Posted on 02/06/2007 9:45:30 AM PST by Ernest_at_the_Beach
NEW YORK (Reuters) - Eastman Kodak Co. (NYSE:EK - news) introduced a line of desktop printers on Tuesday that use low-cost replacement ink cartridges, entering a market dominated by Hewlett-Packard Co. (NYSE:HPQ - news)
For the camera and photography company, the long-awaited launch of inkjet printing products kicks off a year in which it hopes to end the tough and expensive three-year transformation that has seen Kodak shed tens of thousands of workers.
Kodak will start sales in March of 3 EasyShare All-in-One printers, ranging from $150 to $300, which will print, scan and copy document and photos. Black replacement ink cartridges will sell for about $10, and color cartridges for about $15, about 50 percent less than its rivals, Kodak said, adding that it will profit on sales of both printers and ink.
Kodak said this strategy is meant to disrupt the market dominated by HP, Canon Inc. (7751.T) and Lexmark (NYSE:LXK - news), where inexpensive printers are sold at a loss, and profits are earned over the long term in sales of replacement ink cartridges.
In that model, consumers purchasing ink unknowingly also buy expensive brand-specific technology that is built into each cartridge, Kodak says.
Each Kodak ink cartridge prints more pages than a comparably priced rival cartridge, the company says.
"You are throwing that (technology) away and buying a new one every time you buy one of their cartridges, which is pretty expensive stuff," said Cheryl Pohlman, a marketing director at Kodak. "With our system we have put that print head right into the printer... so all you have to buy is ink."
She notes that the products close a loop, of sorts, for Kodak, such that customers can now use Kodak services to print in any of the three most common ways: online, at one-stop kiosks at retail stores, or at home.
"What we want to do is give people who want to print at home a choice," Pohlman said in interview. "We believe that this is a profitable business model for Kodak and that for a consumer it is freeing the way they can print at home."
INVESTORS MEETING THIS WEEK
Citigroup analyst Matthew Troy said the news could in the near term benefit Kodak's shares, which have vacillated between $20 and $30 for the better part of two years. Kodak rose about 10 cents in early trade on Tuesday to $26.36 on the
New York Stock Exchange. Lexmark fell 1.7 percent and HP fell 0.8 percent.
"While official launch will not be financially material for Kodak until 2008 at the earliest, expect shares to be active on (the) perceptual positive," Troy said in a client note.
The product unveiling comes just two days before Kodak meets in New York with investors who are certain to ask tough questions about whether its shift away from traditional film -- a declining market -- to digital products and services will soon pay off.
There are positive signs: last week Kodak reported a fourth-quarter profit, versus a loss in the previous year. Still, much of that profit was driven by royalties from licensing patents and technology, and overshadowed a 25 percent decline in digital camera and related accessories.
Analysts, who had been told since late 2003 to look for an inkjet strategy from the Rochester, New York-based company, are skeptical about how Kodak will be able to compete with companies that have millions of printers sitting alongside personal computers owned by families and small businesses.
"We remain concerned that the upfront costs of establishing an installed base will be high, and that the mature and competitive nature of consumer inkjet requires considerable research and development and (operating cost) commitments," said analyst Shannon Cross of Cross Research, in a client note published in anticipation of the inkjet launch.
The printers are set to sell at Best Buy stores exclusively at first, and should be more widely available by the winter holiday season, Kodak said.
Ink is so expensive that last time I ran out, I went and bought a new printer, it was cheaper.
They've started selling printers with "starter" cartridges holding much less than a refill.
Don't get me started on HP anything.
Got to wonder why they don't just give you a printer/copier for free and charge for toner/ink cartidges.
That sounds like a lexmark thing as well. They have two types of cartridges, one cheaper but with less ink. Still, at 16 bucks, the lexmark printer I got was less than the cost of the printer.
My expensive printer is laid up because it's USB port went bad. I haven't been able to convince HP that I am competent to replace it yet. It's frustrating, I hate to abandon a good printer that cost me a lot of money, but give me 6 more months and the newer printers will be so much cheaper it won't matter.
I'm torn. There are two types of ink cartridge at play here. One, like this new Kodak one apparently will be, contains only the ink, and the actual printing "head" is internal to the printer. That type of ink cartridge is much cheaper because it's just ink in a bottle. The other type, as with all of the HP's I've ever seen, have the printing "head" as a part of the ink cartridge. It's much more expensive because you're replacing the "head" every time you replace the ink.
Each type has its advantages and drawbacks. I once had a Brother printer that I loved. The print head went bad and the printer had to be thrown out. If it got a new head every time I replaced the ink I could have kept it. But then of course the extra money I would have spent on ink over the years would have cost about the same as the new printer I had to purchase.
I just know that the HP I have now is a piece of crap, though it has been working for about 7 years now (and has been a piece of crap all of that time). :)
Refill kits these days are cheap, quick, simple, clean, and did I say cheap.
I'm on my 4th refill of a HP black cartridge, and it looks like I wil have to buy a new one. I have simply worn out this one.
My $35 HP printer has paid for its self over and over.... did I say cheap? It is the backbone of my ebay sales.
...cheap Bob
Have you gone to the HP web site?
They have step by step maintenance/repair instructions for most of their printers. With color pictures for us dummies.
HP cartdridges at Staples for my HP printer are $19.99 each for black and color.
I don't buy mine at Staples. I buy mine online for the knockoff carts.
$5.95 each plus $4.00 for shipping. They work just as good. Problem solved.
"My Momma told me...you'd better shop around."
Newer HP cartridges have a computer chip that tracks usage to prevent it from being refilled.
I am impressed with the way Kodak has adapted to the photography industry's move to digital.
I'll tell you how. The same way that Apple has stagnated at around 5% in their computer business, with proprietary "what the market can bear" philosophy of catering to metrosexuals and homosexuals.
I don't enjoy paying for HP's stranglehold on cartidges designed and manufactured to limit the amount of ink delivered in their otherwise excellent printers.
I have four HP printers, but would replace them all over the next three months if Kodak offered a comparable printer with ink at half the current HP cost.
My printer and scanner died about the same time, and this sounds like something I will most definately be interested in.
I loathe HP.
Sounds great, if it works. I suspect that the cartridges will be very difficult to refill, however, and that will take a lot of the fun out of things.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.