NAICS: 33-4119 Computer Peripheral Equipment Manufacturing, not elsewhere classified
SIC: 3577 Computer Peripheral Equipment, not elsewhere classified
NAICS-Based Product Codes: 33-411911, 33-411941, 33-4119W
In standard classification, computers are divided into two categories: input devices, such as keyboards, communications hardware, and the mouse; and output devices, or peripherals, such as monitors and printers. Monitors, or terminals, reflect the user's inputs and display computer outputs immediately. Printers produce hard copy, or paper printouts, of what is displayed on the monitor. Beginning with the early days of the personal computer, electronic data processing and communications has produced an increase in paper consumption, with the printer being the tool through which the paper passes.
History and Technology
Modern printers represent the convergence of three technological streams: typewriters and teletype machines; dot matrix printers; and xerography, or laser printers. In homes and offices people used typewriters to produce formally prepared text. These machines were available in manual, portable, and electric models. In the electric version keys pushed by the user produce the electric signal that causes machinery to activate mechanical keys striking paper through an inked ribbon. Teletype machines are automated versions of typewriters. Early letter quality impact printers were based on the electric typewriter. Signals from the computer replaced the human keystrokes. The printers used wheels of type, each character on a slender metallic stem called daisy wheels. The wheels could be spun rapidly to place the desired letter-shape above the paper; a hammer transferred the symbol through a ribbon. Text was printed one page at a time with the user feeding paper to the printer.
Large computers used line printers that put out text one line at a time, initially using fixed type and later dot matrix methods. The most widely used printers in the rapidly growing personal computer (PC) market were dot matrix printers, the category introduced to the market by Centronics Data Computer Corporation, a division of Wang Laboratories, in 1970. Effective commercialization of this technology for small printers was carried out by three Japanese companies: Brother Industries, Ltd., Seiko Epson, and Okidata. Symbols were created by causing pins to form letters using multiple dots, and the pins impacting paper through a ribbon. By using multiple passes and slightly offsetting the points of impact, high-end dot matrix printers could produce what came to be called near-letter quality (NLQ) presentations. The name of the method comes from the fact that each symbol printed is a matrix formed of multiple dots. Fan-folded perforated paper is used to feed dot matrix machines. The paper is pulled by punch-holes on the outer edges of the paper and the punched ribbons can be removed after printing by tearing along perforations on either side.
The third technology, laser printing (and, indirectly, inkjet printers) came from the invention of xerography—technology based on static electricity. A metallic surface, a platen, is uniformly charged across its entire surface. A document laid over this pattern, but separated from it by glass, is powerfully illuminated. The areas of the platen that light can reach lose their charge, but the areas shaded by the dark print on the document retain their charge. The process is functionally identical to putting a negative over photographic film and exposing it to light, but in photography the negative would let light through. In xerography the print prevents light from passing through. The platen is moved over a bed of tiny particles of carbonaceous toner. Where the platen is still charged, particles of toner are drawn by the electrostatic force still on the platen to its surface and cling there. Where no charge is present, no toner sticks. The sheet of paper that will become the copy is brought in contact with the platen. A powerful charge is applied to the paper so that it becomes electrically more attractive than the platen and draws the toner to stick to it. While the toner still clings to the paper, the sheet is subjected to high heat, causing the toner to melt and to fuse to the paper's fibers. In practice the platen is arranged as a drum. The image is transferred to the drum as it turns, picks up toner as it rotates, and transfers toner to the paper as both are moving together.
