Dell reveals printer strategy

 

Gallery

By Matt Whipp

Posted on 25 Mar 2003 at 12:31

With Dell announcing four printers in the US to mark its entry into the printer market, it outlines what it has in store for Europe and the future.

The highly anticipated product launch comprises an entry level multifunction device (MFD) and a monochrome laser, along with two business monochrome printers, one of which offers networking capabilities. Ink cartridges will be available online only but aggressively priced with delivery included to compete with high street prices.

The printers are based on technology provided by Lexmark, although Dell claims to have 'uprated the hardware.' The company is also talking to other printer manufacturers to incorporate their know-how into future Dell printers.

Robin Dyer, European Product Manager for Dell, told us that Dell will announce further products to the range in July and August in the US, and the Autumn should see a pan-European launch of the entire line.

He told us that Dell printers will be priced in the UK according to the same differential currently seen between the likes of its notebook range. So, for example, the Inspiron 8500 costs $1749 in the US and £1224 over here. Dell's entry-level MFD will cost $139, which, on that basis, would bring it in around the £99 mark. HP also offers a £99 MFD.

Dyer said that while it had adopted Lexmark detect software, which alerts users when a cartridge is running low and will point them to the Dell Web site to order more, Dell hasn't followed Lexmark down the litigious road. Lexmark is currently in court challenging a US company that makes cartridges to dupe Lexmark printers into accepting them as originals.

'All of our cartridges can be recycled,' said Dyer and said that Dell was well aware of its commitment to the EU's Waste Electrical and Electronic Equipment Directive that requires a 70 per cent recycle rate.

It is a well documented fact that printer manufacturers make up most of their profits from the sales of refill cartridges, but Dyer sees Dell's entry into printers as the beginning of a sea change for this strategy.

'Dell will drive out cost over time and the margins on cartridges will gradually get eroded,' he said.

When questioned on Dell's heavy-handed tactics of wielding its enormous market power to tie suppliers to extremely low prices and stifle a market with a flood of aggressively priced products, Dyer laughed in agreement. 'It's true that many of our suppliers find Dell tough to deal with,' he said. 'But it's a tough market. If we can't get those low prices from or suppliers then we can't pass them on in the products. We don't cross-compensate our lines, so we don't subsidise our PDAs with server revenues. All our product lines stand on their own two feet.'

He said that rival manufacturers are too well aware of Dell's strong arm tactics but that Dell's foray into printers 'is a long term play'. Both HP and Epson have refreshed their entire range over the past few months.

So if you're in the market for a printer, this year could see some fierce price wars. Dyer said: 'In these early years we will seek to get market share quickly.' As has been seen from Dell's Axim line of PDAs, the way it accomplishes this is through aggressive pricing.