Dell pushes into printer market

With the launch of four printers for both personal and workgroup use, Dell Canada announced last month its entrance into the Canadian printer and cartridge business, pitting the company against such rivals as Hewlett-Packard Co.

“The printer market is an opportunity in Canada,” said John Tyler, Toronto-based product manager in the software and peripheral marketing department at Dell. He added that the $2 billion market for imaging in Canada was incentive enough for Dell to delve into the printer industry.

In November last year, Dell entered into a partnership with Lexmark International Inc., as part of a strategy to diversify its offerings beyond PCs. Now Dell offers four printers that target all segments from consumer and education to small office/home office (SOHO) and large enterprise users.

The first offering is the A940, a colour inkjet printer combined with a scanner and copier with fax software for $225. The product features up to 4800×1200 dots-per-inch print resolution and up to 600×2400 dpi resolution when scanning, and prints black text at speeds of up to 17 pages per minute (ppm) and colour up to 12ppm.

The three other standalone printers are laser models. The P1500 is designed for both professionals and consumers and will cost $459, with speeds of up to 19ppm. Dell is also selling two workgroup-level printers that come in both networked and non-networked versions. The S2500 costs $799 while the S2500n for networks costs $1,329. Both have speeds of up to 22ppm.

Dell said that unique warranties and a toner management system will help ensure that customers never face an empty cartridge in their printers. The system proactively reminds customers – via an optional print dialogue box that pops up on the screen – when ink levels are depleting.

With a one-year warranty on ink and a lifetime warranty on cartridges, Tyler said that Dell is breaking new ground because of the end-to-end service package it offers. Part of that service includes an advance exchange warranty, to reduce the amount of downtime for a customer, by replacing a unit before a customers sends a defective unit in for repair.

Dell is also offering printer users a choice between standard cartridges or cartridges that come with a use-and-return policy, where a user is required to ship the cartridge back to Dell for an ink refill.

The cartridges range in price from $45 for black ink and $125 for a 3,000-page yield on use and return toner cartridges.

While Tyler says that service and support will distinguish Dell from its competitors, one industry analyst says the fact that Dell only offers a direct distribution channel to sell both printers and cartridges is the main reason why the company will have only moderate success selling printers.

Bill Fournier, senior market analyst, printers with Evans Research in Toronto, said the printer market is not like the PC market.

“You don’t make money on the printers, you make money on the ink,” he said. “Dell might have some initial success with product buying direct,” but he predicts that larger businesses, with operations and procurements, would be more likely to place orders online, on the telephone or through an account representative – the three ways vendors can buy from Dell.

On the other hand, the direct distribution channel is not conducive to small businesses, who don’t want to place orders to buy supplies but prefer to run down to the corner store, Fournier said.

The analyst added that Dell would be lucky to get three to four per cent market share of the printer/cartridge industry. Right now he estimates that HP has about 45 per cent of the inkjet market and around 65 per cent of the laser market.

“There’s not a lot of room for a lot of players,” Fournier said. “It’s almost all HP.”

That being said, the other main leaders in the ink cartridge/printer industry – Epsom, Lexmark and Canon – also have a firm hold on their share of the market.

“Dell won’t make much of a dent in the market because, by and large, the vast majority of cartridges are bought at dealers or retailers. It’s one of those things [customers] don’t want to buy direct unless [they] are buying large supplies,” Fournier said.

Similar to the Lexmark/IBM printers and cartridges, Dell printers are key-coded so that other manufactures’ cartridges will not work with Dell printers. Fournier said it hasn’t proven successful for IBM and that it wouldn’t likely be fruitful for Dell either.

“I think [Dell] should just go back to selling PCs,” Fournier said.