Laser printing was invented in 1969 by Gary Starkweather, an optician working at Xerox Corp., the developer of xerography. The name derives from the Greek words for dry and writing by way of distinguishing it from the wetness of ink. It occurred to Starkweather that the ability to focus light to a very fine point could let him prepare a charged printing drum by a rapidly moving beam of laser light. The light would illuminate all those parts of the drum intended to remain white and turn off when something black had to be printed. Where to put white and where to put black dots would be governed by the computer's interpretation of the page to be printed. The computer first translates the page into a line-by-line image formed in memory. Each line is one dot deep, and each dot is white or black. An actual line of print on the screen may be formed of many dot-lines. Once the page is formed, it is transmitted to the laser printer, which sends a beam of laser light for every white dot and nothing for black dots. Later the drum picks up toner for every black dot and leaves all else white. Laser printing, therefore, is as dependent on software techniques to rasterize the page—to prepare a page for display or printing—as it is on the high-precision made possible by laser light emitters. Color lasers require four passes to put down differently colored toner—black, cyan, yellow, and magenta, though some machines are designed to accomplish this in a single pass.
Inkjet printing technology, invented simultaneously but independently by Hewlett-Packard in the United States and by Canon in Japan, built on the software staging of data by the computer as rasterized images, but exploited the fact that tiny droplets of heated ink form bubbles that, in bursting, can be directed precisely to intended, tiny areas of the paper to be imaged. The Economist, in a summary of this technology, dubbed it "Spitting Image" by way of conveying the sensory impression this process would make if people were tiny enough to witness it as observers in the vicinity of the printing head. Electrical signals reading the raster (the dots that form the image) cause individual ink dispensers to boil up briefly to eject the proper amount and color of ink to be deposited as the printing head moves.
Sophisticated technology is required in each of these printing techniques, first in interpreting and then digitizing symbolic information into forms usable by machines, and next in using electronic methods, special materials technologies, and very intricate mechanical and thermal means of moving paper and causing images to adhere to paper.
Major Product Categories
During the period of modern computing, which began in 1977 with the introduction of the first PCs, printers have evolved rapidly. Three categories of printers have come to dominate the market: inkjet, monochrome laser, and color laser. Inkjet printers represent the largest category, with some 44 million units sold across the globe. Monochrome laser printers are the second major category, with approximately 20 million units sold worldwide. Color lasers are the latest product with nearly 4.4 million units sold globally. Another new category, the multifunction printer (MFP), which combines scanning, faxing, copying, and printing chores, is thought by some, notably Lyra Research, a leading market research firm specializing in the field, to be a printer that will emerge as a major product in the future. Dot matrix line printers continue to be used widely in massive reporting applications usually associated with mainframe and mini computers used in business. Metal type line printers are used in high-volume label and packaging applications because they are economical.
Printer prices vary widely depending on a number of factors including type, intended use, capacity, and printing surface covered. Inkjets vary in price from a low of $40 to a high of approximately $500 per unit. Monochrome lasers range between $130 and $700, and color lasers range from $300 to $1,500.
Measures of Performance
The two major measures of printer performance are sharpness of image, a function of resolution; and output, which is measured by printer speed. Cost per page is another general measure.
Resolution is defined as dots per inch (dpi). The more dots a printer can place on a square inch of paper, the sharper the image will be. In ascending hierarchy are 300 dpi machines adequate for ordinary text and graphics, 600 dpi machines for high quality, 1,200 dpi for photo quality, and 2,400 dpi for professional level machines capable of producing images found, for instance, in a high-quality glossy magazine.
Generally, the fastest printers are lasers. They are able to produce between 6 and 15 pages per minute. Low-end monochrome inkjets begin at 4 pages per minute, while high-end inkjets have higher output. Low-end photo-quality color inkjets may require three minutes to produce a page, but high-end models will deliver up to 12 pages per minute.
Although inkjet toner is relatively inexpensive, the number of pages an inkjet cartridge delivers tends to be low, approximately 600 pages. Toner cartridges will deliver between 5,000 and 10,000 pages. Cost per page, therefore, is typically lower for laser printers than for inkjets, and significantly lower if the inkjet is a high-end photo printer where special paper and expensive cartridges are used.
