Things Are Looking Up at the Low End of the Monochrome Market

by Charles Brewer, Actionable Intelligence

The recession adversely affected the low end of the markets for personal and workgroup printers and MFPs. The impact was so profound that the market all but collapsed.

Regardless of whether the machines employ inkjet or electrophotographic technology, from the start of 2009 and lasting into 2010, demand for low-end hardware plunged along with consumables sales. In the ensuing years, demand has remained weak in some segments like the single-function inkjet market, which may never fully recover. Demand for certain low-end machines, however, has improved and in some segments unit shipments and sales are rebounding. Such is the case with the lower tiers of the monochrome electrophotographic market, which is seeing new life in the U.S. as well as in other markets around the world.

There are several factors driving sales of low-end monochrome laser and LED devices. Perhaps the most important driver is that, regardless of whether the machines are installed in a home or in an office, most low-end monochrome units are used for some sort of business application, so sales of this class of device are growing as more people get back to work. Also, unlike higher-end machines, the acquisition costs of entry-level units are, by definition, low so there is no appreciable decision process required before a purchase. With price points below $500, buying a low-end machine is straightforward and the sale cycles are short.

One growth factor that is unique to the post-recession market is the rising number of remote workers. Increasingly, today’s workforce does not operate out of a single, centralized office. Nonetheless, remote workers still require the ability to generate hardcopy and they need access to scanning and faxing functionality. Low-end machines provide a great solution. Many recently released units ship with expanded feature sets that can more than handle the printing requirements of an individual user or a small office staff, and they provide other functionality a remote worker relies on such as more mobile printing support.

While the monochrome market is among the industry’s oldest, right now the low end is one of the more dynamic market segments. Some vendors are investing to strengthen their position in the space, while others are rethinking their strategies. We have been following this market closely and the near future Actionable Intelligence will publish a comprehensive report on entry-level monochrome hardware and forces that are shaping the market. Allow me to share some top-level information about this changing market that I’m sure you’ll find rather interesting.

The current market

Just as they have for years, hardware vendors continue to improve the cost/performance ratio of their products including those at the lowest end of the market. While the machines with the smallest price tags can be pretty bare bones, for fairly short money consumers can now buy feature-rich units. For less than $200, you can purchase a single-function monochrome device that prints at somewhere between 12 and 24 pages per minute and comes standard with an Ethernet interface and Wi-Fi connectivity as well as duplex printing. Increasingly, these machines also provide some type of support for mobile users. Those willing to shell out about hundred bucks more can get all this enhanced functionality in a print, copy, scan and fax unit. In addition to being feature-rich, the physical size of low-end devices is getting smaller as manufacturers bring to market less obtrusive devices that can be deployed in small offices where desktop space is at a premium.

The move towards low-end devices with smaller footprints is fairly common across the industry regardless of whether the machine is based on inkjet or EP technology. Electrophotographic print engines from such firms as Brother and Samsung are now commonly based on an LED array light source, which requires less space than traditional laser assemblies. Engines can also be made even smaller by deploying so-called low-melt toners, which tend to be based on polyester resins. This base material does not consume as much energy as older toners to fuse to media so the machines can be designed with smaller fuser units.

The big trend in today’s overall market is to offer devices that can support mobile users. This is true across various market segments, and it is a key driver at the low end of the monochrome EP market. Most vendors now offer some sort of third-party mobility support such as Apple AirPrint or Google Cloud Print as well as their own homegrown solutions. The low-end machines that HP markets, for example, ship with its ePrint technology as well as Apple AirPrint, while Dell ships Dell Mobile Print and the Apple and Google solutions with its entry-level machines, and Samsung ships its Mobile Print App with its low-end machines. OEMs have also come together to form the Mopria Alliance, which I will discuss later, and this alliance promises to drive more printing from mobile devices.

While hardware vendors load down their inexpensive entry-level devices with more features than they ever have in the past, low-end machines remain extremely expensive to operate. They often have per-page costs well north of 3 cents. Suffice it to say, the old razor-and-blade model is alive and well at the low end of the market. Hardware vendors must rely heavily on consumables sales to make any money on cheap, entry-level machines. However, because these machines are so expensive to operate, they are prime targets for less-expensive, non-OEM supplies, which can make low-end devices difficult to market profitably. SKUs for low-end machines are often among a remanufacturer’s most popular products.

