Disrupting the ink jet oligopoly
Eastman Kodak recently announced its latest strategy for trying to survive the precipitous decline in the film business: breaking into the lucrative ink jet printer market. There are only a few major players in the ink jet market, and all of them profit handsomely from the inflated prices that they charge for the ink, even though they virtually give the machines away. The explosion in digital photography and the cost ink has seen users paying far more per photo than they did for the film-based print.
The top companies in the ink jet market and their worldwide market share are:
Hewlett-Packard 41%
Epson 18%
Canon 17%
Lexmark 13%
Dell 8%
Brother 3%
Samsung 1%
Source: Wall Street Journal, 2/6/07
Kodak feels it can break into this tough market based on name recognition (especially among photographers) and excellent color technology. But its real hope is in restructuring the market - making the printers cost more and think cost less. The price range will be from $150 to $300, compared with often sub-$100 prices from competitors. That should reduce prices for typical photo printing by 2/3rds, a reduction that would soon offset the cost of the initial investment, at least for heavy users. The other advantage they offer, apparently is higher speed - most ink jet printers are amazingly slow at printing high-resolution, high-ink coverage documents.
A smart move, but far from guaranteed. First, Hewlett-{Packard has also recently announced a series of color printers that have the same characteristics of higher speed and lower ink cost. And HP has a strong reputation already. It's hard not imagine that Epson, Canon and Lexmark won't follow suit. The result could be a price war, with only the most established companies (HP especially) holding on.
Kodak's ability to break into the oligopoly is far from guaranteed, but consumers certainly will profit, from lower ink prices and faster printer technology. The big four ink jet companies had little incentive to reduce ink prices significantly, but the Kodak disruption will force them out of comfortable positions. That's ironic, since Kodak itself is the victim of one of the biggest industrial disruptions in the past 20 years. When companies are sitting fat and happy, they tend not to what to shake up the market. For Kodak, this move represents an urgent throw of the dice.
8:23:28 PM 
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