Supporting Product Categories
All printers require the purchase of supplies such as paper, but impact and dot matrix printers require, in addition, inked ribbons. Ribbons are a negligibly small element of operating cost. The new generation of printers require toner or ink cartridges costly enough that the market for printer supplies is larger than that for equipment. Ink or toner cartridge prices are directly related to the price of the printer. Low-end inkjet cartridges cost as little as $8 and as high as $100 or more. Laser cartridges, be they black or color, range from $50 to more than $300. Average prices are approximately $30 for inkjet and $120 for laser toner cartridges. Most users will spend more on four cartridges than on the printer. This hardware-supply relationship produces the classic razor-razor blade market in which producers sell the razor in order to sell the blades. Producers make every effort in equipment design to ensure that only their brand of cartridge will work with their printers. Nevertheless, third-party producers offer either compatible cartridges or will refill used brand-name cartridges. The industry is rife with lawsuits in which producers are endeavoring to limit such competition.
Between 1997 and 2005, a dramatic transition took place in the United States. In 1997 most printers purchased, 72 percent as measured in dollars, were actually made domestically. The United States had a large domestic manufacturing role in this market. At the end of this period, in 2005, less than 10 percent of printers purchased had been produced in the United States, and some 90.6 percent of total purchases came from imports. The transition in printers was by no means unique to that product category. Rather, it characterized the entire market for computers and peripherals, but most sharply in the printer category. Imports represented 48 percent of dollar volume in computers, 67 percent in the storage device category (disk drives, tape drives, CD readers), 75 percent in terminals, and 90 percent in printers. The printer industry in the United States had moved overseas in the first decade of the twenty-first century. Leading companies in the business, including top-ranked Hewlett-Packard, were U.S. companies, in 2005 as in 1997, but they had shifted production to regions with lower labor costs.
This transition took place against a background of strongly increasing domestic demand during the 1990s paced by the explosive expansion of the Internet, sometimes referred to as the dot-com boom. That boom came to an end in early 2000, a year that also represents the peak of demand for printers in this period. The recession extending from late 2000 to 2001, in combination with the 9/11 terrorist attacks, caused capital expenditures to shrink. Recovery has been very slow and growth has not resumed to 1990s levels. In the three-year period 1997–1999, demand averaged $15.9 billion per year at the wholesale level; in the last three years of this period, 2003–2005, demand averaged $8.6 billion. The market had nearly halved. Small, inexpensive inkjet printers had appeared early in this period and had become the major segment; similarly, laser printer prices had also come down, the two shifts together in part explaining the contraction. The second likely explanation mentioned more frequently in the industry is that the printer market had matured. The industry as a whole—as exemplified by statements in annual reports and 10-K filings with the Securities and Exchange Commission (SEC), and echoed by market research firms—anticipated slow growth in the future.
A picture of this period is presented in Figure 178 using data from the Current Industrial Reports series published by the U.S. Department of Commerce. Bars depict apparent consumption (domestic shipments less exports plus imports). Curves show the decline in domestic production, the increase in imports, and the slow decline in exports of printers. Playing a prominent role is domestic production in the early years of the period and its minimal participation in supplying domestic demand toward the end. The printer hardware market in 2005 was $8.7 billion, down from $12.0 billion in 1997 and from its peak of $12.5 billion in 1998.
Toner and Ink.
Statistical information for measuring the size of the toner and ink cartridge markets are not available from federal economic surveys. These products are segments of larger chemicals aggregates and are not considered a separate category. Some understanding of the size is obtainable by studying the SEC filings of major producers, who sometimes report their sales of hardware and supplies separately. Some ratios that emerge from looking at data in Hewlett-Packard's, Xerox Corporation's, and Lexmark Corporation's filings, which suggest that users spend between $1.35 and $1.90 on supplies for every dollar they spend on hardware. This is measured at the producer, not the retail, level. Based on such ratios, the 2005 market for toners and inks at the producer level was between $11.8 and $16.6 billion—larger than the hardware market.
