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Kodak inkjet printer promotion!! “Priced to print” – good tag line, suspect mathematics

Issue #0911/1 – Kodak has launched a major new marketing campaign, ‘Print and Prosper’, with a tag line ‘Priced to Print’, in an attempt to ramp up visibility and sales of its inkjet All-in-One printer range. Having lost such a major portion of its traditional silver halide film business to digital photography, Kodak has been left with a major hole in its revenue stream, which it hopes to fill through increasing its activities in the printer market. In this article we consider the claims Kodak makes in its initial marketing drive and attempt to set the record straight regarding cost of ink.

While many players have avoided the inkjet market because of the low unit prices involved and the need to recover R&D costs through ink sales, Kodak has decided [perhaps unwisely] to tackle this sector of the market instead of the laser sector.

Kodak Print and ProsperKodak ‘Print and Prosper’ campaign

Whether or not this is wise, although Kodak refers to ‘consumers’, the ESP range increasingly targets the home office and low-end business environments, with the current top model (ESP 9) being a four-function device with ADF, WiFi and Bluetooth. There are many competing machines from all the competitors that are priced at a similar level to the ESP 9 and fit the bill as home office or business devices.

There can be no doubt that Kodak has made a significant impact on the market in the two years since launching the first EasyShare AiOs – compatible cartridges are not at all hard to find! The company claims to have an installed base of some one million printers and is now aiming to double that figure during 2009.

Kodak’s claim is bold and dramatic:

U.S. Consumers Overspent $5.0 Billion
on Inkjet Printing in 2008

But, can it be substantiated?

Quite clearly, supporting claims such as “revolutionary line of inkjet all-in-one printers” absolutely cannot be substantiated. Kodak’s new printers are not revolutionary in any sense. They are merely the subject of an aggressive marketing strategy. Even the claim that Kodak has “reinvented the consumer inkjet printer industry with a new business model” is barely credible. There is the sense in which Kodak has wound back the clock about 20 years to a point where the entire industry sold ‘reasonably priced printers that use reasonably priced ink’, as Kodak puts it – but no more so than Xerox with its Phaser 8860 (see ) or Kyocera’s long-standing printer business model of the past seventeen years or so).

Reckoning that users are paying heavily over the odds for ink, Kodak does not explain how the figure of $5bn is calculated. What is quoted, is that users who ‘print a lot’ can expect to save an average $110/£57 (UK=61%) per year by using a Kodak printer.

Kodak - Fed upKodak campaign – Fed up with expensive ink?

And, it is here that we have a major problem with Kodak’s claims and systems. Although testing by CharisCo Printer Labs has shown that dedicated 6×4/10×15 photo printing with a Kodak A4 All-in-One device can save users at least 34% on the cost of ink (closest competing model – Canon) and Lexmark’s exorbitant Cost of Printing means that a saving of 87% is possible, when it comes to printing of office style documents – letters, spreadsheets, school homework, web pages, etc. – the story can be quite different.

So, here we take a close look at the cost of printing office documents to determine whether a user will really save this amount of money when using the Kodak ink set against a range of ink sets from other manufacturers that astute potential customers might consider in their purchase decision. These are inevitably centred around ink sets with a reasonably high yield and, it has to be said that, the Kodak cartridges do have the lowest yield in the group. But, it is all part of the competitive scenario if a customer can buy a printer at a comparable price to a Kodak printer but obtain a cartridge set with higher yields! These factors have to be included within the purchase decision.

As a benchmark to the material presented here, the same test programme undertaken by CharisCo Printer Labs showed that the cost of office document printing on the Kodak printer was roughly on a par with the competing models, beating two by around 18% (assuming 250 pages printed per month with 70% of them being mono pages) but losing out to the Canon machine by 15%.

If we use manufacturers’ quoted yields and median street pricing (in Euros, sourced in Germany) to compute nominal CPP and long-term total expenditure on ink for a selection of ink sets, we see a wide range of results.

On the one hand, there are significant variances between manufacturers but, on the other hand, we can see the difference between a typical standard ink set and a specifically business-oriented ink set from the same manufacturer.

Total Cost of Ink

Business Oriented Ink Sets

Total Expenditure

Business Oriented Ink Sets


So, for instance, Brother’s latest LC1100HY ink set and Canon’s PGI-5BK/CLI-8 set both cost some 32% less than the LC1000 and PG-50/CL-51 ink sets respectively. Epson’s T100x series costs 43% less than the T071x series and Hewlett-Packard’s HP 940XL series costs a whopping 60% less than the HP 350/351XL series.

Curiously, Lexmark’s two primary ink sets vary little on cost and the company still has not produced an ink cartridge that delivers significantly more than 500 pages per cartridge, while other manufacturers have progressed well beyond this level. Brother and Epson are close to the 1,000-page mark and Hewlett-Packard has broken the 2,000-page barrier.

Kodak, like Lexmark, has low yield cartridges – in fact, at 342 and 378 pages per cartridge, lower even than Lexmark. This is partly due to the fact that Kodak designed an ink system for its first printers, launched two years ago, and has not developed that system at all. The same cartridges are used in the latest products as in the first product.

This is in sharp contrast to Hewlett-Packard, in particular, where every new generation of printer is equipped with a new ink set whether or not there is any technology advance.

Kodak’s approach does have certain advantages and is one of the reasons that the company is able to offer its ink cartridges at a relatively low cost. Firstly, research and development costs are kept to an absolute minimum; secondly, economies of scale are achieved in the manufacturing and shipping processes; and, finally, there is no confusion amongst customers regarding which cartridge to buy. Conversely, this approach means that there are much lower levels of investment in technology R&D that might contribute towards potential improvements in print quality, permanence or print speed.

