Growth of the German Entry-Level Color Laser Market

by Jordan Zavislak
Data Analyst

Over the past six months, the entry-level color laser printer market has grown throughout all major economies of the world, especially in Europe. This growth is particularly evident in Germany. As a result of this growth, in conjunction with additional vendors entering the market, a price war has broken out between the major vendors competing in the market. With a struggling German economy, price has become one of the most important differentiating features of the entry-level color laser printer market.

Since the entry-level color laser market is a relatively new segment, for the sake of this article, it will be defined by the following technical specifications: A4 print media, host-based printer language, mono speeds between 16 and 20-ppm (pages per minute), and color print speeds between 4 and 12-ppm. Although, there are entry-level PDL-based color laser printers that compete in this market, all have optional networking capabilities; and thus it is arguable that they could be placed in the workgroup color laser market.

As the entry-level color laser market expands, more vendors enter the market and competition increases. As a result, leading vendors drop price, while others follow. In this market, traditional leaders both worldwide and in Germany currently include the following printers: the Epson Aculaser C900, Minolta-QMS Magicolor 2300W, Oki C5100N, and HP Color LaserJet 1500.

Twice, in the past six months, existing vendors have lowered prices to compete against new product entries. In May, TallyGenicom (a U.S. based manufacturer) introduced an entry-level color laser printer - the Tally T8006E - in Germany. Feeling the pressure from increased competition in the market, Oki, Epson, and Minolta-QMS all lowered prices on their respective offerings within three weeks. HP soon followed and lowered its price on the Color LaserJet 1500 the next month.

The graph below illustrates the sudden drop in price for all the manufacturers. Between May and June, prices fell on the Minolta-QMS 2300W, the Oki C5100N, and the Epson Aculaser C900 by an average of 13 percent. Additionally, between the months of June and July, the average price of the HP Color LaserJet 1500 fell by ten percent. Between May and July, the average price of an entry-level color laser printer in Germany fell by 11 percent.

The second example of when vendors lowered prices as a result of a new product entering the channel occurred in August when Canon launched its entry-level color laser printer in Europe. Although Canon's entry-level printer - the LBP-2410 - was not introduced in Germany until mid-September, its August entry into the European market caused pricing pressure in Germany. Between August and September, the average German price of an entry-level color laser printer fell another eight percent. The greatest price drop occurred on the Tally T8006E; over the course of the month its price fell by an average of ten percent.

As of November 1, Oki Germany lowered its list price on the C5100N by 26 percent. Between the weeks of October 27 and November 3, half of the German resellers tracked by ARS lowered prices on the C5100N by an average of fifteen percent. This drop in price will dramatically affect the average price throughout the country. This recent price drop shows that influential factors in the German entry-level color laser market are not limited to domestic affairs.

Before the new-year, Samsung will launch the CLP-500; and within the coming months, HP will launch the new Color LaserJet 3500--the first single-pass printer in this segment to use true laser technology. The Oki C5100N achieves its high speeds through the use of color LED printing. As such, the new Color LaserJet 3500 is expected to be the 'Oki Killer' despite its slower monochrome performance and expected higher selling price.

Shortly after the new-year, these two new entry-level color laser printers will likely cause another sharp downward push on pricing. This estimation is illustrated in the following graph, which shows an estimated average price for the entry-level color laser market in Germany; note that the trend makes a noticeable drop between December and January. Additionally, the graph illustrates where ARS thinks pricing for the new Samsung and HP printer will start, and where pricing will end up after the first quarter.

As new players and new products are introduced into the entry-level color laser market, pricing will become more fierce and competitive. This heated competition will result in surprisingly low prices in the next six months. Vendors have yet to break the sub- €500 barrier. However, with the expected launch on the new HP Color LaserJet 3500 and the Samsung CLP-500, ARS expects Minolta-QMS, Epson, and eventually Oki, to drop below the € 500 mark. With Minolta-QMS and Epson, this could happen in the first quarter of next year and almost definitely by the second half of 2004. However, ARS expects average pricing for the entry-level color laser market to stay above the €500 mark through 2004.

As pricing falls across the entire market, the entry-level color laser market is not for the faint of heart; it will only become more competitive in the future as additional vendors vie for market share and shelf share presence. ARS expects the heightened competition will cause vendors to focus on messaging color laser printing as an affordable and legitimate alternative to traditional mono laser printers.

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