The Color Of Money, The Money Of Color

Monochrome printers still comprise more than 70 percent of the laser printer revenue in the channel, but that share is shrinking, according to The NPD Group, which monitors revenue of Global Technology Distribution Council members.

Monochrome sales accounted for $1.37 billion from Oct. 1, 2003 to Sept. 30, 2004, about 9 percent lower than the $1.51 billion from the year-earlier period, according to NPD. Meanwhile, color sales increased 4 percent to $540.9 million from $521.2 million for the same period.

The delta between average selling prices of monochrome and color laser printers continue to fall. In the 12-month period ended Sept. 30, 2004, the average selling price of monochrome printers was $760, down from $810 in 2003 and $848 in 2002. The average price of color laser printers for the same period fell to $1,721 in 2004 from $2,162 in 2003 and $2,632 in 2002. For the 12-month period in 2002, color laser printers cost 3.1 times as much as monochrome. For the same period this year, the difference is down to 2.3 times as much.

Slower monochrome sales through distribution can be attributed to delayed purchasing caused by vendor product refresh cycles, as well as higher-than-expected growth in the prior year that would have been hard to match, said Kevin Prewett, senior director of product management at Ingram Micro, Santa Ana, Calif. But also, there is no doubt rising demand for color had an impact, he said.

"We're seeing double-digit [percentage growth] in color and monochrome, but when you talk to key manufacturers, their focus is on the color laser. Price points will come down further," Prewett said.

A big breakthrough for color laser printers was when they dropped below $1,000 for entry-level units, said Wendy Linsky, vice president of peripherals product marketing at Tech Data, Clearwater, Fla. Demand should increase even more as low-end color laser printers approach the $500 mark with rebates, she said.

"Also, the technology continues to advance, resellers are expecting great color laser printers, and the delta between the page per minute costs also gets closer. It used to have something like 20 pages per minute for black and white, and color had 2 [ppm]. Those numbers are merging. That's why you see dollar volume erosion."

George Loy, president of Computer Techniques, a solution provider in West Babylon, N.Y., said customers are more interested in color for a number of reasons. "The quality is good. The BubbleJets [have gotten] people interested in color. Now they like the cost of what [color] laser can offer. Even without any graphics, it's a great form. People are emphasizing color on Excel worksheets," he said.

Computer Techniques sells about three monochrome laser printers for every color printer, but the ratio is down from 9-to-1 two years ago, Loy said.

Yet as falling prices spur demand, there is one negative effect: Customers find it's easier to replace a machine, rather than repair it, Loy said. "If you have a $2,000 laser printer that needs $400 worth of repairs, what do you do if you see a $900 machine? We lose that service revenue," he said.

The quality of the color printers rivals copiers, said Michael McClatchy, vice president of Automated Office Systems, Rosemont, Pa. "We're starting to see it almost 50-50 in color and monochrome. Some of the color printers, whether it's Xerox or [Hewlett-Packard], can run at 35 pages a minute, color or black and white," McClatchy said.

Like Loy, McClatchy isn't finding more margins through the products themselves. "We provide a value-added sale. It all depends on the level of service. I provide on-site service within four hours, loaner printers," McClatchy said. "We have loyal customers who will pay three to five points more."