Sensing a soft spot in Hewlett-Packard's printer business, Lexmark International last week unveiled a series of trade-in promotions that give customers a "bounty" for switching from certain HP color printers to Lexmark.
Lexmark launched its salvo hours after HP unveiled the Color LaserJet 4600, a 17-ppm printer that is the company's first in-line or tandem printer. Unlike older, more problem-prone technology that generally requires paper to travel four times through the printer, with tandem printing four print cartridges are stacked one on top of the other to deliver ink to paper in a single pass.
The Lexmark promotion is aimed at chipping away at HP's monster printer sales, a key component of its $87 billion merger with Compaq. According to Gartner Dataquest, for the first quarter of 2002, HP owned 65.5 percent of the monochrome printer market with Lexmark a distant second with 17.3 percent. In color printers, HP controls 44.2 percent of the market; Xerox and Minolta-QMS have about 20 percent each of the market; and Lexmark is fourth with 6.9 percent.
Matt Dollus, senior manager for U.S. product marketing at Lexmark, said the trade-in offer comes as customers are entering a crossroads with existing printers. He said customers increasingly are willing to buy more expensive but more versatile color printers.
"The market is moving very rapidly to in-line color laser printers because of very aggressive pricing," he said. "We think we are going to see a very quick change in the market dynamics when it comes to color laser-printing."
Dollus said the program was not created to take advantage of HP while it completes its merger with Compaq, although he said it was a contributing factor. "It is a ripe marketplace," he said.
A Lexmark spokeswoman later downplayed the use of the word "bounty," calling it "poetic license."
Kurt Rockenhaus, North American LaserJet category manager at HP, said Lexmark's action was "borderline desperation."
"Why would they use such a word? The timing, scale and wording says to me that they are clearly very concerned [about the LaserJet 4600 and they should be," he said.
Roger Jakobs, marketing manager for Sotis Business Equipment, a Lexmark solution provider based in New York, said the trade-in discounts could be a "shot in the arm" given the soft market.
"Color is, quite frankly, the way to go. We've been moving more color printers, particularly with the advent of better pricing," he said.
The promotion gives solution providers the ability to pass through Lexmark rebates ranging from $300 to $1,200 when customers trade in HP's 4550, 4500 or 8550 printers for Lexmark's C750, X750e multifunction printer or two versions of the C910.