The market in supplies is growing rather than declining. Even with declining hardware sales, the number of printers in use is steadily growing and must be supplied with ink or dry toner to serve their users. Based on information provided by Lyra Research, total revenues of worldwide toner sales increased at the rate of 3.2 percent annually between 2000 and 2007, with color cartridges experiencing the most rapid growth at 24 percent per year, and monochrome toner growing at 0.7 percent per year. Lyra's estimates put the 2005 global market at $20.5 billion. The U.S. share of the world's Gross Domestic Product (GDP) is approximately 27 percent. If this ratio is applied to toner sales, it suggests that of the $12 billion U.S. total toner and ink market (using the low estimate) laser toner was approximately $5.5 billion. Lyra's estimate for the global market in 2007 was $21.5 billion.
Combining hardware and supply sales, the market in the United States at the wholesale level was approximately $20.5 billion, with the hardware component essentially flat and the toner/ink market advancing at a rate of approximately 3 percent per year.
In 2006 six companies dominated the printer and printer supplies market representing well over three-quarters of global sales. Three were American and three were Japanese. These companies are shown by their share of a global market of nearly $90 billion in Figure 179.
The leading printer producer in the world is Hewlett-Packard Company, with total sales in 2006 of $91.7 billion of which $26.79 billion represented laser printers, inkjet printers, as well as toner/ink. The laser printer category was pioneered by Xerox and introduced in 1971, but Xerox was slow in scaling down its large printers, principally aimed at corporate, high-throughput applications, to the desktop environment, which had become a large potential market by 1980. Hewlett-Packard entered the market that year with a line of laser printers and rapidly became the leading supplier of the desktop category—a category itself destined to grow with the PC industry and to dominate the printer market. Hewlett-Packard entered the inkjet market in 1984 with the introduction of the ThinkJet, which was soon followed by the DeskJet in 1988, a widely used and popular product especially appealing to those who found Hewlett-Packard's LaserJets beyond their budgets. The color DeskJet made its debut in 1991. Hewlett-Packard produces and sells across the world and has facilities in the United States, Germany, Ireland, The Netherlands, Israel, United Kingdom, China, Japan, and Singapore.
This company had total sales in 2006 of approximately $34.9 billion. Of that total Canon realized $22.6 billion from the sale of multi-functional peripherals (MFPs), monochrome and color laser printers, inkjet printers (of which Canon introduced 24 new models in 2006 alone), and document scanners. Canon, along with Hewlett-Packard, was the first company to develop inkjet printing. Canon is ranked as the leading producer of multifunction units.
Seiko Epson Corporation
This company, usually thought of as Epson, is a Japanese company with sales in Fiscal Year 2006 of approximately $13.2 billion. Epson owes its status in this industry to its early participation in the personal computer market. It developed the first affordable desktop printers. The company was active in the United States in the early 1970s as a producer for original equipment manufacturers. The emergence of small computers alerted the company to the potential new market of printers; thus Epson introduced a low-priced dot matrix printer in 1979, the MX-80. Since then Epson has not only dominated the dot matrix market but has leveraged its experience, know-how, and distribution skills to become a major printer producer offering impact, inkjet, and laser printers, and supplies including multifunction printers (MFPs) and personal photo printers, worldwide.
While Xerox Corp. was instrumental in the development of xerography, it also helped give birth to laser printing when its management allowed researcher, Gary Starkweather, to develop the technology. Xerox has proven itself more creative in inventing than in profiting from new technology. Xerox, however, does remain a major presence in laser and solid ink printing. The company had sales in 2006 of $15.9 billion of which $7.6 million came from the office segment where Xerox reports sales of its MFPs, lasers, and other printers. Xerox is a leader in printing systems used in large office applications.
Lexmark International, Inc.
Lexmark was founded in 1990 when IBM Corporation spun off its successful printer operations to a newly formed enterprise. IBM chose to leave the personal computer hardware business to concentrate on more profitable areas in the computer field, where it remains an active participant in PC software. In 2006 Lexmark had sales of $5.1 billion of which 33 percent were laser and inkjet printers, 56 percent were sales of toner and ink, and the remainder being undefined other sales. Lexmark has a wide line of printer products. Since 2002 Lexmark became the supplier of Dell Inc.'s inkjet and laser printer lines under a special, phased agreement. Dell sells Lexmark-produced machines under its own name and using its well-developed distribution system. Dell is the top-ranked supplier of personal computers.
