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Issue #0430/2 - The Holy Grail becomes a reality in the workgroup. Why bother with a mono laser printer when you can have a Dell colour laser printer, costing less to print in mono than almost any A4 mono printer, and still save money on colour.

Now that Dell has launched its single-pass Colour Laser Printer 5100cn into Europe also, there is little argument left for maintaining a mono laser printer as well as running a colour printer – or for not buying a colour laser printer, as so many desire.

Pricing of this new model from Dell is so aggressive that even Kyocera is being challenged for supremacy where low Cost Per Page is concerned. Using UK pricing, the 5100cn has a nominal mono CPP of only 0.62 pence – a level that appears to be lower than any other A4 format laser printer, colour or mono (apart from workgroup and departmental mono machines from Kyocera).

Where Kyocera is specifically challenged by the 5100cn is with regard to mono CPP and 3-year mixed usage CPP on its FS-5016N single-pass colour laser printer. Although nominal colour CPP for the 5100cn is 33% higher than Kyocera’s FS-5016N, the nominal mono CPP is 18% lower, a figure that pulls the long term mixed usage CPP down so much that it is about 3.5% lower than the Kyocera model. Needless to say, this is strongly assisted by the aggressive hardware pricing.

Set at the same level as the Konica Minolta magicolor 5430DL, featured in last week’s TCPglobal, at £699 / €999, pricing across Europe represents exceptional value for money. Although the purchase price is replicated across Europe, CPP values vary a little.

Single-pass Colour Page Printers

Most noticeable is that consumables prices in Germany have been set at a lower level than in other countries, pushing CPPs down as low as 1.06 Euro cents in mono, 6.27 cents in colour and 2.90 cents long term mixed usage.

When calculating the 3-year usage pattern, the long term CPP is also affected by different pricing applied to the 3-year extended warranty arrangement in the various countries. Dell has taken the approach that the fuser assembly is covered under the extended warranty when it needs replacing at 100,000 pages. So, with this cost included, the difference between €340 in Spain and €65 in Italy is significant. In the UK, the cost of the extended warranty is in line with the Italian cost, at £45.

Single-pass Colour Page Printers

Please note that, in all cases, 3-year long term CPP is based on a usage rate of 5,000 pages per month, printing 70% mono pages and 30% colour pages using maximum capacity toners and taking into account any standard, or starter, toner cartridges shipped with the printer.

Interestingly, pricing of the 5100cn across Europe is not necessarily quite low enough for the CPPs to undercut Kyocera’s as they do in the UK. Germany is one of the exceptions and Italy the other – in each case because one area of pricing has been reduced to levels lower than the norm for Europe (please note that not all European countries have been included in the investigation).

Now that Dell has brought the Cost of Printing to a level that is up to 60% lower than market leader Hewlett-Packard, 70% lower than the most expensive in the class (Lexmark C752Ln), and is challenging Kyocera’s unique technology advantage with traditional technology but aggressively pioneering go-to-market strategies, one has to ask some heart-searching questions:

• ‘can, and will, other manufacturers respond and how will they respond’?
• ‘do other manufacturers take Dell seriously enough to attempt a response?’
• ‘are the days of high returns from consumables and high contributions by consumables to turnover and profit levels coming to an end?’
• ‘will we see a gradual return to sensible hardware pricing but more reasonable consumables pricing?’
• ‘will Dell’s position expedite the demise of the mono laser printer?’

In terms of competitive responses, the suspicion is that to actually drop prices to compete directly would be way beyond the capability of most, if not all, manufacturers. The one exception is, of course, Kyocera.

Tracey Rawling-Church, Head of Marketing at Kyocera UK, says that Kyocera’s goal has always been to “charge a fair price for consumables and to make a modest and sustainable profit on both hardware and software.” Hardware is not subsidised by consumables and this is clearly seen when comparing hardware prices in any category.

In sharp contrast to Konica Minolta’s new magicolor 5430DL discussed in last week’s TCPglobal, as the Dell 5100cn consumables are essentially based on the same principle of toner-box-only replenishment on a day-to-day basis as Kyocera (i.e. separate drum assembly rather than integral toner/drum units), we can assume that Dell is able to make a ‘modest’ profit on the toner at the pricing levels published. What is not clear is to what extent the hardware price is subsidised by the anticipated aftermarket consumables sales.

Certainly it is very hard to see that Dell can make even a modest profit overall but, if enough units can be shipped, a modest profit on consumables could bring Dell to the breakeven point on balance. After all, there is little doubt that this introduction is deliberately designed to shake up the market – especially in this key workgroup sector with fast colour printing. As long as the overall balance for the company is that the Printing Division makes a profit, however small, the effect that being able to offer a one-stop-shop has on the wider business model is probably incalculable.

Kyocera will therefore be watching the situation closely but, all things considered, Tracey Rawling-Church applauds Dell for taking this stance and considers that “this development is good news for users”. She further indicates that “Kyocera may not feel the need to respond”, even though it would take only minor adjustments to slide the consumables pricing just below Dell levels.

One further factor affecting Kyocera’s confidence is that, while Dell sells off-page and off-screen, Kyocera’s model is to sell through resellers that are able to offer customers higher levels of support and bespoke solutions. This will, of course, also form a major part of any response by other manufacturers.

One doubt that might be cast on the potential success of the Dell 5100cn is that of quality. Had the engine been from OEM supplier Lexmark, as are all of Dell’s current mono laser printer and inkjet range, I would certainly wholeheartedly have agreed with the doubts. However, the 5100cn has been taken from the more recent alliance with Fuji-Xerox so, in terms of engineering quality and build quality, there can be little doubt that it comes from a pedigree stable.

Indeed, this particular engine is an up-rated, next generation engine from that used in the Xerox Phaser 6250 (and its cousins, the Epson AcuLaser 4100 and Brother HL-4200C), now offering 25ppm colour and 35ppm mono print performance. Dell has certainly achieved quite a coup in acquiring this engine first, before even Xerox.

Dell 5100cn

However, Dell’s implementation of the engine in the 5100cn does not include the Phaser controller of the Xerox colour models. We have seen earlier in the year that Xerox is capable of achieving rather better print quality from its Samsung-engined Phaser 6100 than Samsung can from its CLP500. This is down to the quality and capabilities of the print controller.

It was further noted that Dell’s 3000cn and 3100cn printers – also Fuji-Xerox engines that are exclusive to Dell at this point – produced colour output where banding was noticeable (not severe but noticeable) when printing photographs. Therefore, it is highly likely that Dell’s output from the 5100cn will prove not to be as good as that achieved from printers driven by the Xerox Phaser controller.

But – at the price, and for general office usage rather than photographic usage, is that really likely to be an issue? One would suspect not.

~End~

This entry was posted on Friday, September 24th, 2004 at 12:01 am and is filed under Issues, Total Cost of Printing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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