Regardless of the risk, certain hardware vendors that never really played in the low end of the printer and MFP space are sensing new opportunities and they are expanding their portfolios to better compete. This is particularly true of firms traditionally viewed as copier vendors such as Canon and Ricoh, which are now marketing some of their lowest-priced machines ever. Printer vendors like Brother and Hewlett-Packard, however, are well established in the entry-level personal and workgroup laser markets and they are reluctant to cede any ground to the newcomers. Competition is fierce and turf battles are raging.

As a result of such fierce competition, some firms appear to be adjusting their product offerings to be less reliant on the low end of the market. While low-end devices generate lucrative supplies revenue, it seems that some hardware vendors have grown weary of the razor-thin margins these units provide and are now moving upmarket. These companies include copier firms like Konica Minolta and printer vendors such as Dell and Lexmark. Konica Minolta is enjoying a lot of growth these days marketing light production machines for the print-for-pay space, while Dell and Lexmark are attempting to better penetrate the high-print-volume environments that enterprise accounts offer. Even Samsung, which initially took the low end of the market by storm, looks to be setting its gaze upmarket. The firm has released several A3 units and is investing in wooing more dealers from the BTA channel.

I hasten to point out that while some of these firms — especially Samsung — appear to rethinking their product lines, most have not abandoned the low end of the market altogether.

Copier companies want in

For years, copier vendors have worked hard to gain a toehold in the A4 space and they continue to look for new ways to better penetrate the market. Copier firms have typically marketed mid-tier A4 machines for medium to large workgroups and offered them with various feature sets that are associated with copiers, such as workflow and document management tools. While copier manufacturers are increasingly developing their own A4 print engines in-house, many continue to source their technology from providers like Fuji Xerox, Lexmark, Samsung and others.

For the past couple of years, Ricoh has been among the most active hardware manufacturers pursuing the sub-$200 space. At the end of 2012, Ricoh released the 13-page-per-minute SP 100 e printer in the United States for a measly $119. At the beginning of this year, the firm added to its line the $175 Ricoh SP 201 Nw, a networked and wireless-enabled 23-ppm printer. The firm also currently markets two other sub-$200 printers, the Aficio SP 1210N and SP311DNw. Ricoh also sells several low-end MFPs based on the same engines as the printers. The Aficio SP 100SU e is a three-function device based on the SP 100 e engine and the Aficio SP 100SF e is a four-function device with the same technology. They are priced at $215 and $240, respectively. In addition, Ricoh offers the three-function SP 204SN for $185 and the $285 four-function SP 204SFNw, which are based on the same engine as the SP 201 Nw.

While Ricoh’s low-end mono hardware is easy on the wallet in terms of purchasing, the machines are pricey to operate. The lowest-end units, including the Aficio SP 100 e, Aficio SP 100SU e and SP 100SF e, all use the same 1,200-page, all-in-one toner cartridge. Calculating the per-page costs of these machines using cartridge pricing found online, we estimate that it costs 6.25 cents to print a black-and-white page with Ricoh’s lowest-tier machines. The SP 201 Nw, the SP 204SN, and SP 204FNw all employ the same SP 201LA all-in-one toner cartridge, which yields 1,500 pages and has a CPP of 4.33 cents.

Canon is the world’s largest producer of laser units thanks in part to its partnership with HP. Historically, the company has been active at the low end of the market with its “LBP” (Laser Beam Printer) units. This year, Canon has refreshed the lower tier of its single-function monochrome laser printer portfolio with the release of the $159, 19-ppm imageCLASS LBP6030w and the imageCLASS LBP6200d, which prints at 26 pages per minute and sells for $169. Canon released its first mono printers under the imageCLASS brand in 2010 and one of the first such products was the 19-ppm imageCLASS LBP6000, which debuted at $249. The firm later slashed the price and the machine currently sells for $119.

Canon leverages its entry-level mono laser engines in a couple of MFPs that sell for under $200. The print-copy-scan imageCLASS MF3010, for example, uses the same 19-ppm engine as the imageCLASS LBP6000 and sells for a mere $149, making it Canon’s least expensive laser MFP to date.  The 26-ppm imageCLASS D530 is priced at $188.

