MSII » Topics » Industry and Market Overview

These excerpts taken from the MSII 10-K filed Sep 25, 2008.

Industry and Market Overview

 

Color Business Printer Market  

 

Historically, the office environment has been dominated by monochrome (black and white) printers for document printing. However, with decreasing printer prices, and increasing print speeds, quality and reliability, color printing has become increasingly common.

 

Color laser and solid ink printer shipments are expected to grow at a compound annual growth rate of 13% between 2006 and 2011. Color laser and solid ink multifunction devices are expected to grow at a compound annual growth rate of 30% during the same period. Such growth would result in an increase in the worldwide installed base of color laser and solid ink printers and multifunction devices from approximately 11 million units in 2006 to just under 30 million units in 2011, reflecting a compound annual growth rate of 35%. (source: Lyra Research, Inc., January 2008)

 

 

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Shipments of color toner cartridges are expected to experience a compound annual growth rate of 20% between 2006 and 2011, while color toner cartridges revenues are expected to double from $9.5 billion in 2006 to $20 billion in 2011. (source: Lyra Research, Inc., January 2008)

 

Color Business Printer Technologies  

 

While monochrome printers are predominately based on laser technology, there are three significant technologies in color printing: inkjet, toner-based laser and solid ink.

 

Inkjet printers are typically inexpensive to buy, print slowly, and produce their best images on expensive special papers. In general, they are expensive to operate. However, their low purchase price (sometimes almost free) has made them ubiquitous for home printing. As well, they are often found in small businesses where print volumes are low.

 

Where faster print speeds and lower cost of ownership are desired, color laser and color solid ink dominate. Color laser printers are very similar to monochrome laser printers, except they use four color cartridges instead of a single black cartridge.

 

Solid ink printers, on the other hand, utilize a very different technology from that of laser. These printers consume solid ink sticks, again in four colors. Solid ink sticks can be thought of as large crayons, which when placed into the printer, are melted and “jetted.”

 

While color laser printers are available from all of the major printer vendors, only Xerox has been successful in commercializing solid ink for the office environment. As a result, roughly 95% of the color business printer market is laser based, and only 5% solid ink based.

 

Color Business Printer Supplies  

 

The dominant sources of color printer supplies are the printer manufacturers or Original Equipment Manufacturers (OEMs) themselves. These manufacturers discount the cost of the printer hardware to gain market share, in an effort to capture the recurring profitable revenue stream of supplies. Further, the strength of their established brands and distribution often result in their product being the only option offered to a consumer.

 

Today, the market is robust for monochrome aftermarket cartridges. Aftermarket cartridges are those that are manufactured by companies other than the printer manufacturer. Approximately 27% of the monochrome cartridges currently being purchased are aftermarket cartridges. In contrast, only 5% of the color laser cartridges being purchased are aftermarket cartridges. (source: InfoTrends) Lyra Research estimates that the aftermarket share of color laser cartridge shipments will increase to 10% by 2011. As the market matures, we believe that the color market will ultimately mirror the monochrome market with the aftermarket achieving an aggregate share of shipments of 25-30%.

 

An industry dynamic of note is a trend towards an increasing cost of color printing. Over the last couple of years, the cost to print as measured by the cost of the supplies (ink, paper, maintenance kits, etc.) has been increasing. Further, there appears to be an inverse correlation between the cost of the printer and the cost of printing. Typically, the data suggests, the lower the cost of the printer, the higher the cost of the supplies.

 

Industrial Printers

 

Industrial printers in manufacturing environments to print date codes, lot codes, bar codes and other information on products and packaging. These coders are single “color” devices, but may print black, green, red, blue or other colors at any given time.

 

Industrial coders generally consume relatively high volumes of ink as they may run 24 hours a day, 365 days of the year. Because of the high volume, high speed manufacturing environments in which coders are present, they are a mission critical component in the manufacturing process.

 

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As with the business color market, the primary source of supplies for these coders is the manufacturer of the coder itself. Aside from the coder manufacturers, we are not aware of any other competition for our industrial solid inks. In the industrial marking space, as in the business color market, price is the primary reason for adoption of aftermarket supplies.

