A Greater Variety of Cartridges Being Produced In-house According to Survey
- By Megan Hubble
- Jan 01, 2009
Diversification is the name of the game this year, with the results of the 2008 Cartridge Production Survey showing that remanufacturers are producing a wider variety of cartridges in-house and, most significantly, more color toner cartridges than ever before.
In fact, color toner cartridge production hit 30 percent this year (definitely breaking the previous high of 16 percent set last year), with monochrome cartridges dropping to 66 percent, the lowest production levels since the survey’s inception. That number is down from 79 percent last year, but is a more significant decline from record high of 95 percent that monochrome toner cartridges enjoyed in the survey’s first year, 2004. (MICR makes up 4 percent of toner cartridge production this year, which is about normal.)
For the first time, we also have some respondents who produce 100 percent color toner cartridges. Only 5 percent of in-house toner producers are in this boat, but that is still significant increase over the 0 percent seen in each of the survey’s previous four years.
In other news, fewer respondents than last year say they are producing any cartridges in-house, and those who do are diversifying — producing more cartridge types than in the past. We see that one third of respondents are producing 50 or more cartridge types this year, beating the 2005 record of 23 percent.
While HP still reigns supreme in every category (both in-house toner and inkjet cartridge production), its popularity is slipping, with other OEMs, including Xerox and Sharp, making strides.
This survey was offered at World Expo in August 2008 in Las Vegas. We had 249 people answer at least one question on the survey (198 people last year). This year’s respondents have been in business an average of 15 years (compared to 11 years on average last year) and have an average of 832 employees, much greater than last year’s average of 198 employees.
Sixty-three percent of survey takers are located in the United States and 37 percent are international, similar to the 61 percent U.S./39 percent non-U.S. split seen last year.
The most popular business model is remanufacturer, chosen by 45 percent of all survey takers. Cartridge reseller comes next with 34 percent, followed by ink/toner supplier with 25 percent and printer parts supplier at 20 percent. Fifteen percent do printer repair. Respondents could choose more than one category, so percentages do not add up to 100.
Results for last year’s survey, and those of previous years, will be discussed when relevant. All of the Cartridge Production Surveys were offered at World Expo in late summer or early fall of the listed year.
1) What percentage of your cartridges produced in-house are toner, inkjet and MICR?
Toner cartridges represent two-thirds (67 percent) of the production run for the average in-house producer. See Figure 1. This is up from last year’s 59 percent and from the 63 percent seen in 2006.
Most of the difference came from inkjets, which make up only 28 percent of production this year, down from 37 percent last year and 34 percent in 2006. MICR has seen a slight increase to 5 percent this year, as compared to 4 percent last year and 3 percent in 2006.
It appears that this year’s survey takers are very dedicated to toner cartridge production. In fact, 90 percent of respondents produce at least some toner cartridges, while only 56 percent produce any inkjets in-house, and 40 percent do MICR cartridges.
Actually, many respondents produce only one type of cartridge, with 32 percent producing 100 percent toner cartridges (only 19 percent last year), 10 percent producing entirely inkjets (10 percent last year). While no one produces 100 percent MICR cartridges (less than 1 percent did this last year), a number of respondents do dedicate resources to MICR, and some say these cartridges make up to 50 percent of their overall production run. Not surprisingly, no one produces only inkjets and MICR — all MICR producers also do toner cartridges in-house.
Looking at the bigger picture, we have learned that more than half of respondents (58 percent) produce a combination of cartridge types in-house. For those, the mix is 61 percent toner cartridges, 30 percent inkjet and 9 percent MICR.
Not everyone who took the survey produces any cartridges in-house, though. Of the 249 people who answered at least one question on the survey, 149 people (60 percent) say they produce at least some cartridges in-house, while the remaining 100 people (40 percent) do not do so. Last year, two thirds of respondents produced cartridges in-house and one third did not. The respondents who do not produce cartridges in-house did not answer the remaining questions, since they are all about production.
2) What percentage of your toner cartridges produced in-house are monochrome, color and MICR? How many of each type of toner cartridge do you produce on average each month?
For toner cartridge producers, monochrome cartridges are still the biggest category, but color saw a big increase. See Figure 2. For the average toner cartridge producer, their production run is made up of 66 percent monochrome cartridges, 30 percent color cartridges and 4 percent MICR.
This is a big change from last year, when 79 percent of the average production run was monochrome, 16 percent color and 5 percent MICR. Monochrome cartridges have seen a steady decline over the past five years, from a high of 95 percent in 2004 to the 66 percent we see this year. This is a major difference, and is likely due to increased profit margins on color cartridges as well as increased placements of color printers and MFPs.
