As with most things, there’s good news and bad news when it comes to discussing printers and the reseller channel. The bad news is that many of the retail brand titans still appear confused about what the channel is and how to deal with it. For example, HP ignored our numerous interview requests to discuss its channel efforts.

As you can see in our interview spotlight piece, Epson is quite willing to talk about products and technologies but otherwise appears little closer to having a formal channel program than it did in 2002. To some degree, this makes sense because such companies stake their bread and butter livelihood on retail mass merchants and can’t afford to upset the status quo by offending them through the promotion of a rival sales channel. This is why you see companies like Canon slant their EDGE distribution channel program toward sales into government and education sectors. This is fine, but it leaves most system builders covering the SMB and consumer spaces high and dry when it comes to offering printers at a competitive price.
The good news is that not all vendors are so half-hearted in their channel efforts. Moreover, you’re likely to find the best printer opportunities in gray areas that are entering the mainstream but have yet to be fully embraced by the retail world. Probably the best example of this today is the color laser printer category, which now starts at about the $500 price point and seems destined to become a nearly overnight staple in SOHO and SMB offices everywhere.
There are also opportunities springing up that are related to mature printer categories but require more expertise or setup complexity than the retail market is able to accommodate. Networking and wireless connectivity are key examples that now appeal to customers at every buying level.
As always, deeper knowledge, the nimbleness to stay ahead of the trend curve, and the ability to craft complete application solutions are what set VARs and system builders apart from their mass merchant counterparts, so that’s what we’re going to focus on here.

Getting a Fix on the Market

Without even talking about models or manufacturers, printing is where you want to be. Think about it. Three-megapixel digital cameras, sufficient to produce high-quality 8” x 10” images, now start at under $100, and camera-enabled cell phones, which will soon account for the majority of “digital cameras” sold, are entering the 1-megapixel range. Analog film use in primary world markets is eroding by over 10% annually. From the humblest consumer to the busiest corporate marketing departments, we are increasingly awash in digital images that often need to be output to hard copy. The trend is inescapable.
The news gets even more encouraging for resellers catering to consumers. According to studies released by IDC and HP, nearly 80% of digital images get printed at home. This means that the inkjet opportunity is only getting better and better provided that you can focus on specialized photo models that lend themselves to an overall printing solution. Lyra Research estimates that the photo-specialty segment will grow from 5.0 million units in 2001 to 8.7 million units in 2006 and grow at a compounded annual rate of 12 percent. At the same time, ASPs in this segment are expected to fall from 2001’s $265 to $222 in 2006. Don’t worry about the price tag though—revenue is expected to climb at 8% annually for photo-specialty SKUs.
At the end of 2002, IDC numbers indicated that HP owned 59% of the overall printer market. In particular, HP had gathered 15% and 12% in the inkjet and color laser categories respectively. Interestingly, though, HP’s numbers dropped to 54% overall for the following quarter, showing a rising level of competition, particularly from Epson and Dell/Lexmark. In early 2003, Epson and Lexmark vied for second place behind HP with Canon trailing at 10% market share. It is still too early to say if Dell’s alliance with Lexmark will actually grow Lexmark’s market share or simply cannibalize its own sales.
Overall growth for the printer industry remains fairly small, hovering around a projected 2% for 2004. This is forcing the business in two directions. Vendors such as HP are placing a fresh emphasis on low-end models, hoping to drive volume through exceptionally low price points. Obviously, this is not the side on which system builders can hope to thrive. The other direction is toward the higher end with a much greater emphasis on photo quality and feature integration. You can easily see this in the multi-function printer (MFP) category, which grew 16% year-over-year in 2003.
One good statistic on MFPs comes from the first quarter of 2003, which saw sales of 2.5 million all-in-ones—nearly half of all mainstream inkjets. In contrast, only one out of every four inkjets was an MFP in 2002. While Lexmark’s market share has slipped in the last couple of years, the company now sells more MFPs than it does single-function inkjets. Epson, long a market force in stand-alone inkjets, took the all-in-one plunge near the end of 2002.
Last year marked a big transition period in the printer industry as shifting technologies also jostled the positions of major players. Oki Data, for example, one of the two remaining powers in dot matrix printers, went from having a 5% market share in the color laser space for the second quarter of 2003 to a 14% share by the year’s end, making it the #3 color laser vendor. Eastman Kodak, which previously bailed on the inkjet market, recently announced that it would step back into it around 2006.
HP still retains over 70% of the monochrome laser market, having eaten away a large chunk of Lexmark’s business. Lyra Research estimated in mid-2003 that there were 24 million mono laser units in the U.S. installation base spanning over 1,000 different models. Interestingly, the majority of these are over four years old and serve to illustrate the healthy business in toner supplies.
On the color side, a very recent Lyra report estimates that color laser printer unit sales will grow at 30% annually with an 11% annual climb in revenue, reaching $3.6 billion in 2005. Worldwide color toner sales will climb from $1.7 billion in 2003 to $4.5 billion in 2007, showing a remarkable 27% compounded annual growth. This same report estimates that mono laser toner sales will fall from $17.8 billion to $17.0 billion over the same period, with mono toner sales actually having peaked in 2002.
As you can see, there are plenty of dollars for the taking in today’s printer scene if you’re smart about marketing them. Let’s now take a look at the technology going on under the hood in today’s dominant designs.

