The Great Printer War: Does Cheap Mean Good?

There used to be a great computer company called Dell and great printer company called HP. Then they started to swap: HP wanted to become a great computer company and bought Compaq and Dell wanted to retaliate and invaded printer market. This is a classic business case study you may hear about in HBS. For those just interested in real numbers – skip my mumbling and go down the page….

The Great War For Printer
HP is the leading company selling printers in the US and it is just a problem of the name itself that we do not use it for this class of products in general. Look at Xerox, they were so omnipotent that we started to use expression "to xerox", way before we started saying: "to google". Would HP be Dell, we would very likely be saying: "Hay, Joe, dell these ten pages for me" instead of "print them". Unfortunately you can’t say "hp them for me, pal".

Now you can imagine how nuts and desperate one has to be to try to invade US printer market! You have to be… Steve Balmer or Michael Dell. The problems started with Fiorina’s (former HP CEO) attempt to regain dominant position in the US PC market via aggressive expansion and acquisition of Compaq. Dell cut the prices on PCs and started to sell printers.

The BIG Issue With Dell
The biggest problem people are having with Dell is their greatest advantage at the same time: direct sales. You can buy a darn cheap PC or printer, but you can’t bring it to a local Dell store to fix. You can’t even see a knowledgeable Dell person in you mall to help you.

Dell realized this problem all the time, but only recently, when HP surpassed Dell in PC marked, they started to take actions. This year you will be able to buy Dell from WalMart and their stores. Inevitably, this step will force Dell to raise prices as customers will run to Dell specialists for help. And help will be necessary…

Reliability Is THE Issue
If you were to make a direct sales company, what would you fear most? HAVING TO DEAL WITH RETURNS AND FIXING PROBLEMS. Yes, this is the worst part as you have to pay shipping feels, handling, fixing and sending back. Thus you would want to make your machines as reliable as possible. Reasonable?

Well, that’s just not the case. Dell’s machines are some of the most troubled on the market and this disease spread to printers as well.

My Experience With 5110cn
We ordered that printer for office use few months ago. The reasoning behind that was that on paper it looked very much like HPs 3000-4000s series, but was cheaper and we expected to save on ink.

Technical Specs
Let’s go through the details:
Dell Laser 5110cn
Price $999 ($1,349-$350 instant rebate)
Print Speed: Prints up to 40 ppm in Black and White and 35 ppm in Color
Print Resolution (Black & White and Color): 600 x 600 dpi with 2400 Image Quality
Duty Cycle: 95K pages/month duty cycle (max)
Print Cost Per Page (B&W/Color): $0.009/$0.067 per page.

A comparable machine from HP we looked at was:
HP Color LaserJet CP4005dn for $1,400 or HP Color LaserJet 3800dn Printer for $1,299.99. The latter makes 22ppm (almost two times slower) and is still $300 more expensive.

Basically, Dell is just better. At least on paper it is faster, cheaper and lives longer.

The Ink
As you may know, companies don’t make money on printers, they make them on supplies… ink. You can buy a basic pack of toner for 5110 for $740.96 (That’s like the printer itself!) and it will last for ~18,000 pages for black and 12,000 for others. It’s about 60 300-page books. If you were to buy an HP 3800dn, you are screwed for $776. For 6,000 pages for any of the colors…

THIS IS THREE TIMES LESS! Don’t trust me? Check that for yourselves:
Dell http://accessories.us.dell.com/sna/PopupProductDetail.aspx?c=us&l=en&cs=dhs&sku=BCMY511
HP
http://www.shopping.hp.com/product/Q7581A?landing=supplies&category=&family_name=Color%20LaserJet

Basically you get three times more ink for the same dough.

What Sucks?
As you know, there is no free cheese and everything comes for a price. Our 5110cn died three weeks ago. Apparently the network card was broken and the printer had to be replaced. Yes, warranty covered it, but still it is a hassle.

The other problem with this machine is that it does not look solid. Somehow I get a feeling that it is not assembled well – covers are loose, they are not fit well to each other and overall, the machine does not seem very reliable. I did not have time to use it enough to see if these problems will exacerbate, thus it is just my feeling, but I would bet that HP will live longer.

Overall quality of color print is a bit lower than that on HP’s Laser, but it is not that important for an office machine. Speed it an issue and it does deliver a good rate for money.

Conclusions
Dell is trying to set its foot in the printer market and, apparently, subsidizes it’s high-end printer series to compete with HP. For $999 this is really a great deal on paper and there is hardly a better one. The problem is that Dell is still behind HP on the learning curve and some things are not up to the claim. In particular, there are failures of device and its parts, lack of proper technical advise and support compared to HP and lower print quality.

On the other hand, ink seems to be way cheaper for Dell and this is the major cost for office printer. Who cares if you pay 1.3K or 1K for printer is every time you change toner, you pay 7-8 hundreds. This is the major cost here and with three times more ink for same price, Dell is a champion.

Thus if cost is an issue for you – get Dell. If you worry more about reliability and availability – get HP.