Lexmark’s Exit of the Inkjet Printer Business

As reported in late August, Lexmark announced its plans to slice the inkjet business from its umbrella of products in an effort to shore up the companies bottom line. Lexmark, a stalwart in the printer industry since 1991 when it was formed as a branch of IBM’s print sector, manufactures and distributes laser, inkjet, and dot-matrix printers, along with printer products and accessories. The list of printer products will be shorter when the company stops making inkjet printers next year.
Lexmark said it would stop development of inkjet printers in 2013 and completely close its supplies factory in Cebu, Philippines by 2015. It is not clear how long Lexmark printers will remain on store shelves, however the company has assured its customers that it will honor all outstanding warranties as applicable for the date that the last inkjet sells. Lexmark also indicated that it will continue to supply inkjet cartridges during this period.
Despite earning $4 billion in revenue in 2011, Lexmark reported that its net profit fell to $39 million for the most recent quarter, a 61% decline from the same period a year ago. Lexmark expects to save approximately $95 million annually after it completes the shuttering of the inkjet division. The company also anticipates the loss of 1,700 inkjet related jobs.


Consumer Inkjet Market Decline
Partly due to the soft global economy, consumer inkjet printer sales have declined over the past three years especially in Europe and North America. Part of the softening is due to the shift toward an increasing online world. Traditional consumer level users of inkjet printers – students, families, and small businesses, are doing more and more online now. Not too long ago, a document or photo would have been printed and shared in hard copy. Now, those documents and photos are shared via email or posted to Facebook. Remember those photo kiosks in Wal-Mart and Target? They’re gone now – no need to have a photo processing service when 99% are never printed. The money in printer sales seems to be moving from consumers toward business users. In fact, Epson, HP, and Canon, with a combined 90% market share of global inkjet printer sales, have all made big investments in their business inkjet machines as opposed to consumer inkjets over the past three years, and the trend is continuing. No one thinks that the inkjet business is in danger of going away. There is still ample consumer demand for the machines, driven in large part for peoples love affair with “All-In-Ones” for the increased use of scanners in homes and businesses.


Inkjet Market Status
The global inkjet printer business is in no danger of going away due in large part to the popularity of “All-In-Ones” . The ability to have one low-cost machine to print, copy, fax, and scan is a compelling factor for consumers and small businesses alike. Laser printers may be great for text or basic graphics but they’re not nearly as efficient or inexpensive as inkjets are. Inkjet “All-In-Ones” are a tremendous convenience for homes and small businesses whereas “All-In-Ones” were not largely adopted for laser machines.


The Bottom Line
Lexmark was being squeezed by the Big 3 of Epson, HP, and Canon, and made a business decision to to exit a failing category so that it could focus on other, more profitable areas of its operations. Lexmark will remain a global talent and major player in the printing business despite its exit from the inkjet sector.

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