Posted by: Ian Rowley on July 17, 2006
Laser printers might not be as cool as digital cameras, but they’ve been just as important in helping Canon stretch its operating margins from 9.7% in 2001 to 15.5% last year. If further proof is needed, just look at market reaction in Tokyo today to news that Dell is entering the market for office color laser printers in Japan. By the close trading on Tuesday Canon’s stock price had fallen 3.6%.
The concern is understandable. In Japan, four homegrown companies led by Canon control 80% of the corporate laser printer market. That market strength combined with sales growth of 20% a year makes for a great business. Last year, Canon’s business machine division, which includes laser printers, recorded operating margins of 21.7%.
But Dell’s China-built offering (pictured above), which went on sale this afternoon, looks very competitive. At $770, the price is about one third cheaper than domestic printers with similar specifications, while replacement ink cartridges—another big profit generator—will also undercut locals firms.
Still, Dell isn’t guaranteed to clean up. Sure, having entered the PC business in Japan in 1993, it’s now the third largest player in Japan with a market share of 10%. But in home printers, where the Dell has been battling with Canon, Seiko Epson and others since 2004, its market share is just 0.6%. One problem, says Gartner analyst Tomoko Mitani, is that the quality of Dell’s inkjet printers isn’t as good as rivals. Mitani adds, however, that prospects for Dell’s laser printers in the corporate sector are brighter. “It depends on the helpdesk,” she says. For laser printers, “there’s not much difference in quality between vendors, [but] business users in Japan are accustomed to very good customer service.”