Despite Declines, OEMs Hunt for Opportunities In Lower-Market Tiers During 2014

by Charles Brewer, Actionable Intelligence

While some higher-tier market segments have snapped back to life since the recession, the low end of the market has never fully recovered, and it’s doubtful it ever will. The reasons why are well documented and they’re hardly new: Wireless technology has driven down hardware shipments by putting an end to the requirement that each home computer be tethered to its own printing device. Other new technologies like smartphones and tablets have helped eliminate — or at least greatly reduce — the need to print many documents, which has lowered cartridge consumption.

Despite the ongoing and significant declines in the SOHO market, hardware manufacturers remain dedicated to the space. They demonstrated their dedication throughout 2014 with new product introductions. Regardless if the device was based on inkjet or electrophotographic technology, a flock of new lower-end machines hit the market last year from a variety of vendors. SOHO is dead! Long live SOHO!

Inkjet’s back! Well, sorta

Most vendors reported in 2014 that inkjet unit shipments continued to decline. Some are beginning to wonder if the U.S. market for SOHO inkjet units will ever plateau. Nevertheless, a lot of new lower-tier inkjet machines were unveiled in 2014, although you might have missed them because business-class inkjets got all the attention. Actionable Intelligence is about to release its first report on U.S. inkjet markets, and while we analyze all the latest business class inkjets, the report is chock-full of inkjet devices that sell for under $200. Make no mistake, friends: Brother, Canon, Epson, and Hewlett-Packard are dedicated to the consumer inkjet market. They continued to roll out inkjet hardware for under $150 and some devices are well below that price.

Canon started 2014 by releasing a slew of new inkjet hardware at the Consumer Electronics Show (CES) in January in Las Vegas. The new machines included a couple of upgraded Super-B (13 x 19 inch) printers, the PIXMA iX6820 and iP8720, along with the SELPHY CP910 dye-sublimation compact photo printer. In addition to the higher-end devices, the firm replaced the PIXMA MX452 and MX522 all-in-ones with the new PIXMA MX472 and MX532 wireless office all-in-ones, which were priced at $99.99 and $149.99, respectively. The new SOHO machines feature PIXMA Printing Solutions (PPS), an application that allows users to print photos and documents via cloud technology using an iOS or Android device.

Canon also upgraded its PIXMA MG lineup of photo-oriented inkjet all-in-ones in August with three new units.  The PIXMA MG5620, the PIXMA MG6620, and the PIXMA MG7520 replaced the PIXMA MG5520, MG6420, and MG7120. The improvements to the latest PIXMA MG units were basically mobile/cloud printing enhancements and the printing technology did not really change. Perhaps the biggest improvement in the new machines was their lower price tags. While the new PIXMA MG7520 features the same $199 price point as the previous MG7120, the new MG5620 and MG6620 have price tags of just $99 and $149, compared to their predecessors, the MG5520 and MG6420, priced at $149 and $179, respectively. Who says that price compression is dead? It’s just like the old days.

In June, Epson introduced a total of 11 new machines in the WorkForce WF-3600 series, the WorkForce WF-7000 series, the WorkForce Pro WF-4600 series, and the WorkForce Pro WF-5000 series. The machines were the first desktop inkjets to employ Epson’s PrecisionCore print heads, which debuted in 2013 in a couple of the OEM’s digital label presses. The heads are fabricated using MEMS (microelectromechanical systems) chip-production technology and have a nozzle density of 600 nozzles per inch. PrecisionCore heads can fire 50,000 times per second and those deployed in the new desktop inkjet devices jet three droplet sizes down to a size of 2.8 picoliters. Most of Epson’s new machines came with introductory price tags of between $200 and $400, proving the firm is looking to better penetrate the upper echelons of the space. It has not abandoned the sub-$200 segment, however. The new WorkForce WF-3600 series includes the WF-3620 and WorkForce WF-3640, which were introduced at $169.99 and $199.99, respectively.

Brother was quiet about its inkjet machines for the first half of 2014. In July, however, it announced additions to the Business Smart line of inkjet all-in-ones: the Business Smart MFC-J4320DW, MFC-J4420DW, and MFC-J4620DW. Then, in August, Brother released its new Business Smart Plus line of inkjet all-in-ones, including the Business Smart Plus MFC-J5520DW, MFC-J5620DW, and MFC-J5720DW. The new machines are based on Brother’s Landscape Print Technology, which uses a permanent print head that images across the page from top to bottom, rather than from side to side. With prices ranging from $199.99 to $249.99, the three units in the Business Smart Plus line are a little more expensive than the machines in the Business Smart family, which cost between $149.99 and $179.99. Machines in the Business Smart Plus line have enhanced features such as a beefier duty cycle and more media handling options, and the line can accommodate higher-yield ink tanks.

