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Can H-P Keep Printing Money With Ink Cartridges?

Computers | Jun 16, 05

Hewlett-Packard’s decision to separate its computer and printer division is the latest sign of the firm’s unwinding of the strategies of former CEO Carly Fiorina, and has led to much speculation as to the fate of the enterprise created by H-P’s acquisition of Compaq. Yet if the move highlights a failed computer strategy, it also makes clear that the crown jewels of H-P's empire are to be found in its printer business.

Now what’s interesting about this fact is that while the price of printers has fallen dramatically in recent years, the price of ink has actually gone up. According to a 6/14/2005 Wall Street Journal article, the price of ink per milliliter in name-brand cartridges has risen about 1% per year. As can be seen from the graph below, even the lowest vendor price on PriceSCAN for the most popular H-P ink cartridge (the HP C6656AN #56 Blank InkJet Cartridge) has barely declined during a period of nearly three years.

Time Period: 8/19/2002 through 6/13/2005
Each tick mark represents one week
Red = High Price, Blue = Average Price, Green = Low Price
138441.jpg138441m.jpg
It therefore not surprising that the key to H-P’s printer profits (constituting over 66% of the firm’s earnings) is not in the machines themselves bit in the sale of ink cartridges. However, therein lies a threat to the firm. Recently, many independent providers of cartridges and cartridge refills have emerged, offering ink at steep discounts to the prices charged by H-P, Lexmark and others. These include retail chains that specifically cater to refill needs. In the afore-mentioned Journal piece, the paper found these ink products generally OK, but not quite up to the quality level of H-P. There’s also a point the Journal did not mention, which is that the use of an ink not made by the printer manufacturer generally voids that company’s warranty on the printer.

Yet as printer prices fall, and thus the potential risk of loss due to a voided warranty is diminished, one wonders what will happen to the ink profits of H-P and others, especially if third party ink quality improves just a bit more. I’d like to invite readers to post any experiences they may have had with replacement cartridges or refills – it would be interesting to hear what PriceSCAN users think of these products.

Posted by jeffrey.trester (Permalink)

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Comments

for HP printer...Color refills kits are a complete waste of money, imho. I never had good results with them. However, the black ink ones are easier to do and has great results. The reason is that color ink cartridge has that sponge inside that is hard to refill while the black ink has liquid ink.

Posted by: Iru Teng at June 18, 2005 2:01 PM

I have a Brother MCF5100 C printer and it is rigged to not accept home refills with kits you can buy. The printer simply will not recognize them as full and usable. Consequently, I would urge people to avoid buying this machine. It has enough other problems as well.

Posted by: Gloria Root at June 20, 2005 1:49 PM

Interesting...if color refills aren't ready for primetime and some printers handle all refills poorly, one wonders whether refill capabilities will begin to drive consumer printer selection.

Posted by: Jeffrey Trester at June 23, 2005 11:29 AM

I have used generic black and color cartridges in my HP Officejet v40xi until recently installing it on a new computer. Now it keeps giving an annoying error message to "Remove and check color cartridge" even though it will print just fine. If only there was a way to stop that pop-up!

Posted by: Dale Engbrecht at July 9, 2005 12:30 PM

In the past, where printing was limited to 300x300, refills where easy. Now printers give us resolutions that need advanced inks and heads. If you take a look at a spent cartridge you will see that printing has taken a toll on the head itself. How many refills can it take before it misprints and ruins a 2$ print? A black refilled cartridge that I bought (56Hp) lasted only until half full, then it was done! I haven't bought any refurbished ones since then. How does EPSON sell printers with an irreplaceable head that can last for a long time, I don't know!

Posted by: Georgios at July 10, 2005 3:05 AM

I've done alot of aftermarket refills and I'll break it down for you all..

Canon and Brother = great refill (with the 21/24 as the exception) and great OEM prices.

Epson = good to refill with the right tools.

Lexmark = simple design makes refilling pretty easy.. but newer cartridges are built to fail sooner.

HP = annoying.. and getting worse.



Generalization or categorization, call it what you will. I'm starting to see more convergence though. HP seems to be trading tech with Canon. Lexmark.. well, they've always had their price. Epson has more inks than a leopard has spots.

For the last post.. Epson can use an irreplacable printhead, because they use pizoelectric technology instead of thermal tech. It means fewer burnouts and longer life. In most cases it also means larger drop size, and more ink used for excessive cleaning cycles. I'm not saying it's better or worse, but that's why they have the fixed printhead.

..and sidenote: I've refilled the LC21 cartridges many times without a problem. You just need to find the right refill instructions.

-len

Posted by: gkumba at September 6, 2005 4:00 PM

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