Observations: Low-End Color Lasers—Build Them and They Will Come?

by Jim Lyons

The Hard Copy Observer, December 2006

One of the printing and imaging industry’s most important trends of 2006, well documented elsewhere in this year-end edition of the Observer, was the plummeting prices of high-quality personal color laser printers. A midrange or low-end color laser printer now costs the customer less than an equivalent monochrome laser printer did just a few years ago. But does the downward pricing trend change the customer’s buying behavior? Is this a case of throwing cheap hardware to the masses and watching them beat a path to the vendors’ and resellers’ doors?

My answer to both questions is no. Similar to the situation two decades ago when desktop publishing (DTP) solutions propelled monochrome laser printers into a multibillion-dollar industry (to say nothing of the boost DTP gave to a nascent operating environment called Windows), the success and growth of the low-end color laser printer market depends on developing a story around what to do with color laser printers and how to do it.

A basic marketing principal is that selling a product involves more than just offering a low price. Identifying customer needs and satisfying those needs better than anyone else is the key to marketing nirvana. This strategy is not always the easiest concept to internalize in an industry that revels in hardware price/performance trends and supplies usage factors. But there is a customer behind all that data, and a really nice color laser printer—no matter how inexpensive—may prove to be a boat anchor without a real application for it. Healthy supplies usage also requires real-world printing applications to drive the use of toner, ink, and paper.

Enough about marketing theory. What is the key to pulling low-cost color laser printers (and high-quality business ink jet printers) through the channel? Many believe that at least one of the drivers is a small business’s need for high-quality marketing materials that can be printed in house, rather than being outsourced to a local commercial printer. One of the original goals of DTP was to bring high-end publishing capabilities to the masses, and that idea has now expanded to include printing originals directly on the in-house printer, albeit in smaller quantities than before but with higher frequency.

PC Magazine’s November 21, 2006, edition features an article titled “A Dozen Ways To Boost Your Business.” Many of the tools listed are high-tech and relatively futuristic and include Voice over IP (VOIP), business blogs, wikis, and Web-based applications for customer relationship management (CRM), payroll, and recruiting. But, amazingly enough, right in the middle of the list is the “in-house copy shop.” PC Magazine suggests that businesses use desktop printers for “marketing materials, glossy flyers, [and] pamphlets,” and the article even mentions in-house production of posters and banners using low-end large-format machines, all “without going to a professional print shop.”

Small business is the target of the in-house marketing push. The ability to crank out small quantities of originals meets a small business’s obvious need for personalized short runs. And small businesses represent a massive opportunity for printing and imaging vendors. The Small Business Administration reports that 99.9 percent of the United States’ 25.8 million businesses have fewer than 500 employees, and expanding the definition of small business to include nonprofits and other similarly structured organizations makes this market segment that much more attractive.

Vendors have been promoting do-it-yourself marketing for years. Ink jet technology provided the first wave of printers for do-it-yourself marketing applications, but now color laser printers are coming to the forefront due to their image permanence and ability to produce crisp and professional-looking output. Vince Ferraro, vice president of HP’s LaserJet Business, waxes enthusiastic about what the firm now calls in-house marketing. He asserts that while HP offers a broad and growing portfolio of high-quality business ink jet and color laser printers, buyers often decide to go with a color laser product because these devices offer a broad range of finishing options and can use a wide variety of media. For example, Ferraro points out that creators of marketing collateral want to be able to approach the “look and feel” of the output from commercial printers.

In terms of putting together a total in-house marketing solution, I refer back to my DTP example from the late 1980s. Aldus, HP, and Microsoft worked together to match Apple’s all-inclusive DTP offering. Similarly, Ferraro speaks about “building an ecosystem” around the in-house marketing solution. HP’s current Web page, http://www.hp.com/sbso/productivity/office/index.html, is a gateway to solutions using common applications such as Microsoft Word, Publisher, and PowerPoint; Corel Draw; and Quark XPress. The company’s Web site also offers links to HP partner services such as template designs (StockLayouts), logo creation (LogoWorks), and stock photos (iStockphoto). In case you are wondering if HP is done with this effort, the answer is “not by a long shot,” according to Ferraro, who says that HP is working on other related services, including copy creation.

So is this just one more area where centralized printing is relinquishing its leadership role to desktop and workgroup printers? Not necessarily. Home inkjet photo printing took off a few years ago, but centralized photo printing is fighting back, as exemplified by HP’s 2005 acquisition of Snapfish and Shutterfly’s recent IPO. And what about color laser printers hitting closer to home and infringing on the photo-specialty ink jet printing turf? Ferraro insists that HP’s color laser printers are not positioned to compete in the consumer photo market, despite their inclusion of features such as memory-card support. Rather, HP’s color laser printers are optimized for printing photos as a part of business documents, and effective in-house marketing collateral certainly needs to include high-quality photographs, especially in early-adopting industries such as real estate.

So, in short, my take on the color laser printer market is “Build it, and they will come.” But the “it” that vendors need to build is a complete package including hardware, software, and solutions, not just cheaper and faster laser printers.