As prices get lower, the competition gets more intense


May 27, 1991|By Rory J. O'Connor | Rory J. O'Connor,Knight-Ridder News Service

Ever since Apple Computer Inc. announced the first deskto laser printer in 1985, the precise pages it produced have inspired thousands of cases of printer envy.

Only well-heeled computer owners could afford the luxury of a printer that then cost thousands of dollars, even though it was typically shared by three or four computers. Indeed, Apple's then-Chairman Steven P. Jobs boasted that the LaserWriter, with its own microprocessor and memory, was the most powerful computer Apple had ever made.

But the inevitability of cheaper technology and competition have made it harder to be envious of laser printer owners. Nearly a dozen companies, from Hewlett-Packard to IBM to Japanese consumer electronics giants such as Panasonic, now offer laser printers with list prices of $1,500 to as little as $1,000. With heavy discounting by computer dealers, most can be purchased for between 30 percent and 40 percent below the manufacturer's list price, according to BIS Strategic Decisions, a Norwell, Mass., market research firm.

With the market for the older, lower-quality, noisier and slower dot-matrix printers winding down, said BIS analyst Marc Boer, there is intense competition among makers to capture a piece of the blossoming low-end laser printer business.

"There is almost a feeding frenzy at the low end," said Thad Webster, a product line manager for Hewlett-Packard Co.'s printers in Boise, Idaho. "From my perspective it's so competitive zTC that a lot of [companies] are uncomfortable. No one likes to see their margins shrink the way they are on laser printers. But some companies are trying to buy their way into the market anyway, and that means great deals."

H-P's LaserJet product line accounts for about 70 percent of the U.S. market for laser printers, according to BIS. "So everybody else accounts for the other 30 percent, and if you take away Apple, IBM and Panasonic, everybody else has about a 1 percent share," Mr. Boer said. "The only way to get share away from H-P is to compete on price."

What's made it easier for companies to afford to sell the printers cheaply is the decreasing price of the underlying technology.

The heart of the printers, which work much like photocopiers, is the print "engine." It consists of the laser itself -- in some cases, printers use LEDs or an LCD panel instead -- and the light-sensitive drum that actually prints the image. Almost all printer manufacturers, except IBM, use engines made by four Japanese companies: Canon, Minolta, Sharp and Ricoh. Made in high volume, the engines are now much less expensive than they were when Apple's LaserWriter was introduced.

The price of memory chips -- a key component of laser printers -- also has plummeted in the past two years. Most low-end laser printers have 512 kilobytes -- about 512,000 characters --

worth of RAM chips in them, used to store the data to be printed. Not only are those chips inexpensive, but that's much less memory than is found in higher-end printers used for desktop publishing and other demanding graphics work.

The principal difference among the printers is the controllers, the electronics that drive the engines. Each printer manufacturer usually designs its own, determining things like which type fonts the printer can reproduce, which printer "language" programs must speak to send data to the printer, and how efficient the device will be at drawing an image.

AAnother factor that differs from model to model is the connection port. Some low-end models offer both parallel and serial connections; a few, such as IBM's LaserPrinter E, offer one or the other but not both. Manufacturers can also differentiate their products by offering amenities such as multiple paper trays, large-capacity paper drawers or easy ways to print envelopes.

Even so, there aren't that many differences among the printers. Most print engines work no faster than four or five pages a minute at their seldom-reached top speed. All print 300 tiny dots per inch, giving pretty much the same quality page. And, since H-P dominates the market for IBM PCs and compatibles, nearly all controllers understand the PCL language used by H-P; to save money, few are designed to understand any others.

"H-P is the way to go in the laser market," said IBM spokesman Mike Reiter. Said Mr. Boer, "There is no such thing as a bad laser printer."

The low-end printers get more expensive, however, if you want ** to connect them to the Apple Macintosh. Then they require more complex innards that can handle the PostScript printer language. That necessitates more memory and a better microprocessor than H-P's standard PCL language -- plus a royalty fee to PostScript's owner, Adobe Systems.

The cost for all that can be substantial. Hewlett-Packard, for example, sells a basic Postscript version of its LaserJet IIP for $2,195, a boost of $900.

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