The 17- to 19-inch inkjet printer market is a specialty market worth examining because it may be illustrative of other wide-format printing sectors in the future. Having peaked in 2008 in unit volume, declining 25 percent in 2009, and then recovered with about 10 percent in 2010, the assumption made was that it would continue to recover in 2011. It was not to be, and actual unit volumes in 2011 declined by the same percentage as the earlier decline.
The explanation that unit volumes dropped because of HP’s exit from that segment is not sufficient. Photographers are no longer incented to upgrade their printers as frequently. Also the level of quality and productivity has reached its zenith and there are not enough new photographers interested in owning a medium-size format printer.
Despite the fact that the unit volumes are projected to decline, the long tail of the installed base makes this a market of interest. As illustrated in Figure 2, the installed base remains stable despite a projected 10 percent retirements annually and a decline in new unit placements. The installed base drives the annuity on ink and paper for vendors.
For Epson, Canon, and HP, this installed base is what will continue to provide a relatively steady and predictable annuity stream for years.
The key to sustainability of this market is to sustain the interest of photographers while balancing the investment for the next generation of printers. Epson has not upgraded its 17-inch printer line in about 2.5 years, since the introduction of the Stylus 3880 series. Presumably, one reason it has not upgraded is because the newer generation inkjet heads might raise the acquisition cost of a 38xx replacement well above the current $1,150 street price entry. Another reason may be diminishing returns on print quality improvements, as most digital SLR cameras reach their maximum resolution capabilities for A2 size prints.
Whatever the reason, both Epson and Canon will need to find compelling reasons for photographers to continue to upgrade. Other inkjet market segments such as the label production inkjet printer segment may be more dynamic, but it won’t be able to replace the revenue and profit derived from this segment in the next four years.
Even without much innovation, the annuity from ink and media is projected to continue for years to come. This is the beauty of the long tail of a well-seeded installed base.