Technology Fundamentals Inkjet Printing

Inkjet technology was discovered accidentally in the late 1970s in a Canon laboratory when a lab employee had a chance meeting between a soldering iron and an ink-filled syringe. These days, easily changeable ink reservoirs have replaced syringes, but the concept remains the same: The main reservoir feeds into a narrow channel that terminates in an outside orifice, or nozzle. The interior of the channel has a resistor attached to its wall. As current is run through this resistor, it heats up and vaporizes the adjacent ink, which accumulates into a bubble. As this bubble expands, it pushes a blob of ink out of the nozzle, which jets onto the media waiting beyond it. When the bubble shrinks, it creates a vacuum that pulls in more ink from the main reservoir.
This thermal bubble approach is used throughout the entire desktop inkjet industry with one exception: Epson’s patented piezoelectric technology. A piezoelectric substance is one that either generates an electric charge when mechanically deformed or mechanically deforms when an electric field is applied to it. Examples include living bone, the transducers used in underwater SONAR equipment, and quartz crystals. In Epson’s case, a piezoelectric transducer is positioned at the back of a reservoir-linked chamber located behind each nozzle. When a charge is applied to the transducer, it deforms inward, putting pressure on the ink within the chamber. Soon, ink is squeezed from the nozzle and onto the media. When the charge is removed, the transducer returns to its normal shape, creates a vacuum, and pulls more ink into the chamber from the reservoir.
While we normally think of bubbles and liquid pressure taking a fair amount of time, this all happens within microseconds in an inkjet system. Moreover, the number of nozzles in each ink cartridge is considerable. HP came out with a 300-nozzle print head in 1995 and hit 492 nozzles (for black) with the 720C and 890C. Canon’s i960 photo printer from last year used 3,072 nozzles—512 nozzles for each of six colors. Interestingly, you don’t see nozzle specs listed in current printer models anymore. Perhaps this is because of the yawning disparity between the number of bubble-based nozzles and the number of piezoelectric. The Epson Stylus Photo 1270, for example, was a 1440 x 720 dpi inkjet with 48 nozzles in each of its black and color print heads. Compare this against the many hundred in, say, a DeskJet and you’d assume that bubble technology was trouncing piezo. However, the 1270 was released in 2000 and was already able to produce images that looked better than what you could get back from a professional photo developing lab.
Similarly, resolution is one of those specs destined for obscurity. HP has been saying this for years as Epson continually outstripped it in raw dpi numbers. Interestingly, vertical resolution has hardly advanced at all over the last several years. This is because the printer need only advance the page a fraction of a line rather than a complete line with each pass of the print heads.
What really matters now are things like droplet size and chemistry. Despite the fact that it sounds like self-serving marketing, the best printer vendors really do optimize their inks for their own papers. We’ve tried printing on special HP paper in an Epson printer and vice versa, and the results are terrible. Even on “generic” brands such as Office Depot’s house paper, you often get very noticeable color shifts and poor results overall. The ink droplets are formulated to bond with the paper fibers in a very particular way and not bleed into adjacent fibers. After all, small droplets aren’t much use when the droplet bleeds into an area twice its size. This is why plain paper photo output tends to look so washed out and blurry. The paper is simply not able to hold the ink properly.
As for droplet size, this is often cited as a key indicator of image quality, but half of the quality battle is the algorithms used to layer dots one over the next to create ultra-fine color shades and gradients. Canon’s S630 with “Advanced MicroFine Droplet Technology” uses 5-picoliter droplets. Most of HP’s models now use 5- and 4-picoliter droplets. You can only detect the impact of droplet size on printer price when you get down to the lowest consumer levels. For example, the Epson C84 ($79), C64 ($59), and C44 ($49) use 3-, 4-, and 6-picoliter droplets respectively. But again, to some extent it’s not the size of the droplet, it’s what you do with it.
Another critical aspect to consider is image longevity. Nothing lasts forever, but you at least expect images to keep their integrity throughout your lifetime and preferably that of your children and grandchildren, as well. Scrapbooking is a quickly rising hobby in the consumer market as companies such as Creative Memories create scrapbook addicts out of countless thousands of housewives (the author’s wife is one) and even large crafting chains such as Michael’s start setting aside shelf space for scrapbooking supplies. Tapping into this space can be a huge opportunity for your business since most hobbyists still know comparatively little about printing and archiving technologies.
One of the best resources on print longevity is Wilhelm Research (www.wilhelm-research.com). Wilhelm studies show that print fading can start in as little as one year on store-brand papers, which is another key reason to use printer vendor papers designed for photo output. But be careful. Wilhelm released an update in March ranking eight 4 x 6 photo printers and their permanence ratings. At the bottom was Sony’s DPP EX5 dye-sub unit with a rating of 3.9 years. At the top was Epson’s PictureMate at 104 years, although the HP 245 printing black and white photos with the #59 photo gray cartridge scored a stellar 115 years.
Note that these numbers were estimated based on exposure to 450 lux of brightness under glass for 12 hours per day. Epson told us that while a typical dye-based photo image printed on Epson photo paper should last 48 years and its pigment-based DuraBrite inks should last 80 under similar conditions, these inks should remain pristine for 100 to 200 years in a scrapbook environment. Epson is currently the only company using pigment-based colored ink. On top of being light resistant, pigment inks also resist smudging and even water. The pigments bond to the surface of the paper rather than soak into the fibers. According to Epson, pigment-based images are just as safe against damage as laser printed images, even on plain paper. In fact, for those who want to proof photos on plain paper, DuraBrite inks will provide the highest quality images around.