Like Ricoh’s low-end units, Canon’s entry-level machines are also expensive to operate. The new imageCLASS LBP6030w machine, for example, uses the previously released Canon 125 all-in-one toner cartridge, which sells for $70 and delivers 1,600 pages giving it a per page cost of 4.38 cents. Earlier this year, Canon released the 126 all-in-one cartridge in the LBP6200. It yields 2,100 pages, sells for $87 and prints a page for 4.14 cents.

Printer vendors are committed

As copier makers fill out their portfolios to gain more of the low end of the market, most printer vendors continue to offer a range of low-end devices. As noted earlier, Samsung has made it clear it is interested in marketing higher-end devices like A3 digital copiers, but it is active in the lower market segments as well. Between 2012 and 2013, Samsung refreshed its entire SOHO-oriented monochrome laser lineup and it is putting price pressure on the competition. The firm’s 21-ppm ML-2165W printer was originally priced at $119 when it hit the market in February 2012, but it is now marked down to just $69 on Samsung’s website. The SCX-3405FW MFP was released with the printer at an introductory price of $199, and currently sells for $149. In the spring of last year, the Xpress M2625D and Xpress M2825DW printers were rolled out with 27-ppm and 29-ppm print speeds, and at $139 and $159 price points. The machines are sold through the dealer channel and ship with Samsung’s Mobile Print app and Wi-Fi direct. Samsung also released the Multifunction Xpress M2875FD and Multifunction Xpress M2875FW along with the printers. The M2875FD was released at $259 and the M2875FW carried a $299 price tag. The machines currently sell for $209 and $229, respectively.

Samsung’s lowest priced machines are among the industry’s most expensive to operate. It costs 4.40 cents to print a page with the ML-2165W and the SCX-3405FW MFP. Both units employ the Samsung MLT-D1015 all-in-one cartridge. The low-end Xpress printers and MFPs can accommodate a standard yield and high yield cartridge and they require an imaging unit. The Xpress machines are less expensive to run than the ML-2165W and the SCX-3405FW units. When the high-yield SKU is installed, it costs 2.96 cents to print a page.

Brother has been Samsung’s biggest rival at the low end of the market for years, and lately, I’ve been hearing that Brother is having some success in taking share away from the Korean firm. Brother reported several times last year that its low-end business was growing, especially in emerging markets in Asia such as Vietnam. Selling machines like its 40-ppm HL-5450DN for as low as $199, Brother has been keeping pressure on low-end hardware manufacturers. The Japanese firm now markets a range of units that sell for under $200 in its HL-2200 series including the HL-2230, HL-2240, HL-2240D, HL-2270DW, HL-2275DW, and HL-2280DW. These machines provide a robust 10,000-page per month duty cycle and are capable of delivering speeds between 24 ppm and 27 ppm, depending on the model. The D and DW models were Brother’s first products in this class device to feature standard automatic duplexing. Sporting price tags that range from $119 up to $199, the HL-2200 units are formidable foes with print speeds and duty cycles that one usually associates with higher-end devices.

After the release of the HL-2200 line, in 2011 Brother announced the MFC-7360N, MFC-7460DN and MFC-7860DW based on the same engine deployed in the single-function printers. As it did in the HL-2200 series, Brother introduced standard automatic duplexing for the first time at the low end of its MFP line in the MFC-7460DN and MFC-7860DW. The latter model Brother promoted as the first monochrome laser MFP to include both duplex printing and wireless networking for under $300.

Like the competition, Brother’s HL-2200 printer line and its MFC-7360N, MFC-7460DN, and MFC-7860DW are not cheap to operate. The machines use the standard-yield Brother TN-420 toner cartridge and the high-yield TN-450 toner cartridge along with the DR-420 drum unit. Brother also deployed the same cartridges in the 24-ppm and 27-ppm engine and the same consumables in the three-function DCP-7060D and DCP-7060DN. The TN-420 sells for $44.99 and the TN-450 costs $68.49, while the drum unit carries a $104.99 price tag. With these consumables, the machines are capable of rendering a page for 3.51 cents when the high-yield cartridges are installed.

