Dell's president Kevin Rollins announced plans to cut printer prices by 30% to 50% and ink prices by 10% to 20%, citing complaints from customers over cost. A time frame was not indicated.

 

Facing progressively thinning margins in its PC business, Dell added printer and printer suppliers to its product line-up in March 2003. Two million units were sold during the first ten months, twice as much as Dell had originally forecast. Sales of ink cartridges were 25% stronger than expected.

 

In comparison to competitor HP, however, Dell's current scale is small. Dell racked up 800,000 printer shipments in the quarter ended April 30, while HP says it ships one million printers every week. HP also holds 9,000 patents in printing and imaging technologies, and accumulates an additional 1,000 per year. HP also maintains a vast product line spanning prices from US$39 to US$1 million; Dell focuses on the value-line segment, with prices under US$100.

 

Yet HP has already begun to cut prices. In May, HP introduced what it heralded as the first color laser printer under US$500. The possibility of price erosion accelerated by Dell poses a significant threat to HP, given that nearly 70% of the company's revenues derive from its printing and imaging business.

 

To boost repeat sales on ink cartridges, Dell has integrated software that indicates when cartridges are running low; users can click a website to order additional units, which Dell says usually arrive the next business day. The model also allows Dell to collect customer data.

 

Dell's moves at the beginning of the year hinted at long-term ambitions in the printer business. In January 2004 the company announced alliances with Fuji Xerox, Eastman Kodak, and Samsung.