An Ink Aftermarket in Flux
Finding suitable third-party cartridges for a particular printer isn't always easy, and may be getting harder. That's because selling third-party ink, we're told, is a tough business.
According to imaging industry forecaster Lyra Research, parent company of The Hard Copy Supplies Journal (a printer industry trade publication), printer manufacturers control about 80 percent of the market for replacement printer ink cartridges. Total worldwide revenue from inkjet cartridge sales will be about $31.5 billion this year--$25.1 billion of it going to printer makers and the other $6.4 billion going to third-party cartridge sellers and refill shops or kiosks.
And experts say that third-party vendors' market share may be falling. "Overall, the OEMs are gaining back a little share, maybe a point or two over the next several years worldwide," says Charlie Brewer, managing editor of The Journal.
One key factor in the printer manufacturers' dominance of the replacement cartridge market is a landmark 2007 ruling by the International Trade Commission (a U.S. government agency) that barred the importation of Epson-compatible ink cartridges into the United States. The immediate result for U.S. consumers is a big drop in the availability of third-party inks for Epson printers.
Another factor is the printer makers' aggressive and persistent effort to take third-party vendors to court for infringement of their ink cartridge patents. "A handful of OEMs have a dominant share of the market, and they are laden with patents," says patent attorney Edward O'Connor, who has been arguing printer industry patent-infringement cases for nearly 20 years. "They're very litigious, they're very threatening, and they go after people." O'Connor is helping Ninestar Image, a large China-based ink cartridge vendor, appeal the 2007 ITC ruling mentioned earlier.
Aftermarket lawsuits are nothing new, says IDC's Kmetz. The printer manufacturers "are not making as much money on the hardware as they are on the supplies, so any supply revenue that gets threatened is of great concern."
Printer vendors say they're just protecting their turf, not trying to mortally wound their aftermarket rivals. "We believe in fair competition," says HP's Brown.
Critics, however, charge that printer makers engage in bullying third-party vendors, most of which lack the resources to fight long legal battles. The resulting chilling effect discourages aftermarket competitors from selling ink, which in turn hurts consumers by keeping ink prices artificially high.
The ITC's Epson ruling is just one reason why third-party ink makers may be losing ground in the United States. Another factor is the falling price of replacement ink cartridges from printer manufacturers. Five years ago, the average printer manufacturer's ink cartridge sold for between $30 and $35, Brewer estimates; today, the average price is between $15 and $20.
But the lower prices don't mean consumers are getting more ink for their buck. Rather, the printer makers are offering cartridges with less ink in them and selling them at a reduced price. High-yield tanks sell for around $35, while the lower-yield cartridges go for nearly half that. For instance, the HP 88XL Black Officejet ink cartridge costs $35 and prints an estimated 2450 pages, which works out to a price per page of roughly 1.43 cents. The lower-capacity HP 88 cartridge sells for $20 but prints only 850 pages, or about 2.35 cents per page. So despite their higher cost per page, printer manufacturers' cartridges that carry relatively modest sticker prices can lure consumers away from third-party inks.
And for people who print only a page or two a week, the higher-priced third-party cartridge may indeed be overkill.
"Overall, the OEMs are gaining back a little share, maybe a point or two over the next several years worldwide," says Brewer, although the shift is too new to be reflected in the research numbers. Brewer predicts that the market-share gains by printer manufacturers in some regions, including North America, will be significant. For instance, the 2007 ITC ruling will help Epson. And Canon ink cartridges include a computer chip that thwarts third-party competitors. "Nobody's been able to replicate it, figure it out, figure out how to reset it, get around it," says Steven Eaton, store manager of Cartridge World in Folsom, California. The challenge for third-party vendors is to keep up with the changing ink needs of consumers. "Printer manufacturers roll out new printers every six to eight months, and it's a struggle to keep up with all the new technologies," says Steven Eaton, store manager of Cartridge World in Folsom, California.
Vendors also use scare tactics to frighten users away from third-party competitors. "We see vendors saying that your warranty could be affected if you're not using their genuine supplies," says Kmetz. However, HP's Brown told us that using third-party products doesn't void an HP printer's warranty.
"Usage alone does not void the warranty," says Tricia Judge, executive director of the International Imaging Technology Council, a trade group for toner and ink suppliers. The only way the warranty can be voided, Judge says, is if a third-party product damages the printer. And if you're dealing with a legitimate aftermarket vendor, "They're going to repair or replace the printer for you if their cartridge damages it."
Our Ink-Stained Conclusion
For the best inkjet experience--including crisp, colorful, long-lasting print output--ink from the printer's manufacturer tends to be a better bet than third-party ink. That said, if you're willing to compromise a bit on print quality and longevity, you can save considerable money over the life of your printer by using aftermarket inks from reputable third-party vendors.