Dell planning printer trio

Dell Computer is letting the ink dry on its printer plans.

The PC manufacturer is expected to enter the printer market with three models, including two laser printers and an inkjet, launching at the end of the quarter.

Dell's initial foray is aimed at three of the stronger segments of the printer market, which include laser printers for small and medium-sized businesses and multifunction printers for consumers. Multifunction or all-in-one inkjet printers are one of the hottest segments of the retail printer market right now, analysts say.

The three printers will mark the beginning of Dell's push into the printer market and the latest maneuver in the Round Rock, Texas, company's strategy to increase revenue by expanding into markets adjacent to the PC.

Dell, which typically enters new markets with a partner, is working with Lexmark to build the printers. Lexington, Ky.-based Lexmark will manufacture Dell's printers under a partnership announced last September.

Dell's first consumer-oriented printer is expected to be an inkjet machine based on a flatbed scanner--including the abilities to print, fax and copy documents, sources familiar with the company's plans said. Sources also said that Dell hopes to sell the machine for between $150 and $200. For that price, Dell's inkjet would likely rival Hewlett-Packard's all-in-one inkjet printers such as the HP psc 2110, which sells for $199.

Meanwhile, Dell also is expected to launch two monochrome laser printers. The less expensive of the two will be geared toward small businesses and home-office buyers, sources said. This printer is expected to sell for about $300. Meanwhile, the second laser printer is aimed at larger companies and will sell for about $500. This printer may also include an Ethernet network connection for an additional fee, sources said.

Dell's new printers are likely to replace similar models from other manufacturers, which the company offers now via its Web site or over the phone. Dell could also bundle the multifunction printer with its consumer PCs, the Dimension desktop or Inspiron notebook.

But where Dell has been successful at entering new businesses in the past, the company's printer business strategy is not without potential pitfalls, analysts say. "The challenge is being able to deliver the consumables (such as ink cartridges) to the end user in some sort of fashion that's as graceful or more so than retail," IDC analyst Roger Kay said.

Another risk for Dell is that its own printer brand won't be received as strongly as it anticipates, Kay said. "If it did not pick up in volume like Dell thought, it'd become a liability pretty quickly," he adds.

Get me ink
Indeed, Dell's plans to deliver printer supplies such as ink cartridges to customers will be subject to scrutiny by analysts and the company's competitors. While Dell hasn't elaborated on its strategy, it is most likely to deliver ink and other supplies direct to customers, allowing people to place orders over the phone or online.

The delivery of such supplies has been one of the key criticisms voiced by Dell's soon-to-be printer rival HP. "If my daughter runs out of ink while doing a homework assignment, I need that ink cartridge right now. I can't wait 24 to 48 hours" for the cartridge to ship, Vyomesh Joshi, president of Hewlett-Packard's imaging and printing systems group, said during a conference call last summer. HP ink cartridges are sold at retail stores and online.

Some sources speculate that Dell could use technology that warns when a printer's ink is getting low, allowing the customer time to order more before running out. Dell is unlikely to stock supplies at retail stores or at its kiosks, which display Dell hardware at malls and in Sears department stores.

Dell representatives declined to comment for this story, but the company's top executives have expressed optimism about its entry into the printer business. "We're quite enthusiastic about the opportunity--we sold 2.5 million printers last year. You'll be seeing Dell-branded printers fairly shortly," CEO Michael Dell said last week during a conference call to discuss the company's fourth-quarter earnings.

Analysts have suggested that Dell's next product push could be a communicator phone, which combines the capabilities of a PDA and a cellular phone, or even a digital camera.

But while Dell has expanded its sales efforts to consumers and its product lines, launching its own brand of network switches, digital projectors and PDAs in the recent past, the company maintains that its primary focus will continue to be on business, where it sells servers, storage and an increasing number of service contracts.