, compared to 39 per cent in 1998. According to IDC, it held about 41 per cent of the Australian market.

HP Australia's market development manager for high-end Laser Jets, Anthony Reed, said colour laser printers were the hottest items on the printer market.

"Everyone's been talking about colour laser for a while, but until recently, a lot of companies tried to ignore or ban colour lasers as one option for their users. The push for change has been generated primarily from users within companies rather than IT, as the demand for better looking printed material takes hold."He said this user-driven demand would see explosive growth over the next few years.

"HP is predicting that by the end of 2002, half of our network laser printer sales will be from colour printers. Today it's closer to 13 per cent".

Reed said the reason for this demand was that features and quality available to users of in-house laser printers often matched the quality from offset press or copy shops where most of this work has been traditionally outsourced.

"We expect the market this year to be worth around $45 million and grow to about $80 million by 2003. We [HP] expect to capture around 55 per cent of the market."Reed said the unit growth was expected to be far higher than the rise in sales value, because the average selling price of colour lasers would continue to drop.

He said there was a move away from printers being sold on their own to being sold as part of a solution, such as an overall document management strategy.

"While there is still a market for ‘box moving', a number of customers are looking for help in rationalising their existing printers, lowering their printing costs and increasing their functionality."Reed said the introduction of MFPs that included copying and scan-to-e-mail functionality, along with solutions such as electronic forms and bar coding, all helped to achieve this aim.

Resellers who wanted to compete in this market needed to form relationships and learn the skills needed to offer these services, he said.

Brother International director George Nawa agreed with Reed that corporate colour lasers are the hottest printers on the market at the moment. But he said entry-level lasers are also selling strongly.

Their popularity is being driven by a variety of reasons, including the fact that high-performance laser technology with 12 pages per minute printing speed is rapidly becoming more affordable, especially in the personal laser category.

The fall in prices has effectively closed the gap between lasers and inkjets and pushed the category into the price realm of most users. There also was a realisation that the running costs of inkjets could be very high, because of the price of consumables.

Nawa said the implication for resellers is that users are now looking at upgrading from inkjets to lasers. As such, resellers need to understand the way in which businesses could apply the technology in the workplace. Issues such as the number of users, network options, printouts per day, duty cycles, total ownership costs and the current hardware set-up need to be addressed so resellers can accurately match the user's need to the correct product.

Fuji Xerox made a strong move into the colour laser market last year, with its takeover of Tektronix, which ranks second behind Hewlett-Packard with about 23 per cent of the local market. It has doubled its network printer business in two years and is poised for further growth supported by the Tektronix acquisition and the new Sharp and Fuji Xerox alliance.

The company's general manager of Indirect Channels, Forest McGregor, said the Tektronix colour portfolio complemented the growing Xerox family of monochrome network printers.

He said the company was committed to driving colour in the office/corporate market and would launch several new colour and monochrome network printers by the end of the year.

Business Development manager for Melbourne-based HP reseller Applied Micro Systems, Tricia Richman, said the acquisition of colour lasers is increasing as people began to see the scope of what they could do.

"One of the areas we focus on is educating our clients so they can get to know where colour fits in and the most cost effective way of using it. It means that the colour laser market is increasing substantially, particularly when they understand they can use the colour laser for their mono printing as well.

"The margin is far better for a laser than a DeskJet but looking at it from a business perspective we would not recommend a DeskJet for a business because we are dealing with large corporates and government. DeskJet's are more for home users.

"We have several clients who use DeskJets but they have remote sites which are just like a home user or home office."She said people were migrating from DeskJets to colour lasers. "But it is a matter of an education process and us talking with them about what they are using their printers for. They could buy five DeskJets, when one colour laser would be much better for their business."But colour lasers are not yet within everybody's range. Aleyx Mides, Sales manager for Sydney-based Canon and Tektronix reseller Technotronics Business Systems, said there was a definite movement to colour lasers among people looking at higher-end printers.

"However, in the case of small businesses, they are interested but not buying.

They are still way overpriced for that part of the market."Despite that, she said sales had definitely improved, mainly because the cost of colour lasers was now almost on a par with black and white lasers.

"If the dollar was doing better I would say we would continue to see prices fall for the rest of the year and the market continue to grow."Mides said small businesses wanting to print in colour would continue to look at the inkjet/BubbleJet range because colour lasers were not yet viable for them.

"The improved quality of inkjets and their price means a lot of people are still quite happy to purchase them on the basis that they can replace them next year if something better comes through at a reasonable price," she said.


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