HP is committed

Dogged by competitors like Brother and Samsung, HP has lost some share of the entry-level, black-and-white market over the years. That may be by design, however. These days, the firm seems to be more focused on the color market. Regardless, HP is still the industry’s 800-pound gorilla and remains a solid competitor in the low end of the mono market (although it has not refreshed its entry-level single-function printer line-up for a few years).

 Back in 2010, HP launched its latest entry-level personal monochrome printer, the 19-ppm LaserJet Pro P1102w, which originally sold for $149. It is currently available on HP’s website for just $99.  HP also released the 26-ppm LaserJet Pro P1606dn printer for $229 in 2010, which now sells for $209. More recently, HP upgraded its entry-level workgroup monochrome laser printer line with the 2012 introduction of the LaserJet Pro 400 M401 series. The new LaserJet Pro 400 M401n, dne, and dw models are based on the same 35-ppm engine used in earlier machines.

While HP may be a little tardy in updating its low-end single-function mono laser printers, it has been more active in the MFP space. In October 2013, the firm refreshed the ultra-low-end of its monochrome MFP offerings with the introduction of the print, copy, scan and fax LaserJet Pro MFP M127fn and M127w, which sold for $209 and $259, respectively, when they were launched. Currently, the LaserJet Pro MFP M127fn sells for $169 and the M127w costs $219. The firm also released the lower-end, three-function M125 series in certain overseas markets. In addition to the ultra-low-end MFPs, HP continues to sell its 26 ppm LaserJet Pro M1536dnf MFP for $269. It was introduced in 2010 as a replacement for the LaserJet Pro M1522nf. HP also sells the 35-ppm LaserJet Pro 400 MFP M425dn for $499, which was released in May 2012.

Like Samsung, in terms of cost per page, HP’s units sit close to the top of the list of the industry’s most expensive machines. Using the 1,600-page HP 85A cartridge, which sells for $68.99, it costs 4.31 cents to print a black-and-white page with the LaserJet Pro P1102w. The LaserJet Pro MFP M127 machines are slightly cheaper to operate. They print a page for 4.27 cents using the HP 83A SKU, which costs $63.99. It is even less expensive to print with the LaserJet Pro dn. It uses the HP 78A cartridge, which sells for $79.99, and delivers a page for 3.81 cents. The LaserJet Pro 400 MFP M425 family uses the HP 80A and 80X. Printing with the higher-yield “X” cartridge, it costs 2.59 cents to print a page.

What’s next?

With its gear growing a little long in the tooth, I would expect to see HP refresh some of its low-end machines this year. Included in their feature sets will be better support for mobile printing. Last September, the company formed the Mopria Alliance with a group of other hardcopy industry heavyweights including Canon, Samsung Electronics, and Xerox. The goal of the alliance is to promote easy, wireless printing from smartphones and other mobile devices. HP recently released an office color machine that meets the Mopria global certification standards. I am sure that this will be the first in a string of new units from HP including new entry-level devices that meet the standards.

While HP is the first OEM to release a Mopria-certified machine, it will not be alone in the market for long. Since its formation in September, other OEMs quickly joined the Mopria Alliance. Today the list of firms includes Brother, Canon, Epson, HP, Konica Minolta, Lexmark, Pantum, Ricoh and Xerox. These companies should all have Mopria-certified machines out in the very near future including lower-end units.

Easier, ubiquitous mobile printing should help drive more sales of lower-end devices. While the market may never return to its pre-recession heyday, it is clear that there is a lot of activity in the space. As long as the economy continues to grow and generates more jobs, the low-end of the monochrome market should be in fine shape for the foreseeable future.

Charles Brewer is the president of Actionable Intelligence, a market research firm based near Boston. With thousands of visitors each month, the firm’s website has quickly become the industry’s destination on the Internet for news, analysis and new product profiles. Brewer has nearly 20 years covering technology and business. He was an editor for Inc. magazine and ComputerWorld during the 1990s and more recently the managing editor of The Hard Copy Supplies Journal. He has spoken at numerous industry events around the world. Contact him at cbrewer@action-intell.com or visit www.action-intell.com.