MARKET ROUND UP/ PRINTERS: Lasers Gain In Strength

However, inkjets maintained their share with sales coming from the home segment,
while DMPs saw a drop. HP continued to dominate the printer market, but had to
resort to price cuts to stave off competition coming strongly from Samsung in
lasers and Epson and Canon in inkjets.

The
last two quarter (OND 02 and JFM 03) was not all that cheerful for printer
vendors. After facing a slump in the first half (AMJ & JAS 02 as per MAIT
report), printer vendors’ hope of a fast recovery did not happen. The last two
quarters remained flat according to feedback from the market.

However, most channel partners were able to maintain their bottomline with
increased focus on value addition. Profits were pretty decent, and that is what
most partners wish to focus on henceforth.

This means that the next two quarters may not see many volume sellings, but
will surely see a rise in value-added selling of high-end printers.

FROM INKJETS TO LASERS

In the last two years market estimates show that there has been a shift in
the buying pattern for all the categories of printers. Laser printers have
reported sold better than inkjets and DMPs.

While inkjet sales remained flat, DMP sales saw drop in 2002-03. Another
category that saw significant growth was MFDs. MFDs sales inceased from 3% to
10%.

On
an average market estimates show inkjet sales at around 33% in 2001-02, which
remained the same in 2002-03. Laser sales increased from 20% to 22%.

Though DMPs still had a stronghold on the market, it dropped from 44% in
2001-02 to 35% in 2002-03.

A look at the box (LASER LOOKING AHEAD) shows that the DMP still holds a
large part of the market, primarily because it is used for applications like
invoice printing, ledger, etc. 

"DMPs are rugged printers with low printing cost per page. Hence, the
average selling price is on the higher side than an inkjet," says V
Krishnan, Marketing Manager, HP India.

On the other hand, inkjets hold a strong presence in the home market because
of its low purchase cost. An entry level inkjet can be made available for just
Rs 2,500.

Says Suresh Govindachari, Business Manager, Epson India, "Inkjet is a
sunrise segment because of its consistent growth.

Market analysts predict that sales of inkjet printers will touch the one
million unit mark in India within three years."

"According to IDC, our share in the inkjet space is above 60%, while it is above 70% in the laser space" V Krishnan, HP India

However, Krishan of HP says "We saw a transition from inkjets to lasers
in the SMB space." Until recently, end-users have been ignoring the fact
that the operating cost of inkjet printers are the highest.

The awareness of this fact has increased in the last one year, which can be
seen from the increase in Laser sales. In the SMB space those who bought inkjets
are now looking at lasers.

"We expect the growth of laser printers to be high. This is also because
the average selling price of the laser printer is coming down. Both these
factors together will drive laser growth in the days ahead," says Krishnan.

And another indicator to the growth of laser is the increasing number of
players offering entry level laser market at lower costs. An entry-level laser
printer, which was priced around Rs 20,000 in beginning of 2001, is currently
available for a price of Rs 12,000. "Moreover, the low running cost and
excellent print quality of laser printers results in a better value
proposition," says Bijoy Nair, GM, Vertex Systems.

Dinesh Kumar, Product Manager-Printers, Samsung too has noted that more and
more inkjet users are adopting lasers for two reasons–decreasing price
difference between the two technologies and lower operating costs.

Dependra Mathur, Chief Marketing Officer (Products and Solutions), WeP
Peripherals points out, "Low-end lasers are growing very fast and will
cannibalize some of the market held by inkjets."

While SOHO sales help inkjets to hold the majority share, lasers will
steadily grow in unit terms, as they are considered as the best option by the
corporate segment.

As far as positioning laser printers in the SOHO segment is concerned, Ajeet
Singh, Director, Arman Marketing says, "Vendors have deliberately
positioned lasers at the high-end targeting corporate and government segments.
Our endeavor is to educate the SOHO segment about the value in buying lasers in
terms of better quality, features and lower cost of ownership."

