Posted on 08/03/2003 10:40:45 AM PDT by Brian S
Refilled Inkjet Cartridges Going Cheap
Sun August 3, 2003 08:26 AM ET By Ellis Mnyandu and Steve James
NEW YORK (Reuters) - There's gold in those empty inkjet printer cartridges.
A thriving new economy has grown from selling refilled or remanufactured cartridges for up to 80 percent less than manufacturers like Lexmark International LXK.N , Epson 6724.T , Canon 7751.T and Hewlett-Packard HPQ.N charge.
And, the big office-supply superstores, such as Staples SPLS.O and Office Depot ODP.N , have got into the act, collecting empties and shipping them to third parties for refilling and selling in their stores under their own labels.
The cash value of empty cartridges -- a used Lexmark can fetch up to $7 -- has spawned a vast recycling movement and the Internet is clogged with ads for companies offering refill kits or remanufactured cartridges for computer printing.
A Web site (http:/www.empties.com) for buyers and sellers lists prices for the estimated one million empty ink cartridges thrown out daily around the world, mostly by individuals with home computers. Most cartridges can be refilled at least two or three times, or even as many as 10 times, according to experts.
In contrast, laser printers that use toner are used more by companies, which return empties directly to the manufacturers.
It may not be an ink war yet, but the big manufacturers have already felt small-arms fire from refill-merchants, who can operate out of their own kitchens.
Such is the value of empties that tales are told of armored vehicles delivering cartridges in Latin America. And, Office Depot has acknowledged that shop-lifting of ink cartridges ate into its second-quarter profits.
As a result, the big makers are trying to hit back with technology like "killer-chips" that can disable equipment, to keep consumers buying their higher-priced brand-name cartridges.
'TAKING MARKET SHARE'
"They absolutely hate us. We are taking market share from them," Mark Ansier, vice president of Toner Plus, an Austin, Texas-based remanufacturer, said of the big makers.
"They (cartridges) are a very valuable commodity, that's why they are collected in all parts of the world and resold. In some parts of the world they are being stolen."
"Buying and selling cartridges is a $100 million business at the moment," said Ian Marzonie, president of Anzen Corp., which remanufactures and refills 100,000 cartridges a month at its 40,000-square-foot facility in Denver.
For example, his company, which operates the InkjetUSA.com Web site, offers the Hewlett-Packard 78 cartridge online for $20. The same name-brand item in a store retails for $53.
Lexmark, which warned last week it would miss third-quarter earnings estimates because of slowing demand for ink cartridges, downplayed the threat.
"The proportion of total sales of supplies that is taken by these refills is a real minority," Chief Financial Officer Gary Morin recently told Reuters. "In many cases, it is actually a declining phenomenon. It has not been a successful foray."
Not so, said Jim Forrest, of Lyra Research and managing editor of the Hard Copy Supplies Journal, a publication for the digital printing and imaging industry. He said refillers now control 15 percent of the market, and that is rising.
According to Lyra's research, the total value of the inkjet business, including after-market and refill kits, is $21 billion. Forrest said 794 million ink cartridges were shipped worldwide last year, working out at 2.2 million per day, including refilled and "compatible" cartridges.
'BOOMING MARKET FOR EMPTIES'
"There is a booming market for empties, they are worth money, up to $7 or $8 each," he said. "Companies are prepared to pay lots of money for large quantities of clean empties."
Staples plans to donate $1 for every cartridge recycled in its stores, with a goal to raise $5 million for public education. It said 80 percent of inkjet cartridges are thrown away.
"The customer is looking for value and we feel we offer a wider selection of remanufactured ink cartridges," said David D'Angelo, Staples vice president for global sourcing.
He said remanufactured cartridges sold at 10 to 20 percent below the price of those made by branded-product makers. "We hope to gain more market share. This is a very competitive business."
Forrest said the problem now is getting empties, because inkjet printers are used mainly by home users who get through maybe one, two or three a year and throw them in the trash.
Of the major inkjet printer makers, Lexmark has the lowest rate of remanufacture -- 6.6 percent last year but rising to 7.9 percent in 2003, he said. Hewlett-Packard's third-party remanufacture rate is expected to be 13.5 percent this year.
"Lexmark's cartridges are the most difficult to fill," said Forrest, "The inkjet design is extremely difficult, if not impossible, to clone because it includes so many patents and integrates the print-head to the ink tank."
"We're in a dogfight with the OEMs (original equipment manufacturers)," said Ansier.
It is an "absolute fallacy" that consumers might lose a warranty for using anything but an authorized cartridge, he added. "You can use any gas you want in a car."
I do have a Lexmark inkjet and I vow to never again purchase any of their products.
The guy refunded my money for the cartridge, but it's just not worth the hassle.
I have a Lexmark and have refilled my cartriges more than once.
One of the tricks is to refill before they are completely empty. That prevents a bubble from getting to the print head and causing problems.
After refilling, tell the printer it is a new cartrige. It accepts it as a new cartrige and everything works just fine.
I am wary of refilled cartriges because of quality concerns and from recent articles in several computer magazines there apparently is a growing counterfeit market for ink cartriges--so even paying the full price may not be the best alternative. Aren't the patents on some of these cartrige technologies about up so cheaper 3rd party knock offs can come into the market?
My lexmark X83 doesn't work well on refills. I've tried refilling them myself and buying refills, but neither works for long and the factory cartridges are actually cheaper to use and less frustrating in the long run (a refill always seems to know when my printing job is critically import and and that it's time to for it to fail).
Manufacturers used to give away the razor because they made their money on the blades. If this keeps up, expect the price of printers to skyrocket.
Then listen to the complaints.
I've never been able to successfully refill an ink cartridge. I had one open up inside the printer and spray ink all over my computer desk, and the other sprayed ink all over a section of carpet as I was refilling it.
Stupidest thing I've ever heard.
Yes, they tried the business model of the old "give the razor, charge for the blades"... Only problem is, we aren't talking about razors and blades, we are talking about printers and ink, and the prices are immensely different. Paying five dollars for a razor, then paying ten for a pack of five blades is different than paying thirty dollars for a printer, only to have to pay $90 for ink refills when the "introductory" cartridges run out a week or two later. If this had been the case with razors, then it would have only taken about a month before some enterprising person started making blades that fit those razors for half the price, and like the re-manufacturers and refill makers of today, he would have made a mint. As it stands, it took a year or two in the razor industry before this happened.
You are correct about the price of printers going up if the printer manufacturers decide to give up on that business model. You are also correct about that causing folks to complain. Not only will they complain, they will cease buying printers, and that has the possibility of putting many of the printer manufacturers in the poor house. This is the quandary that the printer companies face. The only way many of them will stay in business is if they get the "mafia" protection they are seeking from the government using force of arms to close out the re-manufacturers and refill makers thus protecting the poor business decisions of HP, Lexmark, Canon and others.
True. I only use the color cartridge in my HP once every 6 months or so, and have needed to replace two due to them drying up.
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