Breaking the Model: Will Chinese Consumers Force Printe...

Breaking the Model: Will Chinese Consumers Force Printer OEMs to Give Up Their Razors and Blades?

Breaking the Model: Will Chinese Consumers Force Printer OEMs to Give Up Their Razors and Blades?
Lyra Industry Reports
Publication Date: 19-JAN-07
Format: PDF
Price: $2,500.00
Delivery: Immediate Online Access
Epson has quietly launched a new consumer printer marketing strategy in China that could have explosive ramifications for the rest of the printer market. For more than a decade, the printer industry has counted on a lucrative combination of low-cost hardware that draws in buyers and high-priced supplies that deliver some of the best margins of any business. But cost-conscious Chinese consumers don't like paying high prices for consumables. HP has responded with its Simple Black cartridges, which deliver inferior print quality for a lower price. Now Epson has gone one big step further and made low-cost cartridges the centerpiece of its Chinese consumer printer strategy.
If Epson's strategy sells printers, competitors will have no choice but to respond in kind, and not just in China. Epson is deploying this strategy to other developing markets. This could start a consumables pricing nuclear war that melts the razor-and-blades model and incinerates the industry's rich profit margins.
This report examines Epson's reasons for deploying this strategy, the phased roll-out plan, international variations of the strategy, and the industry's delayed realization. The report also examines HP's and Canon's positions on Epson's strategy. Lyra uses its in-depth knowledge of the Chinese printer market to explore the difficulties of selling to Chinese consumers, the aftermarket penetration rates in China, and how Chinese consumers are reacting to Epson's strategy. This report will be published in its entirety in Lyra's China Market Advisory Service.
Table of Contents
Introduction
Copying the Blades Instead of the Razors
Chapter 1: Epson's Dilemma
The Razor-and-Blades Business Model
Problems with the Model
The Industry's Delayed Realization
Epson's Aftermarket Vulnerability
Going to Plan B
China Issues
Chapter 2: Epson's Strategy
Epson's Strategy, Phase 1
Epson's Strategy, Phase 2
Epson's Strategy, Phase 3
International Variations
ME Photo 20
Marketing Strategy
Competitive Analysis
No Smoke or Mirrors
Chapter 3: Epson's Impact
Is It Working?
Will It Work?
What's Next for Epson?
Key Drivers for Epson
Options for Competitors
HP's Position
Canon's Position
The Industry Afire?
Conclusions

Contact Lyra
United States
Lyra Research, Inc.
320 Nevada Street, 1st Floor
P.O. Box 9143
Newtonville, MA 02460-9143
telephone: 617-454-2600
fax: 617-454-2601
e-mail: mail@lyra.com