Cartridge World, The Australian Cartridge Refilling Company's Business Model: Can it Sustain?
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Code :BSM0032
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Region : Australia
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Cartridge World: The Australian Cartridge Refilling Company Globally, printer ink cartridge is a $55 billion industry. Owing to the developments in printing technology, growing penetration of computers in households and the decreasing cost of printers, manufacturing inkjet cartridges has rapidly become a growing industry. As the numbers of printers (for example, 60% US households have minimum one printer ) are increasing at 15% annually, printer manufacturers are considering ink cartridges as the industry's cash cow as they ensure a steady flow of revenue even after the customers having purchased the printers (regarded as a one time purchase item)... The Business Model: Competing with the Goliath In 2004, 50% of HP's profits were derived from ink cartridges, although it accounted for less than a quarter of its $80 billionin sales. It is opined that due to high cost of cartridges, for market leader HP and other big printer companies, profits made from cartridge supplies compensate for the losses incurred on printers. Frank Romano, administrative chair (Executive Secretary) of the School of Printing Management and Sciences at the Rochester Institute of Technology said, "The revenue stream from the machines is absolutely minimal. They can give the machines away. The money is in the consumables"... Sustaining the Competitive Edge According to Lyra research, market share of refillers is expected to increase from 19.7% in 2005 to 27.7% by 2009. Although HP and other brand manufacturers have 84% of the ink cartridge replacement market, experts believe that major portion of their market is getting eaten up. They further envisage that as long as Original Equipment Manufacturers (OEMs) like HP and Canon do not find away to permanently seal ink cartridges, refillers would continue to capturemarket share... |
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