Out, Damned Spot (all 300 Of Them)

Sydney Morning Herald

Tuesday November 27, 2001

Charles Wright

Over the past couple of weeks, The Edge has been getting the familiar message from the HP LaserJet 4000 printer which regularly alerts us to the fact that toner is low and it's time to pop a couple of hundred dollars into Hewlett-Packard's revenue stream.

Ever since we bought a LaserJet III back in the days when 300 dots per square inch seemed like a miracle we've been making regular contributions to Hewlett-Packard. At the time we thought we were buying a printer. We didn't realise that we'd written Hewlett-Packard into The Edge's financial plan, as a long-term beneficiary.

It's been a fairly one-sided relationship. While we can't complain about the quality of the product we've had to pay for only one service to the LaserJet III, which is still happily sending money off to HP there have been no rewards for our long-term contributions. Far from offering us a discount for services rendered, Hewlett-Packard seems to want an ever bigger share of our pathetically slim resources.

Last January, for instance, it made a unilateral decision that we would, henceforth, have to kick in a little more. Frankly, we felt unappreciated and taken for granted. There wasn't any sharp increase in the world price of toner. The Australian dollar had dropped only about 4 per cent against the US dollar, but Hewlett-Packard decided we'd have to pay an extra 10 per cent. Is that any way to treat an old friend?

We called a meeting of the Hewlett-Packard Benefit Fund aka The Edge Enterprises and decided to review our policy when that little message popped up again.

This time, we shopped around, and discovered that OfficeWorks wanted to charge us $312 for the HP 4127X cartridge that is supposed to produce 10,000 pages if you count your pages at about two paragraphs of text apiece.

At Harris Technology we could get it for $259, and at Downtown Software, $258. As a result of that, we decided we would also review our policy towards OfficeWorks.

But bad news for Hewlett-Packard we didn't buy that cartridge. We did a little checking around and discovered that one Australian university, RMIT, had done a study of remanufactured laser cartridges from National Toner and Ink.

Their figures showed that these cartridges produced 500 more pages than the Hewlett-Packard version, with no difference in print quality. We priced one of their cartridges at $158. That represented a 38 per cent cost saving, plus 3.5 per cent more pages. The time had come to take Hewlett-Packard off the payroll.

It may seem a trivial matter, but for us some deeper issues were involved. Like many of the companies we've chosen to do business with, Hewlett-Packard has in recent years lost our trust. We no longer believe that these companies are acting in our best interests for instance, when they declare, as Hewlett-Packard does, that recycled laser cartridges may not do as good a job as the original version, or may damage the printer.

We're no longer discouraged by Hewlett-Packard's policy which is also Epson's policy that if something does go wrong with refill cartridges, we'll have to pay the cost of repairing the printer. There are many local companies that sell good-quality toner and ink-cartridge replacements, and if you shop around you'll find one prepared to guarantee you against loss or damage resulting from use of its products.

We know that the standards of the recharging industry have improved enormously over the years and, depending on the degree of remanufacturing, the failure rate of recharged laser cartridges varies between 3 per cent and 1.8 per cent.

At the lower end, that's rough-ly equivalent to the performanceof ``new" cartridges, and they also include recycled material.

The fact is, consumables are by far the most lucrative source of profits for printer manufacturers, and they are prepared to go to what we regard as extraordinary lengths to protect that revenue from the recharging industry. It's a classic case of conflict of interest, and the consumer is losing out.

We have watched Epson, for instance, install a proprietary chip that makes it difficult to refill inkjet cartridges. We've seen Lexmark introduce its ``prebate" cartridges which offer consumers a discount if they agree not to reuse or resell them.

In our opinion, the best way for these companies to kill the recharging industry is to stop exploiting their customers. The mark-ups on ink and toner are, in our opinion, indefensible.

In the US, Federal Government and a number of States have mandated their agencies to at least consider use of replacement cartridges as an alternative to expensive ``new" cartridges.

As a result, some have cut their consumables costs by between 30 per cent and 60 per cent.

Our federal and state governments could save about 50 per cent of their consumables expenditure by adopting the same policy. We suggest that, like The Edge, they should get these printer manufacturers off Australia's payroll.

cw@bleedingedge.com.au