HP RETAINS LEADERSHIP

The overall printer business in the country is roughly put at around Rs 1000
crore by IDC. And there are about a dozen vendors sharing this pie. However,
only half a dozen of them are actually in the open, fighting for a share.

Despite losing some market-share to competition, HP maintained its numero-uno
position in both inkjet and laser markets.

"According to IDC, our unit sales share in the inkjet space is above
60%, while it is above 70% in the laser space," says Krishnan.
"However, from the value standpoint, HP accounts for a 65% market share in
the inkjet space and 73% in the laser space," he adds.

“Compared to last year there was growth in laser printer sales, but overall growth in sales for 2002-03 was negligible” Sagar Pagar, Format Computers

In the inkjet market, HP faced stiff competition with Canon’s aggressive
marketing and Epson launching new models.

Although Canon came up with a new channel strategy, its total cost of
ownership (TCO) pushed the brand over the edge.

Explains Harish Puri, Director, Computer Empire, "If you look at it from
print quality standpoint, Canon is the best, but it consumes more ink. HP gives
a greater number of prints, so it is cost effective."

Meanwhile, Lexmark International India, with its presence in India for the
last three years, has not been able to make a dent in the printer business.

"We are not focusing at creating a marketshare at the moment. Our first
initative was to regularize supplies for printers, which we have done. Next will
be to have the channels in place and then to bring awareness of our
technological superiority among the channels and end-users," says PG Kamat,
GM, Lexmark International India.

Lexmark India, quoting IDC, claims to have 7% marketshare in the inkjet
market. "We want to capture around 20% of the marketshare in the next one
year," says Kamat. In the over printer market, the company claims a
marketshare of 4% (IDC 2002) at the sixth position in the overall India printer
market.

SAMSUNG’S LASER THREAT

In laser segment, HP faced stiff competition from Samsung. With the latter
aggressively pushing its product through channels and Wipro introducing printers
at very low prices, HP had to resort to cutting down on its pricing too.

To hold on to its leadership position and accelerate volumes, HP India rolled
out strategic initiatives for laser printers. These included a price cut of 20%
on the entry-level models.

For instance, HP introduced LaserJet 1000 and LaserJet 1005 at Rs 16,000 for
business users, individuals in small offices and remote workers who require
fast, economical and dependable printing solutions. The HP LaserJet 1000 is now
priced at Rs 13,000.

"Our objective is to help customers adopt better technology for their
businesses. We are clearly focused on growing in the market by offering
customers greater value-adds," says Nitin Hiranandani, Commercial Country
Category Manager, Imaging & Printing Group (IPG), HP India.

According to him, the company´s decision to lower the product acquisition
costs would enable customers to afford the quality, speed and reliability of an
HP laser printer.

While HP is lowering costs to hold onto its marketshare, Samsung India is
working on displacing HP from its numero uno position and grabbing 45% of the
laser printer market by December 2004, according to Dinesh Kumar of Samsung.

Despite being just two years into the laser printer business, Samsung has
already zoomed to the No 2 slot with its focused campaign on SMEs. Among the
many schemes to be promoted by the company, there is a plan to buy back inkjet
printers from the SOHO segment and promote lasers in its place.

The strategy envisages a focused attempt to capture the SME market by
providing a value proposition for the entry-level laser printer. Traditionally
vendors have positioned the laser printer for the corporates and governments.

During the year, the company plans to have a special emphasis on
multi-functional printers by launching several new products in this category.

AFTER-SALES SUPPORT

Be it any product, support and service is one factor that cannot be ignored
by vendors. Most top printer vendors claim to have the required setup to handle
after sales support. But, channel partners, who ultimately face the customers,
are not very happy when it comes to efficient support and service.

Issues like providing instant replacement to DOA cases are still very weak.
"DOA cases are many in entry level printers.

Vendors should strive to bring DOA cases to nil," says Anees Khalfay of
Radiant Technologies.

