Epson ignites printer price war

Drastic regional price cuts from printer giant Epson could rock the printer industry, market observers have predicted. 

The Japanese printer maker has begun selling ink in China at nearly one third the price it charges in Europe and the US.

The move has raised fears of a printer price war that could spread worldwide, potentially saving millions for consumers but hurting manufacturers' profits.

Vnunet.com's analysis of data from Epson shows that buyers of the company's cheapest entry-level printer in China can now expect to spend as little as $0.016 on ink for each page they print.

US and European buyers of similar products are still paying up to three times as much.

"The industry could be facing something it has quietly dreaded for years: a consumables pricing war that melts the 'razor-and-blades' model and incinerates the industry's rich profit margins," said Jiqiang Rong, director of primary research at US-based Lyra Research. 

The Japanese headquarters of Seiko Epson Corp has not responded to vnunet.com's request for comment on plans to introduce similarly low prices outside China. 

"If this strategy sells printers, competitors will have no choice but to respond in kind, and not just in China," said Rong.

In common with other printer makers, such as HP and Canon, Epson makes most of its profit from sales of consumables like ink and toner.

Under this so-called 'razors and blades' business model, the printers may be sold at a loss which is recouped through high consumables pricing.

Lyra Research predicts that a fall in consumables profits would ultimately force manufacturers to raise printer prices.

These high profit margins have encouraged other companies to make copycat cartridges which are compatible with Epson's printers, but which are cheaper than the official consumables.

Epson has pursued legal action against numerous imitators, with some success.

See also:

HP files suit against ink refill company

Do-it-yourself kits allegedly violate HP's ink patents  09 Nov 2006

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