Going upmarket

In an attempt to market higher-end inkjets with better margins, OEMs continue to release more business-class devices. Right now, HP is the king of the business inkjet hill thanks to its Officejet Pro X family of high-speed inkjet printers and MFPs. In 2014, the firm took the technology into the enterprise space with the release of the Officejet Enterprise Color X555 series and Officejet Enterprise Color MFP X585 series. These families of A4 inkjet printers and MFPs are designed for larger businesses and employ HP’s PageWide technology. Although not identical, the print engines in the enterprise units are similar to those found under the hood of the desktop Officejet Pro X machines. Sporting price tags that range from $749 for the base print-only device to $2,799 for the fully-loaded MFP, the Officejet Enterprise Color is anything but “entry level.”

Canon and Epson also released some higher-end inkjets last year. Canon positions its new MAXIFY printers and MFPs as SOHO inkjet machines with a focus on office users. The machines came out in September and include the MAXIFY iB4020 single-function printer and four multifunction machines: the MAXIFY MB2020, MB2320, MB5020, and MB5320. According to a Canon spokesperson, “The MAXIFY brand name is meant to signify what these printers can help small and home business users accomplish in their day-to-day work environment — maximized productivity, efficiency, and reliability in the workspace.” While Canon’s previous inkjets typically used a pigmented black ink and dye-based inks for the other three to five colors, the new MAXIFY machines use a new four-color (CMYK) pigmented ink set.  The MAXIFY MB2020 and MB2320 occupy the low end of the line and are priced at $179.99 and $199.99, respectively. The $299.99 MB5020 and $399.99 MB5320 sit at the top of the line, while the IB4020 printer carries a $149.99 price tag. Interestingly, Canon has released new ink tanks for the lower end of the line that gives them a higher per-page cost than the higher end units.

I noted before that Epson released a bevy of new SOHO inkjet machines during the summer. In December 2014, the firm announced it would release in January 2015 two new A3 inkjets exclusively for its dealer channel. The WF-8090 is a single-function printer, while the WF-8590 is an MFP with print, copy, scan, and fax capability. WF-8000 units will be marketed through the dealers in Epson’s ImageWay Partner Program and through Epson’s authorized commercial channel resellers. The machines ship managed-print ready and offer a feature set office users will appreciate including a 75,000-page per month maximum duty cycle, and certain security features like a PIN-number certification job release and user-access controls. Epson will deploy a new series of ink tanks that contain Epson’s latest ink line, which is marketed under the new DURABrite Pro brand. The new Epson 748 cartridge series includes three sets of CMYK tanks: standard, XL, and XXL. Epson doesn’t quote pricing for the hardware and consumables because the channel will set it.

Lot Of low-end lasers (and LEDs)

One of the more interesting market trends since the recession has been the churn of companies rushing out of and into the low end of the electrophotographic market. Lexmark and Konica Minolta, for example, have gotten out of the lower end of the market, while Canon and Ricoh have demonstrated a keen interest in the space. Brother has opted to maintain and expand its position at the low end of the market  and has taken a significant amount of share. HP and Samsung also remain in the low end of the laser market but the number of entry-level offerings from each firm has dropped.

I’ve been following Ricoh over the past couple years and have watched as it continued to expand its range of low-end products. There was a time when the firm had a very limited number of A4 machines and nothing for the SOHO market. That has all changed. The firm currently offers three monochrome single-function printers that are all priced within a few dollars of each other. Ricoh has been investing in more effectively sub-segmenting the low end of the market to attract the growing number of remote workers that operate out of small offices and their home offices. The 16-ppm SP 112 was released in May of 2014 with a list price of $119, followed by the SP213w,  launched in October with a $145 MSRP and a print speed of 23 ppm. These two lower-end machines join Ricoh’s higher-end 30-ppm 311Nw, which hit the market in September 2013 for $167.

As the supplier of the technology in HP’s LaserJet line, Canon has been in the A4 space for decades. Like Ricoh, Canon finely sub-segmented the low end of the monochrome market in 2014. It started the year with the release of a pair of low-end units with price points separated by only $10. The imageCLASS LBP6030w was released for only $159 and the imageCLASS LBP6200w hit the market at $169. The lower-priced unit had a 19-ppm print speed while its more expensive cousin’s top speed was 26 ppm. In September, Canon was back with another $169, 26-ppm, A4 monochrome printer, the imageCLASS LBP6230, which is the first imageCLASS printer with both wireless connectivity and automatic duplexing.  I suspect that the price of the 6200w will come down. Regardless, Canon is looking for business at the lowest tiers of the mono market with three new printers that sell for under $170.