 

Industry and Market Overview



 



Color Business Printer Market  



 



Historically, the office environment has been dominated by monochrome (black and white) printers for document printing. However, with decreasing printer prices, and increasing print speeds, quality and reliability, color printing has become increasingly common.



 



Color laser and solid ink printer shipments are expected to grow at a compound annual growth rate of 13% between 2006 and 2011. Color laser and solid ink multifunction devices are expected to grow at a compound annual growth rate of 30% during the same period. Such growth would result in an increase in the worldwide installed base of color laser and solid ink printers and multifunction devices from approximately 11 million units in 2006 to just under 30 million units in 2011, reflecting a compound annual growth rate of 35%. (source: Lyra Research, Inc., January 2008)



 






 



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Shipments of color toner cartridges are expected to experience a compound annual growth rate of 20% between 2006 and 2011, while color toner cartridges revenues are expected to double from $9.5 billion in 2006 to $20 billion in 2011. (source: Lyra Research, Inc., January 2008)



 



Color Business Printer Technologies  



 



While monochrome printers are predominately based on laser technology, there are three significant technologies in color printing: inkjet, toner-based laser and solid ink.



 



Inkjet printers are typically inexpensive to buy, print slowly, and produce their best images on expensive special papers. In general, they are expensive to operate. However, their low purchase price (sometimes almost free) has made them ubiquitous for home printing. As well, they are often found in small businesses where print volumes are low.



 



Where faster print speeds and lower cost of ownership are desired, color laser and color solid ink dominate. Color laser printers are very similar to monochrome laser printers, except they use four color cartridges instead of a single black cartridge.



 



Solid ink printers, on the other hand, utilize a very different technology from that of laser. These printers consume solid ink sticks, again in four colors. Solid ink sticks can be thought of as large crayons, which when placed into the printer, are melted and “jetted.”



 



While color laser printers are available from all of the major printer vendors, only Xerox has been successful in commercializing solid ink for the office environment. As a result, roughly 95% of the color business printer market is laser based, and only 5% solid ink based.



 



Color Business Printer Supplies  



 



The dominant sources of color printer supplies are the printer manufacturers or Original Equipment Manufacturers (OEMs) themselves. These manufacturers discount the cost of the printer hardware to gain market share, in an effort to capture the recurring profitable revenue stream of supplies. Further, the strength of their established brands and distribution often result in their product being the only option offered to a consumer.



 



Today, the market is robust for monochrome aftermarket cartridges. Aftermarket cartridges are those that are manufactured by companies other than the printer manufacturer. Approximately 27% of the monochrome cartridges currently being purchased are aftermarket cartridges. In contrast, only 5% of the color laser cartridges being purchased are aftermarket cartridges. (source: InfoTrends) Lyra Research estimates that the aftermarket share of color laser cartridge shipments will increase to 10% by 2011. As the market matures, we believe that the color market will ultimately mirror the monochrome market with the aftermarket achieving an aggregate share of shipments of 25-30%.



 



An industry dynamic of note is a trend towards an increasing cost of color printing. Over the last couple of years, the cost to print as measured by the cost of the supplies (ink, paper, maintenance kits, etc.) has been increasing. Further, there appears to be an inverse correlation between the cost of the printer and the cost of printing. Typically, the data suggests, the lower the cost of the printer, the higher the cost of the supplies.



 



Industrial Printers



 



Industrial printers in manufacturing environments to print date codes, lot codes, bar codes and other information on products and packaging. These coders are single “color” devices, but may print black, green, red, blue or other colors at any given time.



 



Industrial coders generally consume relatively high volumes of ink as they may run 24 hours a day, 365 days of the year. Because of the high volume, high speed manufacturing environments in which coders are present, they are a mission critical component in the manufacturing process.






 



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As with the business color market, the primary source of supplies for these coders is the manufacturer of the coder itself. Aside from the coder manufacturers, we are not aware of any other competition for our industrial solid inks. In the industrial marking space, as in the business color market, price is the primary reason for adoption of aftermarket supplies.



 



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Sep 25, 2008
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