Laser Printing

It seems strange to think that laser printing relies on the same basic principle we spend endless time fighting (especially on tech benches!), namely static electricity. Visualize rubbing a balloon vigorously against your hair or pant leg then wiping it across that dusty area behind your stereo components that never gets cleaned. When you look at the balloon, you’ll see that it’s covered in dust. The same thing happens in laser printing, only the balloon is an organic photo-conductive (OPC) drum and the dust is toner particles. The average toner particle, which is a combination of finely ground plastic and metal, is a mere 15 microns in diameter, or one-twentieth the width of a human hair.
The drum unit is a cylinder within the printer that picks up a positive electrical charge from a high-voltage transformer called a corona wire that is stretched just above the drum’s surface. This charge is held in place by a highly photo-sensitive coating. A motor rotates the drum, and the now positively charged area passes under a laser beam that traces the output job’s image onto the drum. Where the laser’s photons strike the drum, the positive charge disappears and becomes negative.
Now that drum area passes through the toner hopper and gets blanketed in positively charged toner. However, because two positive charges repel each other, the only places where the toner “sticks” is the negative points where the laser hit. From the developer roller, which applies toner to the paper, the drum now makes its way down toward the paper sheet, which is being pulled from the paper cassette or tray. Immediately before the paper starts to make contact with the drum, it passes over another corona wire, only this one is negatively charged and serves to give the paper a stronger negative charge than that present on the drum. Thus as the paper passes under the rolling drum, the positively charged toner particles hop from the drum to the paper. This is the step where print job’s image is essentially transferred to paper.
As the paper exits from under the drum it passes over another positive corona wire that removes the paper’s negative charge. As the drum begins its ascent, any excess toner is swept into a take-up unit, or waste bin. Meanwhile, the paper heads over to the fuser unit, which is a pressure roller on the bottom and a Teflon-coated fixing roller on the top that is generally heated to 210 degrees Celsius. The paper is pressed between these two rollers and heated so that the plastic in the toner melts and fuses the toner into the paper fibers. From here, the paper travels the final path out of the printer. The fastest monochrome laser printers can go through this entire process more than once per second (60 ppm). You can now see why laser printers develop blank streaks in the output when detritus sticks to the corona wire or why shaking a developer unit can help to fix print quality when you’re running low on toner.
Color laser printers work on the same processes, only with four sets of toner (cyan, magenta, yellow, and black) rather than one. Most designs are similar to Samsung’s CLP-500, in which four separate toner cartridges are mounted along the drum’s path. The paper actually makes four complete passes through the printer, picking up a new color with each pass. Some models integrate all three or four colors into one toner cartridge, but this approach is receding for the same reasons vendors are migrating away from it in the inkjet space. If a customer does a lot of blue printing, for example, he’s going to be pretty peeved to see all of the magenta and yellow toner getting thrown out. At the high end, some color lasers integrate four complete engines for each color, but this is fairly rare.
There are plenty of features and specs that going along with selling laser printers. The most obvious is print speed, but some clients may additionally care about the warm-up time until the first page starts printing. Also important for different customer groups are items such as sheet input capacity, installed and maximum memory, the number of paper trays, monthly duty cycle, and duplexing capability.
Inevitably more is better, but just as important are ways in which printers can help save clients money or improve their environment. Two examples from the world of Samsung would be a Toner Saver button, which forces the printer into draft mode for all print jobs, and extra-low noise output. Keep an eye out, too, for how difficult the printer is to maintain. The last thing you want to do put the customer in a situation where he’s spilling toner on himself.
Not least of all, watch for add-on upsell options. Some Lexmark laser models, for example, can convert into MFP machines with the addition of a scanning and faxing module.