Brother Industries, Ltd.
This Japanese company began, and continues still, in the sewing machine industry, but diversified into the typewriter industry. Brother became associated with printers when it began producing printing devices for Centronix, an early entrant into the dot matrix printing field. By 2006 communications and printing devices had become the dominant segment in Brother's portfolio. The company had sales of approximately $4.95 billion. Of that total $3.2 billion was in the printing and communications category, which includes cell phones that are manufactured by the company.
MATERIALS & SUPPLY CHAIN LOGISTICS
The electronics industry as a whole has become a global industry characterized by specialization. Components are generally manufactured in Asia and Europe. Most U.S. producers utilize contract manufacturers and have assembly and testing operations overseas. Such approaches are economically and logistically justified by the relatively high value and light weight of the product, especially true of inkjet printers. For this reason imports have come to satisfy most U.S. demand. Labor savings achieved in low-labor-cost markets outweigh savings in transportation costs that might be available by domestic manufacturing. Meanwhile technical control of the production and creative control over design can be maintained by the producer.
Printers reach their customers using the same distribution in which personal computers and their peripherals reach their destination. A portion of total products follows a three-tier distribution system: producer to wholesaler, wholesale to retailer, and retailer to end user. Most products used in the home are purchased from specialized electronics retailers or mass merchants. Toner and ink are more widely available in office stores and even drug stores. Integrators, a category that properly belongs in the wholesale sector, deliver most printers to small-to-medium businesses, institutional buyers, and large corporations. Printers are typically part of large network installation serving work groups or are sold as add-ons as these networks expand. In small and medium businesses, individuals may acquire printers through the company from the company's own supplier often at discounted rates. A small but important segment of this business takes place by online distribution via the Internet.
Key users of printers are computer users. The deep penetration of personal computers into the household as well as in the public and private sectors and institutional markets has created the demand. Because household use of computers is often less intensive, lower-cost inkjet printers dominate the home market, while laser printers dominate the institutional market.
Paper is the largest market adjacent to printers. At the wholesale level the Printing and Writing Paper Merchants industry (NAICS 42-4110) had estimated sales of approximately $40 billion in 2006, of which a significant portion was printer and copier paper. One major printer producer, Xerox, also sells its own line of paper. Computerized typewriters, still available on the market but a category with a limited future, represent low-end alternatives to printers for text production only. The convergence between copiers and printers in MFP machines is also erasing office copying as an adjacent market to printers. Copiers and laser printers perform the same services in the same way, and as printers learn to copy so copiers are learning to receive rasterized data directly from computers. Photo printers compete with traditional photo printing services from film; service providers also accept and print digital photos delivered on disk, and often use high-end photo printers to do their job. A more distant competitor of the desktop or large office printer is the commercial printer who receives computer-typeset files and puts its content on paper using large offset printing presses.
RESEARCH & DEVELOPMENT
The predominant thrust of research and development is devoted to product development and to the improvement of production techniques. MFPs are receiving considerable R&D funding, especially devices aimed at the desktop user where miniaturization of devices is important. Laser-based color printing is still in the early stages because producers are devoting considerable attention to the subject of color in various contexts—its mechanical deposition and toner chemistry. In the development of larger systems manufacturers are looking to achieve increased reliability, more services to the user, and lower operating costs. Longer-term goals appear to be to enhance laser printing so that it will eventually displace offset printing.
As the first decade of the twenty-first century was nearing its close, the maturing of the printer industry, at least in the developed regions of the world, was an oft-noted trend by industry observers, including major producers. Very large markets remained, especially the markets in China and India. At the same time, new segments within the category were still developing and growing rapidly.
