Ink cartridges getting smarter

Printer companies are extremely concerned about the market for consumables and printer supplies, as the market for printer hardware is only expected to grow 2.4 percent in 2003, according to IDC. But a growing market for third-party printer supplies has led vendors to examine their use of technology to prohibit, or at least discourage, the use of third-party products.

A large business surrounding replacement inkjet and toner cartridges has developed, thanks in large part to the Internet. Remanufacturing companies purchase old ink cartridges, refill them with ink, and sell them for far cheaper prices than the vendors can through places like eBay Inc.'s auctions or direct e-mail.

In response, printer vendors have tried to offer their customers more value along with the higher price for vendor print cartridges. Many companies now place chips within their cartridges to detect when they have been refilled or remanufactured, or notify the user when ink levels are becoming low. Some cartridges can even automatically order new supplies to ensure the customer never runs out of ink.

But some printers and cartridges are designed only to work with each other, and prohibit the use of third-party cartridges. A trial is currently underway that could have broad implications for the remanufacturing industry and the use of smart technology.

Lexmark International Inc. and Static Control Components Inc. (SCC) have exchanged lawsuits over SCC's use of chips in its remanufactured cartridges for Lexmark printers. The SCC chips duplicate the software controls in Lexmark printers and cartridges that only allow Lexmark cartridges to be used with Lexmark printers, and Lexmark alleges this is a violation of the Digital Millennium Copyright Act.

A federal court judge granted Lexmark's request for an injunction prohibiting SCC from distributing cartridges with the chips in February.

Not all companies have chosen to fight the remanufacturing business head on. There is a difference between companies that simply drill a hole in a cartridge, and dump in any ink they can find, and companies that actually recondition each cartridge to replace certain components, and use high-quality ink or toner, said Cathy Lyons, ink supplies general manager for HP.

The latter companies generally have very conscientious business practices, Lyons said. But users who purchase any type of remanufactured cartridges are making a tradeoff between cost and overall print quality, she said.

Remanufactured cartridges generally don't last as long as cartridges from vendors, and the images or text from remanufactured cartridges are more prone to fading, Lyons said.

HP's printers don't shut down when they detect a remanufactured or refilled cartridge. Instead, the printer sends a message to the administrator or user that a non-HP cartridge has been detected, and temporarily halts printing. The user can override the temporary halt in printing by pushing a series of buttons on the printing, or clicking certain links from the administrator's PC, Lyons said.

"We made a very conscious decision never to use smart technology to lock out any competitors or to prevent customers from using competitive products," Lyons said.

The printer also can automatically order new supplies from HP when the ink or toner in the cartridge falls below a certain level. The reminder level is set by HP, but the customer can continue to print until the ink level is extremely low, she said.

Dell uses smart technology to detect foreign cartridges under its Use and Return policy. Dell printer customers can choose to order Use and Return cartridges at a cheaper price than regular cartridges when they buy their printers, but must return those cartridges to Dell when they are empty, said Phil Ventimiglia, senior manager for product marketing in Dell's imaging and printing group.

A chip within Dell's printers detects if a Use and Return cartridge has been refilled, and won't allow users to print with a refilled Use and Return cartridge, Ventimiglia said. However, users can buy a standard cartridge for more money that doesn't have that smart technology, and can be refilled and used without any problems, he said.

Dell also uses smart technology to detect ink levels and automatically order replacement cartridges, he said.

Epson's smart technology also detects ink levels, and notifies customers if they are using a third-party cartridge, but the user can still print with those cartridges, said Pam Barnett, an Epson spokeswoman.

Printer vendors have done a good job of demonstrating that customers don't take into account the long-term costs of operating a printer when they buy one, said Stephen Baker. By keeping the price of the printer artificially low, the companies have a chance to make money on the renewable part of the printer if they can provide an incentive for customers to stick with their products.

But as consumers continue to save money on remanufactured cartridges, the industry will be forced to confront the issue either through the legal system, as Lexmark is doing, or through lower cartridge prices to maintain that important renewable business.

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