Dell Officially Launches Printer Line

Dell Computer marked its entry into a market long dominated by rival Hewlett-Packard, announcing four printers for personal and workgroup use Tuesday. The company also provided details of a policy designed to encourage users to purchase ink replacement cartridges directly from Dell.

As always, Dell is positioning the printers against its competition based on price. For $139, customers can buy a combination printer, scanner, and copier with 4,800 pixels by 1,200 pixels resolution. A similar combination printer from HP costs as much as $199.99 with the same printing quality, but with faxing capability, according to HP's Web site.

"Dell's first foray into printers will be accepted as good-enough technology by Dell's many customers. As a result, we would expect Dell to quickly become a material player in the business printer marketplace," said Peter Kastner, chief research officer for Aberdeen Group in Boston.

Past the PC

Dell used to resell HP printers alongside its PCs, but announced last year it would enter the market in partnership with Lexmark International as part of a strategy to diversify its offerings beyond PCs.

The A940 is a color inkjet printer combined with a scanner and copier, while the three other stand-alone printers are laser models. The P1500 is designed for both professionals and consumers, and costs $289. Dell is also selling two workgroup level printers that come in both networked and non-networked versions. The S2500 costs $499, while the S2500n for networks costs $839.

HP is the acknowledged leader in the printing business, and commands a great deal of loyalty from its customers, Kastner said. The company wants to market itself as an innovation and technology leader, according to comments made by HP executives during a recent conference call.

Dell's focus has always been on pricing and efficiency. "[It] does not have to have the world's most innovative technology to meet most users' needs most of the time," Kastner said.

Inking Issues

Besides price, Dell thinks the software included with the printers sets them apart from the competition, said Tim Peter, vice president and general manager of Dell's imaging and printing group. Users receive prompts to replace cartridges when the ink level falls below a certain mark and a link to Dell's Web site where replacement black and color cartridges can be ordered appears on the user's screen. The workgroup printers send messages through the network to administrators, Peters said.

Printer vendors do everything they can to make users buy replacement cartridges from them, because the margins are high and the revenue stream lasts as long as the printer. However, many users choose to purchase replacement cartridges from other companies that refill and refurbish used cartridges, enabling them to offer the cartridges at prices far cheaper than the original manufacturer.

Lexmark is fighting back against third-party cartridge sales in a lawsuit against a component vendor, charging that company's technology contains proprietary Lexmark code that allows cartridges manufactured by other vendors to work in Lexmark printers. Without that code, the cartridges will not work in Lexmark printers. The Dell printers are not based on any of the Lexmark models that are part of that lawsuit, a Dell spokesperson said.

Cartridge Choices

Dell is offering users of P1500 or S2500 series printers a choice between standard cartridges or cartridges that come with a use and return policy, which obligates the user to ship the cartridge back to Dell for recycling under a licensing agreement that takes effect when the user breaks the seal on the cartridge's package. Purchasers of the standard cartridges are not bound by the licensing agreement.

The use and return cartridges contain a chip that disables the cartridge if it is refilled and replaced in a Dell printer, the spokesperson said.

"This is a way to sell the contents of the cartridge without selling the cartridge itself," Kastner said. "They're creating a legal barrier to the cartridge refilling business." Lexmark similarly offers users a choice between standard cartridges or ones that feature the proprietary software at issue in its lawsuit.

A 3,000 page-yield standard cartridge for the P1500 costs $99, and the Use and Return cartridge costs $75. For the workgroup printers, a 5,000 page-yield standard cartridge costs $129, while the use and return version costs $99. A940 users do not have to adhere to the use and return policy, and can pay $29.95 for a black ink cartridge and $34.95 for a color cartridge from Dell's Web site.

The cartridges are different sizes than cartridges from other printer vendors, including Lexmark, the spokesperson said. This will limit the amount of knockoff cartridges available, but only until someone figures out how to reverse engineer Dell's cartridges.

Dell prefers to label the program as part of a recycling initiative. The Round Rock, Texas, company is including a prepaid postage label and instructions with the new printers for users to ship their old printers back to the company for safe disposal.

"We're trying our very best to make it easy to recycle printers," said Greg Davis, director of sales and marketing for the imaging and printing group.

The launch is confined to the U.S., Canada, Mexico, and Puerto Rico as of Tuesday. Dell is still finalizing plans for a European launch later this year, but could not say when the printers will be available in Asia-Pacific.