TCPglobal - news, views and issues on total cost of printing

Issue #0620/1 - Lexmark has launched a new colour laser printer. It can only be described as extraordinary – costing just £205 but with a Total Cost of Printing that is rising through the roof despite the fact that the machine is specified to a very much lower level than its predecessor.

Introducing the new C500n from Lexmark was supposed to read, ‘Virtually identical to its predecessor, the C510n, the C500n is an excuse for Lexmark to raise the Total Cost of Printing again’.

Lexmark C500N

However, we have a problem with that description! The C500n is actually a stripped-down but pumped-up version of the C510n. Although the casing is virtually identical (not quite as tall), could never be mistaken for anything other than a Lexmark C5xx family member and probably contains most of the same mechanics inside, buyers will not be receiving anything like an identical printer in the C500n.

What they will actually be doing is paying less for the privilege of paying more for less!! Work that one out!

In terms of purchase price, the C500n comes in at just £205 – the cheapest networked colour printer available other than Dell’s outgoing 3000cn - discounted to £137. Please note that Dell’s new four-pass colour printer, the Dell 3010cn, will be available imminently but typical Dell web site inconsistencies and company confusion make it impossible to be absolutely clear on the costs right now.

Lexmark’s own outgoing model, the C510n, was last priced at £289. This represents price erosion of 29% from old model to new model. However, the original price for the C510n, when it was first launched in April 2004, was £479. So, price erosion on the C510n over two years was 40%. Add to it the lower launch price of the C500n and we have a total price erosion of 57% in two years.

Now consider the Total Cost of Printing over that period if time. At launch prices, the C510n would have cost a user a nominal 1.50 pence per mono page printed and 7.64 pence per colour page printed. If 2,500 pages were printed every month over three years (at the same cost of supplies) and printing 70% mono pages and 30% colour pages, the overall Cost Per Page would be 3.67 pence

As reported frequently in TCPglobal over the past year, Lexmark has systematically pushed up the Total Cost of Printing by increasing prices on supplies. This has been accompanied by systematic reductions in hardware pricing to try and push as many units into the field as possible with the sole intention of reaping higher supplies revenues from the increased supplies prices.

What we have seen is that the cost of running the C510n has risen to a nominal cost of 1.74 pence per mono page and 9.60 pence per colour page, meaning that the overall Total Cost of Printing (when combined with the reduced purchase price) rose to 4.21 pence.

This is a 16% increase in nominal mono print costs, a 26% increase in nominal colour print costs, making a 15% increase in the overall Total Cost of Printing!

Now let’s do the calculations on the new printer, the C500n. Nominal mono CPP has risen to 2.15 pence (24% increase from C510n), nominal colour CPP is now 10.41 pence (8% increase from C510n), and long-term Total Cost of Printing is 4.71 pence (12% increase from C510n).

Over the two years since launch of the C510n, this all combines to mean that the overall Total Cost of Printing on Lexmark’s entry-level colour laser printer has risen by 43% for mono pages, 36% for colour pages and 28% overall.

This is an astonishing increase in the Total Cost of Printing – and in only two years. There is no other printer company that has implemented any systematic increase in the Total Cost of Printing in the way that Lexmark has with this printer category. Even Hewlett-Packard’s most expensive cartridge, the 2,000-page Q2612A for the LaserJet 101x series, has decreased in price over the period.

So, let’s now put this into context. The comment above that the C500n is a ‘stripped-down and pumped-up’ version of the C510n is no exaggeration.

Lexmark C510n

TCPglobal has never before presented a comprehensive specification comparison because it would only be duplicating work undertaken by others in the industry. However, in this instance, we just have to take a look at the specification of the C500n against the C510n to show the depths to which Lexmark has sunk to reduce costs while attempting to boost sales in order to access potential supplies revenue.

Taking an overall evaluation, the over-riding impression is the number of red ‘thumbs-down’ in the list (below). This machine really has been ‘stripped down’. Everything possible has been taken out of it in order to reduce manufacturing costs and allow the company to sell it at a very low price without making too heavy a loss on the hardware.

	C510n	C500n	Change
Print Speed colour/mono	30 ppm mono 8 ppm colour	31 ppm mono 8 ppm colour	insignificant -
Duty Cycle	35,000 pages	35,000 pages	-
Toner (shipping)	1,500 pages Black 1,500 pages CMY	1,000 pages Black 1,000 pages CMY
Toner (standard)	5,000 pages Black 3,000 pages CMY	2,500 pages Black 1,500 pages CMY
Toner (high capacity)	10,000 pages Black 6,600 pages CMY	5,000 pages Black 3,000 pages CMY
Photo developer	10,000 colour pages	30,000 colour pages
Fuser	51,000 colour pages	60,000 colour pages
Waste toner bottle	3,000 colour pages	7,500 colour pages
Standard paper capacity	250-sheet	250-sheet	-
Maximum paper capacity	780 sheets with 530-sheet optional feed;	780 sheets with 530-sheet optional feed	- -
Interfaces	USB 2.0 10/100 Ethernet	USB 2.0 10/100 Ethernet	- -
Printer Languages	HP PCL6 emulation PostScript 3 emulation Direct PDF printing PPDS migration tool	GDI
Processor Speed	500MHz	200MHz
Memory	128MB RAM Expandable to 320MB	64MB
First Page to Print	<13 seconds mono <19 seconds colour	<13 seconds mono <19 seconds colour	- -
Duplex	Option	N/A
Management tools	‘MarkVision Professional printing and network printer management software’ ‘Manual or Automatic Colour Correction’ ‘ColorSaver mode’ ‘Colour Balance Control’ ‘Coverage estimator’	MarkVision
Other options	Serial interface Parallel interface Token Ring network interface Wireless network interface Ethernet interfaces - various Flash Hard Disk Flash cards – various	Wireless interface
Physical size	385(h) x 495(w) x 420(d)	385(h) x 480(w) x 420(d)	insignificant
Weight	30.3kg	29kg	insignificant
Starting purchase price	£479	£205
Ending purchase price	£289

Even toner supplied with the printer is kept to an absolute minimum – enough for only 1,000 pages at 5% of each colour. This is one-third less than the amount of toner supplied with the C510n and is designed to push the user into buying new toner at a high price just as soon as physically possible.

