Apparently tired of getting no respect when it comes to the bashing of printer manufacturers over the cost of ink, one of the executives at H-P has taken to blogging about why their ink costs so much to produce.
Tired of hearing customers whine that printer ink is too expensive–and facing competition from ink-cartridge refillers–executives at Hewlett-Packard’s printing division would like to buff up the print giant’s reputation with consumers. So the company recently sent Thom Brown, who specializes in “competitive media intelligence,” on a media tour with a presentation called “Why Does Ink Cost So Much?”
Opening a bag of props including a trio of shot glasses, squares of foam and some disassembled print heads, Mr. Brown earlier this week explained the complex workings of H-P print heads, and the billions of dollars the company has spent over the years developing them.
He talked about the challenges in shooting drops of ink at moving pages of paper, and the perils of refilling ink cartridges rather than buying new ones from H-P. Refilling involves poking a hole in an H-P cartridge and filling it with a god-knows-what mixture of non-H-P ink–a process that can lead to smudging and other poor performance, Mr. Brown said. H-P, he added, has heard from plenty of customers who tried refilling. “A lot of them don’t have good experiences,” he said.
In addition to research-and-development, the expense of ink cartridges comes from H-P’s high-tech testing of cartridges that break. The company uses electron microscopes, Mr. Brown said, to figure out what made a printhead malfunction. H-P has started what it calls an “Ink Amnesty Program” to bring back customers who have left H-P for refillers. In exchange for sharing your bad-ink story, the program will give consumers a 20% discount coupon for H-P ink.
Of course it’s not just R&D that makes H-P’s ink costs so much. With more than 40% of the worldwide printer market last year, according to research firm IDC, H-P doesn’t face serious competitive pressure that would force it to drop prices.
Mr. Brown said his area of knowledge is printing technology, not profits.
But in the company’s last quarterly earnings report, H-P’s printing division booked more than $6 billion in sales and more than $1 billion in operating profit. Its operating profit margin was 17%, but Shaw Wu, an analyst with Kaufman Brothers, said that includes sales of low-profit printers. On ink alone, he estimates that H-P’s margin is somewhere between 20% and 30%.
Pretty good profit margin, and we all know that margin is not being bolstered by the hardware. (If for any reason you don’t know that, you should.)
The problems I have with H-P are more along the lines of what other manufacturers do with their inks, and how they price them. In my work, I have found that H-P is by far the most expensive ink out there… but…I use it because I don’t want my printer ruined by a refill job, and I have witnessed printers being ruined by poor quality refills.
If H-P wants to point things out, it should be the overall print product, as I believe that their printers are the best, though it has nothing to do with the print heads or ink. That is not to say that they have no expertise in the area, just that other companies do equally well at the actual printing process.
Where H-P printers excel is in the paper handling. Their printers don’t jam. Other brands of printers I have used do – frequently. H-P printers don’t have problems with the path of the paper through the printer. The paper does not cock to the left or right because the manufacturer was too cheap to put in a guide that has a drive roller on both sides, as nearly every Lexmark printer does. Canon printers I have used not only jam, they have problems with pulling multiple pieces of paper through, when only one should be. Epson printers have performed admirably for me, but have actually broken far before their brethren in my usage. During the time I was working at Radio Shack, this seemed to be a big problem for many Epson models. I sold many Epson printers with Compaq computers, and quite a few had problems, just the far side of the warranty expiration.
We’ve all heard the stories of how the inkjet printers are actually free, and the ink is what subsidizes the cost. I have found that to be true with other brands, but not H-P. The H-P printers I have owned have outlasted other brands, and perhaps that is why some people complain about the lack of drivers for new operating systems. The usual H-P printer outlasts the lifespan of a Microsoft OS, and the customer is naturally upset as the printer they love cannot be taken forward.
There are other problems with H-P ink costs, such as the fact that there is usually plenty of ink left when the electronic gauges tell you it’s time to change the cartridge, but that is a sin committed by all of the manufacturers. The cartridges hold far too little ink, but again, that is a problem across the board.
Perhaps H-P should rethink the cost of the printer versus the ink costs, and all of the other manufacturers should beef up the quality of their printers, so that the printer does not become that throw away, which erodes the perception of their products and makes the ink seem so expensive by comparison.
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