The price point of these printers has dropped in recent years, making it much easier for the average office to afford them. Since many color machines take three separate color toner cartridges (in addition to a single black cartridge), aftermarket color cartridge production is likely increasing to keep up with the increased demand.
All of that said, it may seem a bit unusual to see such a big change in one year, especially when the shift had previously appeared fairly gradual. But we have seen some fairly large jumps in the past as well. In fact, there was a 10 percentage point increase between 2004’s 3 percent color production and 2005’s 13 percent share. Looking at it in that context, it is easier to accept this year’s 14 percentage point jump (from 16 percent last year to 30 percent this year).
Another sign of the changing color landscape is that, for the first time, we have respondents who produce only color toner cartridges. Six respondents (of the 118 people who produce any toner cartridges in-house and answered this question) say they produce 100 percent color toner cartridges. This is only 5 percent of respondents, but it is still significant when you consider that only 10 percent (or 12 total respondents) say they do 100 percent monochrome cartridges.
When we look more closely at the production runs, we find that monochrome cartridges are still, on average, outpacing color and MICR in absolute numbers, but not by much. The average number of monochrome cartridges produced in-house is 46,261 per month, with a median of 400. Last year’s average was 9,395 monochrome cartridges with a median of 400 as well.
This year, the average number of color cartridges produced in-house is 44,123 cartridges per month (median of 200), which is a very significant increase from last year’s 3,310 color cartridges (median of 50). For MICR, the average production run is 250 cartridges (with a median of 50), up from an average of 136 MICR cartridges last year (median of 10).
But all of this tells us that we must have some very big producers taking the survey. That is probably yet another reason why we saw the percentage of color cartridges increasing — large producers are more likely to have the expertise and money to set up color toner production lines. We have at least two respondents who each produce a million monochrome cartridges and a million color cartridges per month — obviously large companies indeed.
3) What percentage of your inkjets are black and what percentage are color? How many black and color inkjet cartridges do you produce on average each month?
Black inkjet cartridges are still more popular to produce than color inkjets, and the average inkjet producer has a production run is that 62 percent black and 38 percent color. See Figure 3. Last year, the average was 64 percent black and 36 percent color, although color hit a high of 39 percent in 2006.
Five respondents (7 percent) say they produce 100 percent black inkjet cartridges, and two respondents (3 percent) produce entirely color inkjets. Last year not a single respondent produced 100 percent of either type of cartridge.
While the percentages do not seem to have changed much, the absolute numbers show production is increasing fairly significantly. The average number of black inkjets produced is 41,699 per month, with a median of 750, up significantly from last year’s average of 13,200 black cartridges (500 median). On the color side, the average production run is 39,641 color inkjets per month, with a median of 400. Last year, the average was 14,628 color inkjets per month (50 median).
Clearly, there are some very large companies taking the survey this year. In fact, there is one respondent who produces one million black inkjet cartridges and one million color inkjets per month. When we remove this respondent, the averages drop to 22,533 black inkjets and 18,407 color inkjets per month. So even without this very large company, the averages are up for both black and color inkjet cartridges.
4) How have your in-house production volumes changed compared with two years ago?
Given the increases we have seen in the average production runs in the last few questions, it is not surprising that 50 percent of respondents say they are producing more total cartridges than two years ago. But in last year’s survey, 65 percent said they were producing more total cartridges in-house than two years earlier (it was 70 percent in 2006).
Twenty percent of respondents say they produce fewer total cartridges than two years ago, which is up from 14 percent last year, and another indicator of market uncertainty. Five percent say volumes are about the same (6 percent last year).
The responses on the toner side are: produce more toner cartridges, 33 percent (46 percent last year); produce fewer toner cartridges, 11 percent (8 percent last year). The inkjet responses are: produce more inkjet cartridges 18 percent (21 percent last year); and produce fewer inkjet cartridges, 6 percent (3 percent last year). It should be noted that respondents could choose more than one category, so responses do not add up to 100 percent.
But the results are clear. Across the board we see respondents being a bit more cautious — that is, fewer people are saying production runs have increased, while more people say production runs have decreased. There are a couple of possible explanations for this change, especially in the face of the previous few questions showing large increases in the average production runs for both toner and inkjet cartridges.
The first possible reason is that this year’s survey takers might represent much larger companies than last year. So while fewer people say production runs are increasing, we see that absolute production numbers are still higher than in past years. So the logical assumption is that these particular companies must have had even higher production runs previously, meaning they were even larger two years ago.