Brave New Network

Two years ago, network functionality for printers was almost exclusively a corporate issue. Now, though, networking has pervaded the SOHO and consumer markets, as well, and a host of networking options abound. Novices to the subject might point out, “Hey, I can just share my printer on the network. No problem.”
But it is a problem. Initiating a print job sucks up a large amount of host resources, and woe be to the harried user of a system that just had four or five large print jobs dump into it from across the network. Conversely, if the host system is running some resource-intensive software, print jobs can be delayed. More troublesome is the fact that a shared printer only works if the host is powered up and operating normally. In home environments, many users may want to turn their main PC(s) off at night, both to save power and reduce security risks from hackers. If the printer is running from a print server on the network, there is no host PC to worry about and nothing to hack. Users can send print jobs from the living room or bedroom as they like.
Ethernet ports on printers are old hat to the business world, but the cost of units sporting this feature are now getting down into the small business and occasionally the SOHO space. Xerox’s Phaser 3450/DN, for instance is a 1,200 dpi, 25 ppm monochrome laser with standard 10/100 Ethernet interface (as well as parallel and USB) for only $749. HP’s monochrome LaserJet 1300n is only $599 and includes HP’s separate Jetdirect 200m print server (normally $199).
Print servers have largely replaced the function previously filled by proprietary plug-in printer network cards. These are usually device-agnostic network devices, although HP’s Jetdirect line only works with HP’s LIO/EIO ports. Network bottlenecks are eased, and the TCP/IP functionality enables businesses to craft solutions for remote printing and hardware management.
A good example of an entry-level print server would be D-Link’s DP-300U Express EtherNetwork Multi-Port Print Server ($85). The device sports two parallel ports, one USB 1.1 port, and plugs straight into the user’s 10/100 router. All configuration and maintenance is done through a Web browser from any station on the LAN.
Another value-add you can offer buyers is a print server-enabled router. Customers hear about routers with integrated firewalls all the time, but not print servers. One very slick model, again from D-Link, is the DI-824VUP ($209). This gem is a 4-port Ethernet with 802.11g support, VPN compatibility, and print serving through one parallel and one USB port.
Wireless print servers are fast becoming a must-have item in SOHO and home network environments, and even in small businesses provided the security is set up properly. The WPS54GU2 from Linksys ($149) is one of the first wireless print servers to support both 802.11g as well as a USB 2.0 port. (There is also one parallel port.) Plenty of 802.11b print servers can be found for under $100, and if you’re not selling these along with your other networking equipment and complete system bundles, you’re missing a great margin builder. Most people don’t know what a print server is yet, but any environment from a two-PC home on up is a likely candidate.
One of the most exciting opportunities coming onto the printer scene is Bluetooth. Bluetooth has taken a bit of a bad rap for its slow market ramp-up, but the technology is here and now invading all manner of peripherals, including printers and print servers. With Bluetooth compatibility, the coming wave of camera phones and PDAs equipped with Bluetooth will be able to print directly with no file conversions, software, or other complications. See below for an example.
We had a chance recently to try out two Bluetooth printing accessories: HP’s bt1300 ($160) and Belkin’s Bluetooth Access Point with USB Print Server (F8T030; $150). The bt1300 is a little Bluetooth network adapter that fits in the palm of your hand, sporting a parallel port on one side, a USB port on the other, and requires external AC power. Most Bluetooth printer adapters only feature parallel or USB interfaces, not both. We plugged this unit into a Samsung ML-1450 laser printer, fired up a Bluetooth-enabled Pocket PC, and were immediately able to send contacts, spreadsheets, and note documents to the laser printer with only a few taps. Among many other applications, the utility of this for outside sales reps who need to quickly drop log sheets off would be outstanding.
Belkin’s device serves double duty for $10 less than HP’s bt1300. Not only does Belkin deliver a full print server for any LAN user to a connected USB printer, but up to seven Bluetooth clients can connect through the access point. This allows any Bluetooth handheld with a compatible profile to get onto the Internet through the access point’s connection to the router. Very slick, very affordable, and about to be a real hot ticket as more and more Bluetooth devices come into the mainstream.
As you would expect, Bluetooth printing devices have to cope with the technology’s limited range, usually up to about 30 feet. However, we found the devices to be free from glitches caused by nearby 2.4 GHz 802.11 devices or cordless phones, and don’t forget that such items will have instant early adopter appeal.
Up Close and Hands On

We were fortunate enough to have several vendors submit printers for evaluation during our writing process. To help give you a sense of what to expect from models that typify the latest gear in today’s SOHO and SMB markets, we’ll take you through what we found with our samples.