January 8, 2007
Shift to Notebooks Leads to Disappointing Holiday Printer Sales

Despite inkjet printers’ drastically lowered prices, the 2006 holiday season brought disappointing printer sales, amid consumers’ shift in preference from desktop computers to notebooks. Inkjet printer sales declined 1% when comparing the 2005 and 2006 holiday seasons (traditionally, Thanksgiving week through the end of the year), and sales of desktop computers were down 2% year-over-year.

“Sales of printers and desktop computers are closely tied through bundle promotions, so when customers shy away from desktop purchases, printer vendors also take a hit,” said Lissa Jordon, Printing Research Analyst at market research firm Current Analysis.

Tying printer sales to computer sales through bundles is a common strategy with desktop PCs, but it has not yet reached maturity in the notebook market, though the trend is on the rise. Printer manufacturers should consider devoting more resources toward notebook bundling opportunities, since holiday notebook PC unit sales increased 51% and revenue growth amounted to 21% year-over-year – both growth rates are higher than those of the 2005 holiday season.

“The fact that notebook ASPs have fallen more than 20% to below $800 has caused many computer buyers to skip the desktop aisle altogether,” said Samir Bhavnani, Research Director at Current Analysis.

Printer vendors also saw a decline in average selling prices (ASPs) this past holiday season. Overall ASPs for inkjet printers were down 23% compared to 2005, which resulted in revenues declining 24% year-over-year.

Multifunction inkjet printers, or all-in-ones (AIOs), provided a bright spot in the printing industry, with holiday sales up 8% compared to last year. Also, for the first time, AIOs nudged out single-function printers to claim a majority of holiday printer sales; AIOs comprised 51% of inkjet printers sold and 60% of revenues. Among the disappointments was an 18% decline in sales of compact photo (snapshot) printers, which will have a serious impact on manufacturers because the great majority of snapshot printer sales traditionally come during the holidays.

Additional holiday highlights:

Computers

• Desktop PC unit sales declined 2%, and revenue declined 13% compared to last year’s holiday season.
• HP was the market-share leader for notebooks, accounting for 42% of systems sold during holiday 2006.
• Notebook computers’ share of the overall PC market continued to grow, with notebooks claiming 64% of holiday computer unit sales, up from 53% last year.

Printers

• Sales of printers bundled with computers comprised 40% of all inkjet printer sales during the 2006 holiday season.
• Inkjet cartridge sales recorded an unimpressive 2% growth rate, the poorest holiday performance in three years.
• HP took the industry-leading position away from Epson in the snapshot printer segment; HP dominated with a 56% share of holiday units sold.
• Canon dramatically increased its market standing among AIOs, claiming 19% of holiday unit sales compared to 4% last year.
• Business printer sales increased 20% compared to the 2005 holiday season due to drastically declining ASPs and more consumer-friendly designs.