In fact, this is a situation where a set of low-capacity after-market toner cartridges on their own (i.e. without waste toner bottle, drum or fuser) costs more than the printer itself - by 23%!!

Now, this does not actually mean that it would be cheaper to buy a new printer instead of a new set of cartridges because the cost per page for those 1,000 pages (all printed as four-colour pages) would be 20.5 pence as opposed to a nominal CPP (four-colour printing) of 10.41 pence using the high capacity cartridges (including drum, fuser and waste toner bottle costs), although the equivalent CPP using low-capacity cartridges would be a rather horrendous 16 pence per page.

However, there is a significant ticket-shock factor involved here. For a customer to be forced to buy new cartridges at a minimum cost of 23% more than the original printer cost within a few days or weeks of purchase, could have serious customer satisfaction implications. If the customer buys the high capacity cartridges, the spend is a huge 58% more than the cost of the printer.

Furthermore, over a three-year period of ownership, a customer printing 2,500 pages per month, with 30% in colour and 70% in black would have spent almost 20x the cost of the printer just to keep it replenished with consumables.

By comparison, one of the more economical printers in the category (Canon Laser Shot LBP-5200 with optional network interface) would only require the customer to spend just under 8x the purchase price to print the same number of pages over three years.

To help emphasise the point, all other printers in the category are now more highly specified than the C500n, using hardware that is probably more reliable and user-friendly. So, if the customer can look beyond the purchase price (perhaps even if the customer doesn’t look any further than purchase price), the C500n represents appalling value for money.

On this basis alone, why would anyone buy a Lexmark C500n?

Add to that the fact that the C500n is a GDI-only printer, and we see where Lexmark can make a significant financial saving without impacting too much on raw performance. All of the Page Description Languages have been stripped, meaning that all processing is now being performed in the PC, in turn allowing a much slower processor to be used and that the machine can operate with half the amount of memory (which is not expandable).

In addition, Lexmark does not offer the high level of network and printer management and maintenance features in the software provided with the new printer. Instead of a sophisticated colour and network management suite, the C500n is shipped with basic network management software.

Further savings are made by not allowing the C500n to receive most of the options available for the C510n. There is no duplex option, the memory options have been stripped, the interface options are now restricted to a wireless network unit and the flash hard disk and flash cards are not available either.

With regard to the specification, the only elements of the C500n that can be considered to be improved over the C510n are the life-expectancies of the secondary supplies units – i.e. photo-developer, fuser unit and waste toner bottle but not toner. These units are all rated for more pages than the original units.

Most improved of these is the photo-developer, which is rated for three times the number of pages. Then follows the waste toner bottle, with improved life of 150%, while the fuser unit will last for 17.6% more pages than the C510n fuser.

Longer life is always good news because it lowers the Cost of Printing. Yes? Almost yes – but definitely not with Lexmark.

What makes this situation so extraordinary is that, despite the improved life-expectancies of these units that should be reducing costs, Lexmark has still succeeded in pushing up the Cost of Printing in the process.

Pricing on the C500n firmly consolidates Lexmark’s claim to have THE most expensive A4 colour printers to own. In almost every category, the Lexmark model is the most expensive – followed fairly closely in most cases by the competing Hewlett-Packard model.

Just to add insult to injury, while the C500n is marketed primarily as a high-speed mono printer with occasional colour available, it is, as always, billed as ‘affordable’. However, this strictly means ‘to buy’ not to run!

When one considers that the nominal CPP for mono printing (i.e. toner only), at 2.15 pence, is very nearly twice the overall three-year CPP of a 34ppm mono printer such as the Oki B6300n and is more than twice that of the 35ppm Dell M5200n – and that is not even beginning to mention any comparison with Kyocera Mita printers – why would anyone buy the C500n as a mono printer?

Note that for this level of machine, the mixed mono/colour long-term CPP over three years shown in the accompanying table is calculated on the basis of 2,500 pages per month; printed at a ratio of 70% mono pages and 30% colour pages; is based on the use of maximum capacity supplies with 5% per colour page coverage; takes into account any standard, or starter, supplies shipped with the device; and also includes the cost of purchase. All prices are manufacturer’s recommended prices without tax.

When one considers that the long-term CPP of the Lexmark C500n is 61% more expensive than the outgoing Dell 3000cn, and the purchase price is actually 50% higher also, quite frankly, why would anyone buy the C500n as a colour printer?

This must rank as the worst-specified and worst-priced printer ever to hit the market. Lexmark should be ashamed of itself for playing on the vulnerability of customers looking for low purchase price.

The main feature of the machine, and the only positive thing that can be said about the C500n, is that it offers network-ready colour for less than the price of many a network interface!

~End~

This entry was posted on Friday, June 23rd, 2006 at 12:03 am and is filed under New Products, Supplies, Hardware, Pricing, Comparisons, Issues, News, Financials, 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.