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Printer ink: Tired of feeding the cash cow?

Inkjet refills typically cost significantly more than the printer itself.

By Lamont Wood
March 28, 2012 06:00 AM ET

Computerworld - Human blood costs about $17.27 an ounce, silver about $34 an ounce. But both are bargains compared to the ink sold to the owners of inkjet printers, which can exceed $80 an ounce. Meanwhile, the ink used to print newspapers costs about 16 cents an ounce.

Today, color inkjet technology offers essentially photo-realistic output from consumer or home-office printers that cost less than $100. But even those who print out as few as 20 pages a week will probably have to buy several ink refills a year, at minimum, costing way more than the original price of the printer. Those who understand the issues can avoid the worst shocks. (See "Shopping advice," below.)

"Everyone complains about the price of ink, but consumers do not do a net-present-value analysis when shopping -- we only do it with higher-ticket items," explains Federico De Silva, an analyst at Gartner, a market research firm. "They are going for a $49 printer, but when they have to refill it they realize they are spending $50 to $60 just on ink."

"The industry figured out years ago that once people buy a printer they are committed to it, so you can sell the printer at or below cost knowing they will buy the cartridges," adds Charles Lecompte, head of Lyra Research, a market research firm in Newton, Mass. "We think they are selling the cartridges for several times more than it costs to make them."

Why? "Printer prices have hit rock bottom, and the manufacturers are trying to somehow make up for the money they are not making from the hardware," says Seheje Saraphy, analyst at market research firm IDC.

At Hewlett-Packard, the world's top-selling printer maker, justifying the price is not a problem. "There's a lot of technology in ink," says Thom Brown, a supplies technology specialist at HP. "It's more than colored water; there are more than a dozen different ingredients."

Aside from leaving a mark on paper, the ink has to remain unchanged in the cartridge for two years or more, and endure the heat and pressure of being shot through a microscopic hole in the print head after being heated suddenly to 300 degrees Celsius, he explains. The ink must then travel the equivalent of a quarter falling 30 stories, hit the paper and not bounce, dry instantly and not fade for decades.

"It takes three to five years to develop one new ink formulation and a thousand prototype printers, since there are so many iterations in the process," Brown adds.

But Veneeta Eason, Kodak's director of future product marketing, sees HP's justification as a market opportunity. "When we entered the inkjet market several years we saw that the number one dissatisfier was the high cost of ink -- printer prices were dropping while ink prices were going up," she recalls. So Kodak decided to offer printers that cost somewhat more with cartridges that cost less, largely thanks to the print head being in the printer rather than on the cartridge.



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