Archive for Monday, May 6, 2002

Ink stink: Printer companies fight back against cartridge refills

May 6, 2002


— Brian Evans thought he'd gotten a good deal on a Canon inkjet printer until it ran out of ink.

"I paid 80 bucks for the printer, and the ink was 52 bucks," Evans said, pausing on his way out of a Manhattan office supply store.

"It's incredible," said Evans, a 33-year-old bank employee, holding aloft a plastic bag with his latest purchase another ink cartridge.

Companies like Lexmark, Hewlett-Packard, Canon and Epson have coupled low-priced inkjet and laser printers with high-priced disposable ink cartridges for years.

But that business model sprung a leak.

Wily entrepreneurs started refilling and rebuilding toner and ink cartridges and selling them for about half the price building a $3 billion yearly business that has carved away an 11 percent chunk of the lucrative refill market.

So the printer giants are battling back, using clever techniques aimed at retrieving market share. They also are facing something of a backlash legislation in some states that's designed to protect the refillers.

One method employed by the printer giants is a so-called "killer" computer chip installed on ink cartridges that makes it tough for the cartridges to be refilled. Some chips warn refill users that the cartridge is "invalid." Some even disable the printer.

Another means of protecting refills is a "prebate" agreement that Lexmark uses to sell discounted refills. In return, the buyer promises to return the cartridge to Lexmark for remanufacturing and not to sell it to anyone else.

John Jackson, sales manager at TonerPlus, an Austin, Tex., remanufacturer that buys and fills empties, said it appeared the printer industry was trying to corner the market.

"If you buy a Chevrolet and you pull it out of the lot, Chevrolet can't make you drive back and buy their gasoline," Jackson said. "It's the same with printers. We consider toner the fuel for the printer industry."

Printer companies say neither effort is aimed at thwarting remanufacturers.

"We're really giving customers a benefit they didn't have before," said Epson marketing manager Rajeev Mishra, whose company has installed smart chips on many replacement cartridges. Mishra said the chips helped customers track ink use and other printing statistics.

H-P and Lexmark declined telephone interviews, opting to answer questions through e-mail and declining to address many of the complaints. Neither company had much to say about the price differential between printers and ink.

For instance, a Lexmark Z22 color inkjet printer sold on recently for $49.98 while its replacement ink cartridges cost $32.97 for black and $37.87 for color. Meanwhile, remanufactured cartridges for the Lexmark Z22 were available on for $19.95.

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