Dell fires opening salvo at the printer channel
- 09 June, 2004 16:12
Dell has served up a challenge to the printer channel with the introduction of two new models that it claims undercut competitor prices by up to 79 per cent.
The announcement could lead to an aggressive price war, according to one distributor. But others have dismissed it as a marketing ploy that fails to address the total cost of printer ownership.
Dell’s A922, the successor to its A940, will target the consumer inkjet market; the 1700n network-capable laser is designed for SMB and large corporates.
According to Dell, the 1700n delivers workgroup-level performance at a price point 79 per cent below the advertised retail price of an HP laser printer.
Dell A/NZ software and peripherals manager, David McQuarrie, said the pricing was a clear indication customers had been paying too much for 25ppm printers.
While insisting the extremely aggressive pricing was customer-driven, Dell was out to make a name for itself in the printer space, he said.
“The Dell brand, in terms of printers, has only existed since December,” McQuarrie said.
Prior to that, Dell had been selling printers through OEM relationships with Lexmark and Samsung. McQuarrie would not be drawn on which partner was providing the latest models.
Managing director of HP distributor Synnex, Frank Sheu, shrugged off Dell’s claim of undercutting current printer prices by 79 per cent, calling the move a marketing gimmick.
“All manufacturers are selling below cost,” Sheu said. “Dell just wants to install a customer base to then sell toner to. The money you pay determines the quality you get.” Sheu claimed the channel would still be cheaper overall when services and support were factored in.
In contrast, Dicker Data general manager, Angela Coronica, said Dell’s announcement would force all vendors to rethink printer hardware prices.
This would further compress sales margins and could hurt the channel, she said.
“You can see what is happening in the PC market,” Coronica said. “Dell drops their prices or do an offer, then HP, IBM and Toshiba just knee jerk and it drives the margins down.
“Dell is obviously looking for growth and can’t invest further in existing product lines, so its sales strategy is to rebrand complementary product.”
McQuarrie said customer loyalty would shift toward Dell, because the market was not listening to what they wanted.
“Customers want low initial costs, ease of procurement, and predictability of [ongoing] costs through the life of the printer,” he said.
McQuarrie said Dell had taken a broader view on setting the price of its printers and consumables.
The vendor would neither be relying on volume or access to its large customer base to encourage OEMs to lower prices, nor would it reap excessive amounts from the on-sell of peripherals, he said.
To ensure operating costs remain low, Dell will introduce a high-capacity printer cartridge which, it claimed, cost up to 34 per cent less per page than its competition.
Coronica said it would be interesting to see if the toners performed to the rates Dell had proposed.
Synnex’s Sheu also expressed doubt over Dell’s higher capacity cartridge. He said printing quality deteriorated over the life of a cartridge and this would be especially true for a long-life cartridge.