Another option is that this question received more of a “gut” response than a numerical one. That is, some respondents may have responded based on their feelings about how production runs had changed rather than by considering the actual numbers. With the looming economic crisis, people may have chosen an answer based on their gut feeling on how their business was doing. It is possible that many respondents were troubled by economic indicators, and they may have been thinking of those issues instead of considering their actual production data and how it had changed.
5) For how many cartridge types do you currently produce cartridges? How has your in-house production offering changed in the last two years?
The majority of respondents (67 percent) say they produce 50 or fewer cartridge types in-house, but this year’s respondents have moved away from the middle, with more respondents at the bottom and top of the range than ever before. Actually, all of the results are records this year — either the highest or lowest the results have ever been.
This includes a new record high of 21 percent who produce 10 or fewer cartridge types. See Figure 4. It was 12.5 percent last year and the previous record high was 14 percent in 2004.
We also have two new record lows, including the 21 percent who produce 11 to 25 cartridges (it was 32 percent last year, but the low was 30 percent in 2006), and a new low of 25 percent who produce 26 to 50 cartridges (it was 36 percent last year, but the lowest it had previously been was 34 percent in 204 and 2005).
Another record high is that now we have 18 percent of respondents producing 51 to 100 cartridges (14 percent last year, but the previous record was 16 percent in 2005) and 15 percent of respondents say they produce more than 100 different cartridge types (5.5 percent last year, but the previous high was 7 percent in 2005 and 2006).
So the 11 to 25 and 25 to 50 ranges both are the lowest they have ever been, while the other three set record highs. The increases in the top of the range — those 50 and above — likely are related to the larger companies in this year’s survey. Larger companies are more likely to have the resources to produce a greater variety of cartridge types. The average total cartridge production of those who produce 50 or more cartridge types is 252,483 cartridges (both inkjet and toner combined), much higher than the average.
Obviously we have some specialists too — more people than ever are producing 10 or fewer cartridges. They are more likely to be smaller producers, with an average in-house production of 842 cartridges.
The increases at the top of the range may also be related to the fact that almost three quarters of respondents say that their cartridge offerings have increased in the last two years. In fact, 71 percent of in-house cartridge producers say they are now doing more cartridge types, while 16 percent say they are producing fewer, while 13 percent say things are about the same as two years ago. In last year’s survey, 74 percent had seen increases, 13 percent had seen decreases and 13 percent stayed the same.
6) Do you produce color cartridges in-house? If so, how has your in-house production of color cartridges changed in the last two years?
Although we have already been able to gather some data on color production from the previous questions, we also asked more directly. We find that overall, 74 percent of in-house producers say they produce some sort of color cartridges in-house, either toner or inkjet, while 26 percent produce only black toner or black inkjet cartridges. Surprisingly, this is actually down from last year, when 88 percent produced some sort of color cartridges in-house and 12 percent produced black only.
But our earlier results indicated that the big surge was in color toner cartridges. When we look at the cartridge types separately, we see that 63 percent of all in-house producers make color toner cartridges, which is up from 54 percent last year. See Figure 5.
We find that only 25 percent do color inkjets, down from 54 percent last year. Fifteen percent of respondents produce both color toner cartridges and color inkjets, down from 33 percent last year.
We have seen in previous questions that the number of inkjet producers taking the survey dropped slightly, but this should not have affected the black/color split for inkjet production so much.
This may mean that color inkjet really is dropping off, perhaps as end users (particularly businesses) shift their color printing to laser printers, which are faster and likely a better overall value, despite higher up-front costs. We will definitely keep an eye on this in upcoming surveys.
7) What percentage of your in-house inkjet cartridge volumes is from each OEM?
HP is still tops on the inkjet side as well, with the average inkjet production run made up of 55 percent HP cartridges. But this is down rather significantly from last year’s 65 percent. Epson came in second, with 12 percent (10 percent last year), followed by “other” at 10 percent (2 percent last year). See Figure 6. The “other” OEMs include Sharp, Ricoh, and Neopost. Once again, the popularity of this category was due mostly to a few respondents who produce 100 percent of a non-listed cartridge.
The other OEMs include: Canon, 8 percent (8 percent last year); Lexmark, 7 percent (11 percent last year); Dell, 4 percent (2 percent); and Brother, 4 percent (2 percent).
In addition to HP, we see that Lexmark also dropped, while Epson, Dell and Brother gained ground.
8) What percentage of your in-house toner production volume is from each OEM?
Once again, Hewlett-Packard rules the roost, with the average respondent’s toner production line made up of more than half HP cartridges. But HP only claimed 55 percent of the average toner production run this year, down from 66 percent last year and 70 percent in 2006. There are 12 people (11 percent) who produce entirely HP cartridges, though. Also, 88 percent of those who answered this question say that they produce at least some HP cartridges in-house.
