They're practically giving away color laser printers, but watch out for those toner prices.
Magazine Contributor
5 min read

This story appears in the December 2004 issue of Entrepreneur. Subscribe »

Hard to believe, but there was a time when color laser printers cost $10,000 to $25,000. You really needed to be a graphic arts firm to justify that kind of expense. But today, just about any home office can afford an even better printer. Color lasers are popping up like eggs at Easter, with price tags as low as $400.

Of course, we're so accustomed to getting more for less in every office product category that it's easy to overlook the magnitude of the accomplishment. But clearly, some kind of affordability threshold has been reached, and everything is coming up color.

"Around here, we use the analogy of a dam breaking," says Vince Ferraro, vice president of Hewlett-Packard's business imaging and printing division in Boise, Idaho. "That's how fast people are buying inexpensive color lasers."

HP struck an important blow against the $1,000 barrier in 2003 with its Color LaserJet 2500. Today, more than one-third of all color lasers carry sub-$1,000 stickers, according to imaging industry research and analysis firm Lyra Research; and many, like HP's newer, more capable LaserJet 2550, sell for half that. Over the next few years, you'll see low-end color print speeds (as opposed to faster monochrome speeds) accelerate from about 5 ppm today to 10 to 23 ppm, says Larry Jamieson, senior analyst with Newtonville, Massachusetts- based Lyra Research. Expect comparable improvements in duty cycles, memory amounts and paper-handling options.

The news will only get better now that Dell is selling color lasers, adds Jamieson. Currently, Dell claims a relatively small market share of any printer type compared to Canon, Epson, Lexmark and, of course, HP. But Dell is a spoiler, and its direct sales model will shake up the market, says Jennifer Thorwart, senior analyst with IDC, based in Framingham, Massachusetts.

Dell, you'll recall, made its bones as a price-slasher-basically, by cutting out the middlemen. It's not always the low-cost product producer; it doesn't even build its own printers. But there's little doubt, says Thorwart, that Dell plans to deliver printers more cheaply than any competitor with a multilevel distribution model can.

Exhibits 1, 2 and 3 are Dell's first three color lasers-the 3000cn, 3100cn and 5100cn. Before the ink had dried on the first print run, Dell had slashed their rock-bottom prices by 10 percent, to $449, $549 and $999, respectively. Dell claims each is configured to give just a little more in either print speed, duty cycle or paper handling than comparable HP models-the Color LaserJet 2550, 3550 and 4650, which can cost 20 to 100 percent more.

Those are the wrong specs to measure, says Ferraro. HP boasts true printer throughput, and its color quality and reliability have garnered it A+ ratings by testers for more than a decade. That's why HP sells half of all color lasers.

Find Me the Money

It turns out that most of the cost of putting ink to paper is in the toner cartridges you buy every six months or so. Jim Forrest, managing editor of The Hard Copy Supplies Journal, figures that Dell's entry into monochrome lasers and inkjets 18 months ago depressed ink prices by about 10 percent overall.

But the real money is in color laser supplies. The typical set of color cartridges (cyan, magenta, yellow and black) can cost $300 to $800, depending on cartridge capacity, printer brand and model.

True, only a single-digit percentage of office printing involves color. But guess what? When people use color, they really use color, says Forrest, covering a lot more of a page than the 5 percent that vendors use to develop their cost-per-page calculations.

At least you can count on toner cartridge prices to continue to fall for the foreseeable future, says Boris Elisman, HP vice president of marketing and sales in Cupertino, California. He says HP consumables are about 30 percent cheaper this year than last. And now, Dell is challenging HP on that front, too. For example, a $308 set of replacement toner cartridges for Dell's 3100cn is about $60 cheaper than a set for HP's LaserJet 2550. You'll pay $560 for Dell 5100cn toner, about $228 less than a LaserJet 4650 cartridge set.

Notice that cartridge prices are about twice as high for high-end printers? That's because they carry twice the toner, usually rated to print 8,000 to 9,000 pages. Here again, though, vendors haven't yet agreed on a single way to measure color page coverage-and when they say, "Your results can vary," they really mean it. Still, when you have a choice, larger capacity cartridges are usually the better buy, says Forrest.

How about aftermarket cartridges? Are they as good as original equipment? Printer makers would disagree, but there are only small convenience or feature trade-offs in third-party cartridges, says Forrest. Ink is ink.

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Mike Hogan is Entrepreneur's technology editor. Contact him at .

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