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U.S. Printer Service and Supply Revenue Estimates: 2006-2011Product Type: Market Research ReportPublished by: InfoTrends/CAP Ventures Published: June 2007 Product Code: R290-344 Description Service and supplies are integral parts of the printer market. For equipment vendors and resellers, supplies are critical because, in many cases, profit from hardware sales alone is not enough to be successful. On the other hand, service has not always been an important part of the profits equation in the printer market, at least not for Personal and Workgroup printers. Consumer inkjet printers are certainly not designed to be serviced, but instead are thrown out and replaced if they fail. In most cases, the limited warranty that comes with the purchase of an inkjet printer is the only assurance that consumers have should they encounter problems with the operation of the device.Similarly, Personal and Workgroup laser printers are designed to be service-free to as great an extent as possible. Early office laser printers had user-replaceable cartridges, which nearly eliminated the need for service. For Personal and Workgroup laser printers and other page printers, reliability is still the most important feature of the machine. Therefore, these machines are designed to enable the user to solve the majority of potential problems with the purchase of a cartridge or kit. In other words, manufacturers have designed laser printers so that most of the machine’s moving parts are replaced when a new toner cartridge is installed. As a result, service for Personal and Workgroup printers has largely evolved into an extended warranty business. At the very low end, these extended warranties are almost impulse buys that are offered by the reseller which, when exercised, generally allow for replacement of the machine. On the higher end, actual on-site technical service would be provided by either the OEM or a third party service organization. Nevertheless, there are numerous factors driving the need for additional service in the Workgroup printer market. Office lasers have moved up in speed and volume, which has led to the placement of these machines in critical network applications. Downtime can be a critical drawback to the need for extended service, depending on how the device is used and where it is installed. At the same time, vendors are offering more paper handling and finishing options for network printers. Meanwhile, multifunctional products add cost to the machine, as well as an increased level of complexity, because a single device is used for multiple applications. As Workgroup devices become more expensive and complex, an increased level of service or maintenance is emerging. Basically, the expense of the device and its level of criticality to the user’s environment are determining factors in the need for ongoing service. Overall, InfoTrends estimates that service and maintenance kits only represent about 7% of the total revenue generated by printers and printer-based MFPs. The cost of the hardware itself accounts for 19% of total revenue, while revenue from supplies makes up the remaining 74%. The actual percentage varies by machine segment, as higher volume machines have a larger service component than lower volume machines. For the purposes of this report, service involves extended warranties, break/fix, and other types of services at the high end to maintain the printers. Other types of services such as fleet management or managed print services that move beyond the traditional realm of the total cost of ownership equation are not included in this report. Table of Contents
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