| At
$22 per quarter-ounce, a Hewlett-Packard color ink-jet cartridge
is more expensive, by weight, than imported Russian caviar.
Consumers are annoyed at the price of authorized
replacement ink cartridges, and tempted by third-party substitutes
that don't always work flawlessly.
The major vendors, including Canon, Epson,
Hewlett-Packard, and Lexmark, are at odds with independent
manufacturers of alternative inks. In fact, some big vendors
are suing third-party makers of cartridge clones for alleged
patent violations. Meanwhile, second-tier ink cartridge makers
say they simply offer consumers a choice--at prices that are
sometimes 75 percent below what major vendors charge.
Recently, the controversy has caught the attention
of overseas regulators. Trustbusters in the United Kingdom
and at the European Union are examining the way Canon, Epson,
HP, and Lexmark price ink and do business. In the United States,
at least one state is attempting to protect consumers' right
to purchase third-party alternative goods.
The Real Cost
The printer supplies industry has adopted
the practice of cell phone and razor blade sellers: Charge
low prices for initial equipment, then make money from ongoing
fees for additional needed components. Vendors sell consumer
printers at cost, or even sometimes at a 20 percent loss,
say financial analysts at Bear Sterns who track Epson and
HP. But on the flip side, both firms earn a 60 percent gross
margin on ink jet and toner cartridges, says Bill Hand, financial
analyst with Bear and Stearns.
Protecting Profits
Not surprisingly, printer vendors characterize
this aftermarket as a financial threat, Hand says. "It's
fair to say at least 80 percent of overall profits [from within
Epson's and HP's printing divisions] come from supplies,"
he says.
Lexmark has tried to suppress the makers of
aftermarket cartridges by integrating a microchip, dubbed
a "killer chip," inside its own laser jet toner
cartridges. If a Lexmark printer doesn't spot the Lexmark
chip inside a cartridge, the unit won't work. The only way
to reuse the cartridge is by sending it back to Lexmark, which
will refill the empty tank and reset the microchip for another
use.
If you try to refill the Lexmark toner cartridge
yourself with third-party toner, or if you use a compatible
cartridge that lacks the microchip, the printer won't accept
it. The microchip and Lexmark printers have the intelligence
to "expire" toner cartridges and use only Lexmark
goods. Critics worry that it's only a matter of time before
Lexmark introduces the chip to its ink jet product family.
Down the Inkwell
Caught in the middle, many consumers remain
angry about the high cost of ink.
Predictably, HP and others say their cartridge
prices aren't high considering the cost of researching and
developing the technology and then manufacturing the equipment.
"These aren't just bottles of ink you put inside of your
printer," Jotwani says.
CAP Ventures says that it doesn't count the
cost of the printer itself in figuring prices per page; it's
based largely on the cost of cartridges. The analysts attribute
the higher per-page costs largely to the fact that the average
page printed today contains more cartridge-draining graphics
and images than even a couple years ago.
Printer
Ink Cartridges - The History |
Printer
Ink Cartridges - Easier And Convenient |
Recycling
Cartridges and Machines |
Why
Do Ink Cartridges Cost So Much? |
Determining
if Your Printer Uses Toner Cartridges |
Inkjet
Cartridges |