Color printing in the inkjet segment was well established by the middle of the first decade of the twenty-first century. Rapid growth in color laser printers, however, was just beginning. For instance, Canon reported growth in its sales of color lasers advancing at a rate of 50 percent from 2005 to 2006 whereas its sales of monochrome units advanced at a rate of 10 percent. Other producers also reported this trend.
The rapidly growing market for digital cameras was creating a growing market for specialized printers designed to produce photographs from pictures stored in computers or directly from the digital camera. The category known as photo printers, is based on inkjet and thermal dye technologies. Thermal dye devices carry the color on a ribbon, cause it to vaporize to a gas before deposition to the paper where the color once more solidifies. Photo printers place their images on ordinary or special photographic paper.
The multifunction printer appeared on its way to becoming the dominant future category. At the high end such machines can scan and digitize information on sheets of paper and act as copiers, printers, and as fax machines. According to Lyra Research, Inc., unit sales of MFP inkjets exceeded single-function machines for the first time in 2006. MFP lasers, particularly monochrome implementations, are also expected to grow more rapidly than single-function machines.
TARGET MARKETS & SEGMENTATION
The printer market has a large home-use segment principally served by inkjet and specialized photo printers. Casual users favor these products because equipment costs are modest and cartridge costs are relatively low. At the high end of the home segment, some buyers tend to opt for laser printers and, increasingly, color lasers. The high end of the commercial/industrial segment is served by high-throughput printer systems, typically by MFPs designed to support large work groups. Marketing aimed at the home market emphasizes low cost and quality of output, particularly in the photo printer segment. Promotion to the industrial high-end is based on throughput, reliability, and operating cost.
Between these extremes lies the broad business market populated by small- and medium-sized enterprises, the largest institutional buying segment. Its requirements are for high quality and reliable products readily satisfied by monochrome lasers. Specialized machines aimed at buyers in the graphic arts and typesetting businesses, accommodating large paper sizes beyond the standard and legal size, are promoted by features and performance.
RELATED ASSOCIATIONS & ORGANIZATIONS
Association for Computing Machinery, http://www.acm.org
Business Technology Association, http://www.bta.org/i4a/pages/Index.cfm?pageID=2031
Computer & Communications Industry Association, http://www.ccianet.org
Consumer Electronics Association, http://www.ce.org
Electronic Industries Alliance, http://www.eia.org
IEEE Computer Society, http://www.computer.org/portal/site/ieeecs/index.jsp
National Electrical Manufacturers Association, http://www.nema.org
Portable Computer and Communications Association, http://www.pcca.org
"Computer History." Computer Hope.com. Available from: 〈http://www.computerhope.com/history/index.htm〉.
"Computers and Peripheral Equipment: 2005." Current Industrial Reports. U.S. Department of Commerce, Bureau of the Census. January 2007.
Darnay, Arsen J. and Joyce P. Simkin. Manufacturing & Distribution USA, 4th ed. Thomson Gale, 2006.
Lazich, Robert S. Market Share Reporter 2007. Thomson Gale. 2007.
"Monochrome MFPs Are Here To Stay." Lyra Research, Inc. 25 August 2006. Available from 〈http://www.lyra.com〉.
"Multifunction and Single-Function Ink Jet Shipments Converged in 2005." Lyra Research, Inc. 13 March 2006. Available from 〈http://www.lyra.com〉.
O'Hanlon, Charlene. "Gary Starkweather—Laser Printer Inventor." ChannelWeb network. 13 November 2002. Available from 〈http://www.crn.com/it-channel/18838549〉.
"Product Summary: 2002." 2002 Economic Census. U.S. Department of Commerce, Bureau of the Census. March 2006.
"Spitting Image." The Economist. 19 September 2002.
"Worldwide Bulk Toner Revenue, Monochrome versus Color, 2000–2007." Lyra Research, Inc. Available from 〈http://lyra6.lyra.com/UnityMailImages/ECNext/WWToner.jpg〉.