Printer OEMs squeezed by third party rivals

Printer vendors could see more than US$13 billion swiped from their hands in the next 12 months as buyers look to cut costs

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Printer OEMs squeezed by third party rivals Printer OEMs could lose US$13 billion to remanufacturers and counterfeiters in the next year.
By  Andrew Seymour Published  July 30, 2009

Printer vendors could see more than US$13 billion swiped from their hands in the next 12 months as buyers look to cut costs by sourcing remanufactured supplies instead.

That’s the stark warning from research house Gartner, which believes the economic downturn is forcing procurement managers and other supply buyers to look at ways of trimming their consumables expenses.

Ken Weilerstein, research VP at Gartner, says this emerging pattern is a worrying sign for printer makers given the profits they draw from supplies.

“Because printer supplies produce a higher margin than the product itself, this trend is leading to lower profits for printer OEMs,” he said. “In addition, there is potential for damage to the printer OEMs' brand because of poor quality and counterfeits.”

Despite the threat, Gartner claims OEMs are well-placed to take advantage of the challenges facing the remanufacturers, particularly if they can win the marketing battle.

It points out that OEMs hold the advantage of understanding the market, their competitors and buyers' preferences, and urges them to develop campaigns that educate users about the benefits of buying original cartridges, focusing on factors such as yields, reliability and image quality.

“Remanufacturers will continue to make inroads into the print supply aftermarket if an OEM competes purely on cost,” warned Vishal Tripathi, principal analyst at Gartner.

“Therefore, marketing campaigns need to focus on end-user education, highlighting aspects such as environmental friendliness and the importance of third-party certification for yield quality. These OEMs should back this with aggressive marketing that shows strengths while highlighting the quality challenges faced by remanufacturers,” added Tripathi.

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