Issue #0438/1 - Hewlett-Packard’s consumables prices creep upwards in the UK while Lexmark reverses its increases of October in the UK with significant reductions across Europe.
With the Euro breaking through its previous record levels against the US Dollar, achieved during January/February of this year, Lexmark is the first printer company to bring benefit to its customers around the Euro zone. The Euro has broken above the $1.3 to the Euro mark in the last few days – 50% higher than at the beginning of February 2002.
In the meantime, Hewlett-Packard has not yet decreased pricing around Europe but, on the contrary, has increased them again in the UK due to the continuing and disastrous slide of the UK Pound against the Euro.
These record-breaking $/€ rates will impact on the financial results of Xerox, Hewlett-Packard and Lexmark and should give rise to some reductions in the prices of supplies in the Euro zone – if rates hold.
Lexmark reduces consumables pricing – throwing the UK into turmoil
Lexmark has implemented a major price reduction across Europe on its consumables products this month but has thrown the UK’s price list into confusion.In the Euro zone, around 61% of Lexmark’s dot matrix, mono laser, colour laser and inkjet products are affected. On average the reduction is in the order of 4%, with the highest reduction noted at 6.6%, and affects all cartridge types including Return Program cartridges.
Consumables not benefiting from the reductions tend to be those for printer/MFP models just released by Lexmark and low-capacity cartridge variants. Another delineator is that products for consumer devices (i.e. inkjet products) are not affected by the reductions. The only inkjet product that is affected is Lexmark’s one and only (legacy) business inkjet printer – the J110.
Clearly, Lexmark’s policy on pricing adjustment is largely focussed on businesses. No increases or decreases have been implemented recently on consumer inkjet products in the Euro zone or in the UK, whereas business products (in the UK) have been the subject of four sets of pricing adjustments since April of this year.
These above average reductions (> 6%) are on the high yield cartridge and drum unit for the E330/E332 mono laser printers – with high reductions in the UK also.
Considering the UK specifically, these European changes come at a bad time for Lexmark decision-makers in the UK. Only last month (October – See TCPglobal Issue#0433 - "Lexmark follows suit with UK consumables price increases") the company increased prices on 95% of its consumables in the UK, by an average of 2.4%, as a result of the weakening exchange rate in the UK against the Euro.
However, the end result is some confusion for the customer base as prices rise one month and then immediately fall by a greater amount than the increase the very following month. Does this suggest a lack of coordination between Lexmark UK and Lexmark Europe, I wonder? A look at the exchange rate trends should have allowed Lexmark to anticipate the reductions in Europe and hold back on its price increases.
As far back as 1st October, TCPglobal (Issue #0431 - "Exchange rates push Hewlett-Packard consumables prices up in the UK by up to 10%") indicated that the Euro zone should be safe from price increases. Although we did not go as far as to suggest that prices would actually be reduced, it should have been clear to Lexmark that the trends would balance one another out.
To be more specific, we should be seeing Euro zone reductions from both Hewlett-Packard and Xerox in the coming weeks.
What this situation means to the UK is that, while almost 60% of Lexmark’s consumables products in the UK have experienced a price change this month, average reductions are limited to only 2.65% in comparison to the 4% in the Euro zone.
But, this is good news for the user – confusing … but good!
Furthermore, it means that most of those UK prices are now an average of 0.84% LOWER than they were in September with only a few prices that have not fallen to September levels or below - but these are in the minority.
Standing out on a limb, however, is the 10,000-page standard toner cartridge for the T620/622 laser printers. This cartridge has had its price reduced by 6.3% since September. It was subject to a reduction of 3.7% in October and then a further 2.7% this month.
Very significantly, this is one of the very cartridges that has been at the hub of the battle between Lexmark and Static Control Components –where Lexmark lost its battle recently (see Issue #0435 - "Lexmark loses out to Static Control Components Inc.").
Similarly, the other cartridge involved in the law suit, the 7,500-page standard cartridge for the T520/T522 laser printers, has also had its price reduced by a higher than average 3.9% since September.
Other minor variations from the norm are also noted in the UK. The 32,000-page cartridge for the T632/T634 laser printers has been reduced by more than the average (4.3%), as has the 6,000-page cartridge for the E33x series. One product that has actually been increased this month (by 5.5%) is the new transparency media designed specifically for colour laser products.
Hewlett-Packard still on the increase
Moving exchange rates are not doing Hewlett-Packard printer users any favours in the UK at the moment.Hewlett-Packard has introduced more increases this month as the UK Pound continues its slide against the Euro. The UK has experienced a healthy rate of exchange against the Euro zone over the summer months but, since early August, the rate has been sliding back towards the €1.45 level from a high point of over €1.51. This is a total slide of 4% in the exchange rate to early November.
Following the recent price increases from Hewlett-Packard, further increases for November are levelled at about the 1.5% mark. However, because only half the inkjet products have been increased, the average increase is less than 1%, at 0.7%. On the laser side, 84% of products have been increased with the average increase being 1.1%
While most products have suffered an increase of around the 1.5% mark, a few products have been singled out for increases as high as 4.3%. These particular adjustments on specific products are replicated across the entire EMEA region even though it is the UK that suffers the exchange rate driven general increase.
UK increases of 4.3% are on the high capacity black No. 29 and high capacity tri-colour No. 49 ink cartridges.
Without checking every one of the 56 different possibilities (!!), these same cartridges (No. 29 and No.49) suffer increases in Spain, Switzerland, Norway, South Africa, Saudi Arabia while Italy sees an increase just on the No.29 cartridge. Other increases around EMEA, where no exchange rate increases have been implemented, include:
- No. 20 ink cartridge: Germany / Spain
- No. 20 and No. 58 cartridges: France / Norway / Saudi Arabia / South Africa / Switzerland
As indicated, not every possibility has been checked, so there will be additional countries with prices increased on these particular cartridges.
While prices on these cartridges have been widely increased, and the UK has experienced its widespread increases, there are just a couple of other cartridge products that have actually had prices reduced – by as much as 4.5%. It is the rather obscure toner collection kit for the Colour LaserJet 5 series that benefits from the 4.5% price reduction. But, other products, such as the No. 10 high capacity ink cartridge and a number of media products, have also seen reductions (by up to 16.7%). Within the media products in general very few product prices are increased.
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