The next most popular category, believe it or not, was “other,” which drew 8 percent on average. This included OEMs such as Kyocera Mita, Oki, Epson, Muratec and Ricoh. This category’s high rank can be attributed to a few respondents who do 100 percent “other” cartridges.
In fact, six respondents (5 percent) say their entire production run is from OEMs other than those on our list.
The remaining OEMs and the percentage they make up of the average production run are: Lexmark, 7 percent (7 percent last year); Xerox, 6 percent (2 percent last year); Sharp, 5 percent (1 percent last year); Canon, 5 percent (7 percent last year); Brother, 5 percent (4 percent last year); Samsung, 5 percent (6 percent last year); Dell, 3 percent (3 percent last year); IBM, 1 percent (1 percent last year) Konica, 1 percent (1 percent last year), Pitney, 0 percent (0 percent last year also); and Kodak, 0 percent (1 percent last year).
In this group, we see that Xerox has made fairly significant gains, going from 2 percent last year to 6 percent this year (putting it in third place). It is interesting to note that Xerox produces quite a few color laser printers, and its rise in the rankings may reflect the increased interest in color toner cartridge production seen throughout the survey. No one produces entirely Xerox cartridges, but about 5 percent of respondents say that their production run is made up of at least 60 percent Xerox cartridges. Overall, we find that 30 percent of respondents produce at least some Xerox cartridges in-house.
Sharp also saw fairly significant gains, but Canon and Samsung both declined.
9) What is your largest-volume toner cartridge and for which OEM have you seen an increase in demand?
We know that HP is the most popular OEM, but which cartridge is the most popular overall? This year, the top cartridge is the one for the HP LaserJet 4200, taking the top spot for the first time. In fact, this is the first year it has even made the top five.
The HP 4250 was next, followed by the HP 2600, HP 1010 and the HP 4000 (the top cartridge in 2005 and 2006) rounded out the top five. If you added in the few votes for the HP 1012 (which takes the same cartridge as the HP 1010), it would bump it up to a tie for second place, but the HP 4200 would still be the winner. Last year’s top five were: HP 1012, HP 4250, HP 1010, HP 4000 and HP 4100.
So we see a bit of a shakeup this year, with HP 4200 jumping to the top, and the HP 4000, that ever-popular workhorse, still hanging in there. This is also the first year that a color printer has made the top five; the HP 2600 is definitely growing in popularity.
Most respondents did name HP cartridges, but this year, cartridges from Xerox, Brother, Canon, Dell, Sharp, Lexmark, Konica, Oki, Ricoh, Sharp and Samsung all got at least one mention.
Last year, only Samsung and Brother were even listed. So we see that respondents are definitely producing a wider variety of cartridges than in the past.
As for the OEM seeing increased demand, HP is still the runaway winner, with 49 percent of the vote (51 percent last year). Dell was next, with 18 percent saying they see increased demand for that OEM, although that is down from 24 percent last year. The other OEMs listed (and the percentage choosing each) are: Brother, 8 percent (10 percent last year); Canon, 6 percent (11 percent last year); Sharp, 6 percent (0 percent last year); Samsung, 5 percent (23 percent last year); Xerox, 4 percent (1 percent last year); Lexmark, 2 percent (2 percent last year); Minolta, 1 percent (0 percent last year); and Ricoh, 1 percent (0 percent last year). Epson garnered 1 percent last year but didn’t make the list this year.
Dell and Samsung both saw rather significant drops from last year, and Xerox saw a decent increase. There were a few new additions to the list, including Sharp, which had a fairly strong showing.
10) What is your largest-volume inkjet cartridge and for which OEM have you seen an increase in demand?
The HP 56 cartridge is still the most popular one on the inkjet side. Second place goes to the HP 21, which also held second place last year. In third and fourth places, but much less popular, are the HP 15/45 and the HP 58, neither of which made the list last year.
Last years other top contenders were the HP 57, HP 27 and HP 92. The non-HP cartridges listed included some from Canon, Epson, Neopost, Ricoh and Sharp.
HP cartridges are also the most likely to see increased demand, with 82 percent picking this OEM. But like every other area in the survey, this is a drop from last year, when 95 percent picked HP.
The other OEMs listed this year include: Epson, 8 percent; Canon, 4 percent; and Dell, Ricoh and Sharp, each with 2 percent. So the diversification continues, with HP maintaining a significant lead, but losing a little ground to other OEMs. Clearly, many remanufacturers are looking to broaden their production lines, both with products from other OEMs and with color cartridges.
This article originally appeared in the January 2009 issue of Recharger.