The appearance of cheap and readily available compatible cartridges for Canon and Epsons may well be the final straw that breaks the golden egg for us. Why? Isn't competition good. Well yes until it hurts a big player.
There are some trends appearing that could spell the imminent end for these cartridges.
First, some perspective. We know HP is the leader overall in printers and their design with a built in head into cartridge pretty much eliminates compatibles. Same goes for Lexmark. With Canon and Epson, the story is different. Epson in my view saw the light early on and started the chip thing first. Canon sort of stayed behind and I think observed.
We know the strategy employed by these corporations fits consumer behavior to a tee. Basically offer a cheap printer and then the consumer will purchase and they will then buy consumables afterwards. It's not only printers, but is also used in medical devices ( glucose machines), labelers etc. The concept is proven and they must practice it or suffer in the market.
Now every corporation is there to make profit and must have a return on investment. HP, Epson and Canon all took different printer concepts. As it turns out the decision by HP may have been a crucial one that eventually determined the most profitable for the long term. HP makes its profit from selling consumable cartridges and to a large degree they succeed and wil continue to do so because the supply of compatible cartridges is nil for new models and even if people succeed in refilling my guess is on average after three to four refills, another new cartridge is called for. In any case, the consumer will continue to buy albeit at a slower rate. HP maximizes profit because the practice the most efficient market model whereby consumers who want convenience pay the high price and those who are price sensistive do the refill route/ reman route but again the source of all these is really HP.
With Canon and Epson, the situation is different. For many years, those who wanted convenience, bought the new oem cartridge and similarly those who were price sensitive refilled but the cartridges still came from Epson and Canon. the point to note is that the customer who wanted convenience pays the full price for the new cartridge and it goes to Canon.
Now look what happens when Compatibles come to the party. The key revenue source is attacked by the compatibles. The customers that want convenience. Canon is definitely feeling the pain now. The same story goes for Epson. The most lucrative customer is being attacked and they are feeling the pain. With compatibles, every consumer potentially does not have to give Canon any revenue after the initial purchase and remember the printer is sold at low prices. That spells HURT in a big way.
What is Canon to do? Now fortunately for them, their head technology is not totally dissimialr to HP so they can integrate the head into the cartridge for reasonable costs and I predict there will be much more of this. Wrap this is a sponge based cartridge and you've got a reasonably good HP type model.
The situation for Epson is different. The piezo head is a more expensive head and to integrate it would be too costly for a cartridge. I am not surprised that Epson has already announced it will begin departing the low cost printer market because there is no money to be made there and it will concentrate on the more specialized printer segment... read expensive pro models.
So while we enjoy the cheap cartridges I suspect it will only be so for the current and previous generation of printers.
Canon must react to continue to please shareholders and they have to devise ways of securing the most lucrative segment of the market. Hp has already reacted by offering special models in third world markets that cannot be used in NA. That way they offer reasonable printing costs geared to affordability. In a way they also "allow" this with overengineered cartridges that can be refilled a few times. Also the bladder system is gone because sponges are harder to refill and cheaper to manufacture another direction for limiting refills.
Canon and Epson MUST secure their revenues. The only model I see for Epson is to have their chips nonremoveable for their cartridges and introduce a more sophisticated chip for the cartridges that prevent resetting. I believe Canon will have a two fold strategy. Introduce more printers with integrated heads into the cartridges and also embed chips that cannot be reset period. All these cost more to manufacture but it's cost pales in comparison to the lost revenues caused by the compatiibles.
The worst outcome is if cartridges cannot be refilled at all. I think the ability to do so is there but they also recognize that not all consumers belong to the lucrative segment so they have to find a balance. Unfortunately that "balance" keeps tilting to more restrictions.
There are some trends appearing that could spell the imminent end for these cartridges.
First, some perspective. We know HP is the leader overall in printers and their design with a built in head into cartridge pretty much eliminates compatibles. Same goes for Lexmark. With Canon and Epson, the story is different. Epson in my view saw the light early on and started the chip thing first. Canon sort of stayed behind and I think observed.
We know the strategy employed by these corporations fits consumer behavior to a tee. Basically offer a cheap printer and then the consumer will purchase and they will then buy consumables afterwards. It's not only printers, but is also used in medical devices ( glucose machines), labelers etc. The concept is proven and they must practice it or suffer in the market.
Now every corporation is there to make profit and must have a return on investment. HP, Epson and Canon all took different printer concepts. As it turns out the decision by HP may have been a crucial one that eventually determined the most profitable for the long term. HP makes its profit from selling consumable cartridges and to a large degree they succeed and wil continue to do so because the supply of compatible cartridges is nil for new models and even if people succeed in refilling my guess is on average after three to four refills, another new cartridge is called for. In any case, the consumer will continue to buy albeit at a slower rate. HP maximizes profit because the practice the most efficient market model whereby consumers who want convenience pay the high price and those who are price sensistive do the refill route/ reman route but again the source of all these is really HP.
With Canon and Epson, the situation is different. For many years, those who wanted convenience, bought the new oem cartridge and similarly those who were price sensitive refilled but the cartridges still came from Epson and Canon. the point to note is that the customer who wanted convenience pays the full price for the new cartridge and it goes to Canon.
Now look what happens when Compatibles come to the party. The key revenue source is attacked by the compatibles. The customers that want convenience. Canon is definitely feeling the pain now. The same story goes for Epson. The most lucrative customer is being attacked and they are feeling the pain. With compatibles, every consumer potentially does not have to give Canon any revenue after the initial purchase and remember the printer is sold at low prices. That spells HURT in a big way.
What is Canon to do? Now fortunately for them, their head technology is not totally dissimialr to HP so they can integrate the head into the cartridge for reasonable costs and I predict there will be much more of this. Wrap this is a sponge based cartridge and you've got a reasonably good HP type model.
The situation for Epson is different. The piezo head is a more expensive head and to integrate it would be too costly for a cartridge. I am not surprised that Epson has already announced it will begin departing the low cost printer market because there is no money to be made there and it will concentrate on the more specialized printer segment... read expensive pro models.
So while we enjoy the cheap cartridges I suspect it will only be so for the current and previous generation of printers.
Canon must react to continue to please shareholders and they have to devise ways of securing the most lucrative segment of the market. Hp has already reacted by offering special models in third world markets that cannot be used in NA. That way they offer reasonable printing costs geared to affordability. In a way they also "allow" this with overengineered cartridges that can be refilled a few times. Also the bladder system is gone because sponges are harder to refill and cheaper to manufacture another direction for limiting refills.
Canon and Epson MUST secure their revenues. The only model I see for Epson is to have their chips nonremoveable for their cartridges and introduce a more sophisticated chip for the cartridges that prevent resetting. I believe Canon will have a two fold strategy. Introduce more printers with integrated heads into the cartridges and also embed chips that cannot be reset period. All these cost more to manufacture but it's cost pales in comparison to the lost revenues caused by the compatiibles.
The worst outcome is if cartridges cannot be refilled at all. I think the ability to do so is there but they also recognize that not all consumers belong to the lucrative segment so they have to find a balance. Unfortunately that "balance" keeps tilting to more restrictions.
