Lexmark tones up for printer fight

Lexmark International plans a major product unveiling next week aimed at raising the stakes in the laser printer battle with Hewlett-Packard and taking on copier manufacturers that make office machines that act as a printer, scanner and copier, sources told CNET News.com.

The No.2 printer maker is expected to speed up its laser printers in the sweet spot of the market while introducing so-called multifunction peripherals (MFPs) that offer better integration of scanning, printing and copying functions. The company is not expected to introduce any new inkjet models as part of the announcement, set for Monday.

The multifunction market is a key area for printer makers such as Lexmark and HP, which are looking to capture business as companies replace their analog copiers with digital machines. Companies increasingly are trying to replace copiers and faxes with machines that hook into their corporate computer network and can act as a network printer, as well as a place for workers to walk up and make copies.

"As businesses look around at their output options, they are saying 'Get rid of the old fax and the old copier, and get this device,'" said Gartner Dataquest analyst Peter Grant.

Lexmark also is expected to introduce new products in its mainstay laser printer market. Rival HP introduced two new laser printers on Wednesday and cut prices on several other models in an effort to boost the company's appeal to small and midsize businesses.

A Lexmark representative on Wednesday declined to offer details on the company's forthcoming products.

Although Lexmark is a solid player in both the corporate and consumer markets, it is far less visible than HP. The company's most publicity of late has come from its role as technology provider to Dell Computer, which last week introduced three black-and-white laser printers and a color inkjet all-in-one machine using technology from Lexmark. The two companies inked a manufacturing partnership last September.

Still, Grant says Lexmark is a formidable competitor for HP, in some cases moving considerably faster in bringing out new products than its larger rival.

Lexmark's new MFP products will represent the company's third full generation of such devices, Grant said. Lexmark now has both color and monochrome versions of its MFPs. In January the company also introduced its first software geared at helping companies manage their electronic documents.

All the printer makers face a common challenge in trying to garner attention for their gear, Grant said, noting that printing and copying have historically been almost an afterthought for most IT departments. Most companies have little control over what gets printed, and many don't even know how much they are spending.

"Printers are the last thing people think of," Grant said.

However, companies are starting to pay more attention to printers as they look to find ways to cut already scaled-back budgets. "Output is one of the last bastions of unmanaged consumption," says Jim Lundy, a printer analyst at Gartner. "CIOs (chief information officers) are starting to get it."

Many companies can cut their printing budgets by 10 percent to 30 percent by rationalizing their array of copiers, faxes and printers, Grant estimates, with multifunction peripherals representing an attractive option for many companies.

Although the MFP represents a potential boon for the printer makers, the segment is dominated today by copier makers such as Xerox, Canon, Ricoh, Sharp and Konica. In the 20-page-per-minute to 40-page-per minute segment, for example, HP is No. 9 in the market, and Lexmark is No. 15, according to Gartner. However, analysts say that the printer makers have increasing advantages given their understanding of the complexities of corporate networks and how documents are created and stored.

In some cases, the battle between the copier manufacturers and the printer makers boils down to who is making the purchasing decision. Whereas IT managers traditionally choose which printers go on a company's network, the selection and maintenance of copiers and faxes often is made by the facilities department.

"It's a battle of who is going to own purchase decision," Grant said.

Here too, some analysts say the printer makers may have an edge, given that most multifunction devices hook into the network and are likely to fall under the purview of the IT department.

"HP and Lexmark dominate monochrome printers," Grant said. "It is a natural for them to introduce MFPs and broaden their market."

In that area, both HP and Lexmark have their strengths, Grant said. HP has its dominant market position, a well-known brand and track record of reliability. Lexmark, meanwhile, has been somewhat nimbler, generating new products faster and at a lower cost, he said.

"Lexmark is doing quite well," Grant said. "They understand this business, and they understand document management and workflows."

HP executive George Mulhern sees the MFP as helping to usher in an era where more documents are stored electronically. Whereas today most people approach the devices as a way to make more paper copies, Mulhern predicted that at some point the copy flow would reverse itself, with the devices seen more as a way to get paper documents into an electronic form.

"Copying is going away," Mulhern said. "It has been for several years."