HP Streamlines Ink Buying for Its Inkjet Printers

Hewlett-Packard announced today that its introduction of new low-yield cartridges that contain a limited amount of ink will cut ink cartridge costs by as much as 50 percent. The company also said that it will change the way it packages inkjet cartridges for its printers, making the process easier for consumers to understand.

The changes involve two-tiered ink pricing, including new low-yield, lower-cost cartridges as well as high-yield, more-expensive cartridges. The company will also move to new color-coded packaging, coupled with a two-digit cartridge identification system, which will be used throughout the HP inkjet cartridge line. This, the company hopes, will simplify the task of pairing inkjet cartridges with HP printers and will make ink purchases less troublesome to consumers.

Experts say that the announcements are good news for customers who don't want to shell out big bucks at the register for ink, but who aren't willing to risk generating inferior printouts with ink purchased at a discount from third parties.

"We recognize our customers have choices, and we always want to be one of them," says Pradeep Jotwani, senior vice president for supplies in HP's Imaging and Printing Group.

Price Pressures

External forces may have sparked the changes.

"Nobody likes spending a fortune on ink," says Andy Lippman, printer expert at Lyra Research. HP, he says, is feeling the competitive squeeze exerted by third-party inkjet cartridge companies that sell HP-compatible cartridges for less. Lyra reports that third-party ink cartridge sales are growing by 10 percent each year, compared to cartridge sales growth of 5 percent per year by HP and other printer makers.

Another, somewhat lesser pricing pressure, according to Lippman, comes from Kodak, which introduced a line of printers that use Kodak replacement cartridges priced as low as $10 to $15 per cartridge.

Jotwani says HP recognizes that some people neither need nor want to buy a high-volume cartridge. "For our customers who only print things occasionally--they would rather spend less at the register," he says.

Color-Coding Cartridges

Colors, not just SKU numbers, will be used to indicate differences between high- and low-volume cartridges. The company's Standard cartridges--packaged in blue boxes--will contain less ink and be priced at between $15 and $18 a box. Higher-yield Value cartridges--packaged in green boxes--that will be priced as high as $35 a box. A third cartridge type, Specialty, will come in red boxes and be aimed at users interested in generating best-quality photo prints. The Specialty cartridges will be priced at about $25, and will print approximately 150 photos each.

HP hopes to win over "customers who still want access to high-quality printing, but don't want to pay a lot at the point of purchase," Jotwani says.

The company previously had offered low-yield cartridges for some cartridge models, and currently it uses a two-digit cartridge-naming scheme for most of its inkjet cartridges. Today's announcement expands the two-digit numbering method and low-yield offerings to embrace the entire HP inkjet cartridge line.

Spend Less, Get Less

To get the most value for your dollar, PC World recommends that you stay away from HP's lowest-priced ink cartridges.

HP says that Value (high-yield) cartridges can save you more than 35 percent on a cost-per-page basis compared to Standard (low-yield) cartridges. For example, when buying black ink for the HP OfficeJet J5780 multifunction printer, you'll spend $15 on a 74 cartridge (blue box, with a print yield of approximately 200 pages) versus $30 for a 74XL cartridge (green box, with a yield of approximately 750 pages).

It's like buying one can of soda versus buying a six-pack of the same beverage, says Ron Glaz, research director at IDC. You get a worse deal when you buy one can at a time, he points out.

True ink price reductions haven't kicked in yet, Glaz says, because the inkjet market is still growing, and as a result vendors like Canon, Epson, and HP are under no pressure to cut into their big inkjet profit margins.

In 2006, the inkjet cartridge market was worth $30 billion worldwide. Industry observers expect that figure to grow for another five years before the market flattens and the price of ink starts to decline, Lyra's Lippman says.