Along with the imageCLASS LBP6230, Canon also released various entry-level monochrome MFPs. Although the MFPs are not as close in price as the printers, the pricing bands are fairly compressed. The imageCLASS MF212w and the MF216n are 24-ppm units, which are priced at $169 and $199, respectively.  The $248 MF227dw and $299 MF229dw are 28-ppm machines. So, during 2014, Canon fleshed out the lower end of its monochrome portfolio with four models priced under $300.

Despite claims from HP president and CEO Meg Whitman that the firm is focused on releasing more “high value” LaserJet MFPs, the firm unveiled a range of new low-end machines in September. All the machines are based on the same 26-ppm monochrome print engine. The new LaserJet Pro M201 line includes the M201n base unit, which comes with a USB 2.0 interface and Ethernet connectivity. The M201dw is identical to the n model, but adds standard automatic duplexing and a wireless interface. The new M225 and M226 MFP lines appear to be identical but use different supplies, and presumably, they will be marketed in separate regions worldwide. The M225dn and M226dn ship with standard Ethernet connectivity, while the M225dw and M226dw add a WiFi interface. All four MFP units are Mopria-certified.

In August, Brother refreshed the low end of its monochrome printer and MFP offerings. The new lineup features the HL-L2300 series of printers, including the HL-L2320D, HL-L2340DW, HL-L2360DW, and HL-L2380DW. Brother’s new MFC-L2700 family of MFPs includes the MFC-L2700DW, MFC-L2720DW, and MFC-L2740DW. The HL-L2320D was released at $119, while the HL-L2360DW and the HL-L2380DW cost $149 and $199, respectively. In addition, Brother quietly added the $139 HL-L2340DW printer at some point in the later part of 2014, which makes Brother currently the OEM with the largest selection of low-end monochrome machines in the United States in my estimation.

Conspicuous absences

I was struck by a couple of companies that opted out of releasing new low-end mono machines last year. Perhaps the most conspicuous absence was Samsung. Ten years ago, the firm aggressively attacked the low end of the market and took share from a number of vendors. Prior to the recession, Samsung boasted that it was the No. 1 MFP provider in the low tiers, a position it looks like Brother is now actively pursuing. Another firm that was well known for grabbing share at the low end of the market was Lexmark, which also didn’t release any low-end hardware in 2014. Both Lexmark and Samsung are now focused upmarket and each firm released new higher-end hardware last year including A3 and A4 devices. I should note, however, that while neither Lexmark nor Samsung released a low-end unit in the past year or so, they continue to market low-end machines that are growing long in the tooth.

I was also surprised to witness a dearth of low-end color devices in 2014. Gone, it seems, are the days of the sub-$250 color laser printer. In the U.S., Canon released the lowest-priced color laser printer that I am aware of last year — the $279 Color imageCLASS LPB7110Cw. While this machine may have the lowest price in its class, it was also the most expensive to operate. A black-and-white page costs 3.6 cents to print using the LPB7110Cw and it costs a whopping 20.6 cents to print a color page. The Brother HL-8250CDN hit the market last May for $349.99 and it prints black-and-white and color jobs for 2.7 cents and 13.4 cents, respectively. Ricoh released the SP C250DN last April. With an MSRP of $360 and estimated black and color per-page costs of 2.8 cents and 16.5 cents, Ricoh’s lowest priced color device in 2014 cost a little more than the comparable Brother machine in terms of both acquisition and operation.

There are several reasons why OEMs may not have rolled out new low-end color machines last year. It could well be that the technology is just fine as it is and releasing new products would not necessarily fuel much growth in sales. Or it could be that hardware manufacturers just can’t make money with inexpensive color hardware so they are backing off the space.  It is so expensive to operate low-end color lasers with OEM cartridges, it could be that the low price of third-party supplies is enough to woo end users away. Let’s face it, image quality is not a huge factor for consumers who purchase low-end machines. They’re buying on cost and will most likely be swayed to try third-party supplies once they get over the sticker shock associated with an OEM’s low-end color cartridge set.

One other factor to consider: office inkjet machines. Could it be that folks looking to accouter their small offices are favoring business-class units over color lasers? As I noted earlier, business class machines have certainly come of age and most have the feature sets office users demand. Perhaps the “value prop” of inkjet has reached a level that can overcome the laser basis we’ve heard so much about in the past — at least at the low end of the color market. Only time will tell.

Of course, we’ll be watching all of the various market segments at Actionable Intelligence this year. Will vendors continue to shun the low-end of the color market? Are business inkjets finally gaining share? Will vendors further sub-segment the lower tiers of the mono market? We’ll let you know!

Charles Brewer is the president of market research firm Actionable Intelligence. Brewer has nearly 20 years covering technology and business and has spoken at numerous industry events around the world.

This article originally appeared in the January 2015 issue of The Imaging Channel.