Another issue that channels face is that of the providing services. "The
users expects an on-site maintenance on all printers that we well. How is this
possible with wafer-thin margins," asks Satish A Villait of Bitsy Infotech,
Mumbai.

Channels also complain about vendors offering too many models which makes it
difficult for them to educate customers to make the correct buying decision .
"The rates of two entry-level brands vary so much that it becomes difficult
for us to value the two for SIs or end-users. For example the price gap between
two entry level model: HPLJ 1000 at around Rs 12250 and Samsung ML1210 at Rs
11000 are very wide," explains Sagar Pagar of Format Computers.

"Market analysts predict sales of inkjet printers will touch one million unit within three years" Suresh Govindachari, Epson

Meanwhile, RM Eswaran of Printview Technologies, complains, "Entry-level
printers are not up to customer expectations in terms of reliability."
Vendors also need to address are issues related to ensuring supplies and drying
of cartridges.

Problems of the channels and end-users are galore. Vendors claim to be doing
enough to address problems. The speed at which problems are addressed does not
seem to satisfy the channel.

With the cost of entry-level printers going down, the cost of providing
service has become an expensive proposition. In the case of entry-level
printers, most vendors prefer to provide replacement rather than service a
defective piece during the warranty period. But, when it comes to lasers or MFDs,
replacing is not that easy or economically viable.

According to Dinesh, Samsung has an average turnaround time of a day and a
half and offers service at over 120 locations across the country. "We have
over 50 registered Samsung supplies resellers across the country who further
feed the channel to ensure easy availability of toners," he boasts.

Lexmark too is working on spreading awareness with its customer support
initiatives, and has begun free service camps in many cities across the Northern
and Western region. This initiative is a joint effort of Lexmark India and its
national support partner, Accel ICIM.

According to the company, the immediate benefit to Lexmark through these
initiatives will be achieving the much-needed customer confidence in the brand.
"We have something called the LexExpress for the inkjet range which offers
instant replacement delivered at your door step during the warrant period. No
other company provides such a service," says Kamat.

He also states that given the cost of an inkjet, the company prefers to
replace it than repair it. There are 30 LexExpress centers. For the laser range,
Lexmark’s customer support executives to take calls, while 22 centers are run
by Accel ICIM.

More than the printer sale it is the continuous business that is generated
through consumables that is a scoring point for vendors. It is this recurring
business that most players are eyeing every time a printer is sold. No wonder,
vendors are up in arms against refillers and fake consumables dealers, despite
that fact that it accounts for barely 20% to 30% of the total consumables
business.

TRENDS AND FORECAST

The industry expects the market to grow by 5% in revenue terms and 12% to
13% in unit terms this year. In layman terms, this means that the average
selling prices of printers will go down further.

Last year saw vendors bundling printers with PCs as compared to previous
years. This was due to the increasing importance given to the value-for-money
concept in the printer space.

The trend that vendors foresee is that more and more home users will go for
photo printers. Photo printing will grow, but the limiting factors here will be
the cost of the media and cartridges. 

In the corporate space there will be a proliferation of color printing
because the average selling price of color lasers are expected to go down.

The other evident trend that was observed in the market was the rapid
replacement of DMPs by inkjets. DMPs are used mostly for specialized jobs and
niche applications especially in banks, financial sectors and in the Government.

There was a notable shift to smaller printers, multi-paper path printers and
even multi-function devices.

GROWTH IS NEAR

The overall sales of printers in 2002-03 was comparatively better than the
previous year. With the economy showing signs of recovery, and a general
´feel-good´ factor prevailing currently, the market is all set to grow.
"We expect the market to grow by 5% in revenue terms and 12 to 13% in unit
terms," says Krishnan of HP.

As per market estimates inkjets and lasers will drive an overall 15% growth
in 2003, while DMPs may show slight decline.

Going by the growth of MFDs in the last one year, even this category of
printers are expected to grow the fastest.

SUNILA PAUL in Bangalore with inputs
from NELSON JOHNY in Mumbai and MOHIT CHHABRA in New Delhi.