From the ink sets presented here, we see a range of more than 4x in mono CPPs and a range of 2.6x in colour CPPs, resulting in a 3x variance in total expenditure on ink over three years. Now, it must be remembered that these figures are cost of ink only and do not account for any variation in hardware purchase price. But, with a wide range of models available from the various manufacturers at similar prices, the cost of ink is the major factor here in Total Cost of Printing.

Ink sets Nominal CPP
Mono
Nominal CPP
Colour
Total spend
over 3 years
Long-term CPP
over 3 years
Brother
LC1000 series
3.79 cents 11.83 cents €534 5.93 cents
Brother
LC1100HY series
2.44 cents 7.22 cents €363 4.04 cents
Canon
PG-50/CL-51
4.80 cents 10.04 cents €584 6.49 cents
Canon
PGI-5BK/CLI-8
2.82 cents 8.07 cents €395 4.38 cents
Epson
T071x series
3.82 cents 11.17 cents €530 5.89 cents
Epson
T100x series
2.11 cents 6.82 cents €304 3.38 cents
Hewlett-Packard
350XL/351XL
3.44 cents 9.03 cents €487 5.42 cents
Hewlett-Packard
940XL series
1.11 cents 4.49 cents €193 2.14 cents
Hewlett-Packard
88XL series
1.34 cents 5.19 cents €208 2.31 cents
Kodak
No 10 Series
2.98 cents 6.92 cents €370 4.11 cents
Lexmark
#34/35
4.26 cents 9.40 cents €522 5.80 cents
Lexmark
#43/44
4.57 cents 9.97 cents €546 6.07 cents

Note that for this level of machine, the mixed mono/colour CPP over three years shown in the accompanying table is calculated on the basis of 250 pages per month; 70% pages in mono and 30% pages in colour; is based on the use of maximum capacity supplies; takes into account any standard, or starter, supplies shipped with the device; but does NOT include the cost of purchase. All prices are median street price, sourced in Germany, and include tax.

Note: Canon and Lexmark quote yield figures that differ from printer to printer for the same cartridge set. An average yield figure has been used where relevant.

Looking at Kodak’s position specifically, we find that total expenditure on ink using the Kodak machine is slightly below average (12%), even considering that we have ‘the most’ economical ink sets in the line-up – Hewlett-Packard’s 940XL and 88XL ink sets. Moving in the opposite direction, as inkjet printers push further down into the consumer and entry-level space, the cost of ink rises dramatically and many more devices are burdened with the higher cost of ink seen here from the six ink sets that cluster around the 6 cents level for total cost of ink per page.

This means that the 4.11 cents per page achieved by the Kodak system is actually quite impressive, the value of which should not be underestimated when compared with average consumer inkjet models.

However, with ink sets from Brother, Epson and Hewlett-Packard actually offering lower cost than Kodak, and an ink set from Canon only just failing in that regard, Kodak’s claim to cut the cost of printing is wide of the mark. Yes, Kodak can save some users a considerable amount of money but, at the end of the day, it falls to the user to make the decision regarding which printer from which manufacturer to buy – a decision that could save them as much as a further 48% by making the best possible choice rather than Kodak’s preferred choice (maximum saving = 67%, Hewlett-Packard HP940XL series over Canon PG-50/CL-51 series).

To return to Kodak’s claims, the company has set up a cost comparison web site that purports to indicate how much money could be saved by using a Kodak device. Comparing the Kodak device with a Canon device using the PG-50/CL-51 ink set – the most expensive in this group – Kodak’s claims appear to be way off beam.

Average annual ink cost Canon Kodak
Kodak cost comparison £289.45 £78.90
TCPglobal cost comparison £159.65 £79.61

Please ignore the minor variation in cost of the Kodak ink between the two calculators. This is merely due to the differences in configuration of the calculators with regard to balance of pages printed in black and colour (or photos). The very fact that these figures are so close verifies the accuracy of our own cost model. Note that median street prices in the UK have been used for both ink sets in the TCPglobal calculations. Kodak’s source of pricing for competitive products is unknown.

However, there is a huge difference between the figure Kodak quotes for the Canon ink set and what we believe to be the real cost – 81%.

Now – the obvious explanation for this is that Kodak has made the calculations using the PG-40/CL-41 ink set instead of the PG-50/CL-51 set. This would be perfectly acceptable if the particular printer shipped with the PG-40/CL-41. But, it does not! It ships with the PG-50/CL-51 set and the PG-40/CL-41 set is an aftermarket option. Therefore, unacceptable!

Furthermore, the cost of ink using the PG-40/CL-41 would be only £202.05 per year – so even that does not explain the discrepancy.

This places great doubt over Kodak’s claims from top to bottom.

So, conclusion – Kodak’s claims are definitely exaggerated, misleading and perhaps even deceptive in some cases. However, where office document printing is concerned, and especially involving photo printing, there is no doubt that the Kodak models do offer inkjet printing at a lower cost than many models from other manufacturers. This would be especially true of the low-end models on the market that might be pitched against the ESP 3.

However, caution must be exercised because a more suitable model, offering even better Total Cost of Printing than Kodak’s ESP range is definitely available to many potential users.

Therefore, we must again emphasise that it is imperative for careful research to be undertaken before making that crucial purchase decision, at the risk of wasting large amounts of money in the long term.

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