The following appears in The MFP Report
By Brian Bissett, Publisher & Editor
On October 18, Lexmark made “one of the most significant product launches in the company’s history” with the release of dozens of new B&W and color laser MFP and printer configurations. Not only was this the biggest product launch in Lexmark’s history, it was the first hardware launch since the company announced in August that it was leaving the inkjet market after almost two decades.
Adding to the sense of urgency and importance surrounding the new laser products was Lexmark’s announcement of Q3 financial results a few days later on October 23. Lexmark managed to beat Wall Street estimates for revenue and earnings, but both figures were down from a year ago.
Lexmark basically broke even, with net income of $5 million (after one-time charges) on revenue of $919 million. Despite investing well over $500 million in software acquisitions since 2010, that part of the business generated just 5% of revenue and lost 19¢ on every dollar in sales.
Lexmark’s laser printer and MFP placements in Q3 were down 6% in the large workgroup category and 8% in the small workgroup category. Revenue was down 20% and 11% in the same categories. Laser supplies revenue was down 5%, and MPS was basically flat. All of this highlights the critical need for a boost in Lexmark’s laser business, and that is what the new MFPs and printers are intended to do.
nterestingly, while the press release highlighted the “seamless integration of Lexmark’s smart MFPs with the Perceptive Software portfolio,” there is nothing new in terms of Lexmark’s MFP software platform or specific new applications supported on the latest models.
As a result, Lexmark’s October product launch was a classic hardware announcement. The big news was “speeds
and feeds” and supplies. Lexmark has pushed its top A4 monochrome speed from 55 ppm to an astounding 70 ppm. In addition, all of the new MFPs and printers pair a separate longer-life photoconductor with a new toner formulation that Lexmark is marketing under the new “Unison” name.
Unison. Despite the breadth, capabilities and speeds of the new MFPs, it is the Unison toner and print system that is the most important aspect of Lexmark’s latest launch.
We would quibble with the new branding. Unison is too close for our liking to Unisom … “America’s leading brand of single ingredient nonprescription sleep-aid.” And the “uni” prefix is at odds with the idea of separating the previously unified toner and drum, an approach Lexmark until now has followed only on its entry-level A4 color devices.
It intriguing to see what Lexmark emphasizes in marketing Unison. The key benefit being highlighted is that the new toner cartridge does need to be shaken near the end of its life. Lexmark also highlights how the toner puts less wear on engine components and how the technology has a better carbon footprint, up to 48% better than HP according to a study Lexmark cites. Similarly, Lexmark mentions how Unison lowers Total Energy Consumption (TEC) on its new models. The lower-melt toner also enables faster first-page times.
Even more interesting is what Lexmark does not mention and what it downplays. In particular, Lexmark mentions nothing about the operating costs for its new Unison sup- plies. Additionally, Lexmark mentions only in passing the extremely high yields of some its new Unison cartridges or how that reduces the frequency of user interventions. In fact, some of the new cartridges yield 45,000 pages, which is 25% more than any current Lexmark cartridge and more than the toner for many A3-size “copier-based” MFPs.
The other odd thing Lexmark has done is to create separate sets of toner cartridges for its new MFPs and its new printers, even though the new devices share the same engines and are largely sold through the same distributors to the same resellers and end users. Only the imaging and developer units are shared. Moreover, all of the prices and yields for these parallel sets of toner cartridges are identical.
Most of the toner cartridges for the new devices are available in “return program” and non-return program versions. By our count, there are more than 80 individual new supply items for Lexmark’s latest models. There are “only” 26 supply items for the new monochrome devices, and a mind-numbing 56 supply items for the much smaller number of new and relatively low-end color MFPs and printers.
We have to wonder how hardcopy resellers, business end users, and MPS providers will react to this plethora of consumables and the attendant logistical and inventory issues. It strains credulity to believe even a patient and well-informed customer will devote the requisite time and effort to assess all of the choices and be able to determine the relative economic merits of the options. By default, Lexmark is betting that inattention and ignorance will prevail and work
to its benefit. That may indeed work, but it is hardly a strategy for which a vendor can or should be proud.
Diving into CPC. From a technical perspective, switching from all-in-one toner cartridges to separate drum units and toner cartridges, and offering higher-yield toner cartridges, should enable Lexmark to provide customers with lower operating costs on its new laser printers and MFPs. But the reality is far different. In every case, the lowest cost per page from the highest yield return program cartridge on each new Lexmark model is higher — and often significantly higher — than on the closest previous models.
Lexmark is using its Unison supplies, not
as a way to deliver lower operating costs in
a declining office printing market, but as a
way to boost profits on supplies in the hope
of offsetting such declines. This may help Lexmark’s bottom line in the near term, but it could prove a risky proposition in the longer run. And it does nothing to help Lexmark win in an ever more competitive office imaging market.
Start on the color side of the product line. Lexmark’s new color MFPs range from 25 to 32 ppm, while the closest current models have speeds between 21 and 25 ppm. The lowest possible cost per page for supplies on the new 25 ppm MFPs is 3.9¢ for black and 15.1¢ for color. The costs on the current 25 ppm MFPs are 3.5¢ for black and 11.8¢ for color. In other words, supplies on the new color MFPs are 11% higher for black and a full 28% higher for color.
The story is the same for monochrome. The lowest possible supplies cost on the new 35 ppm models is 2.3¢, versus 2.2¢ on the current 35 ppm models, or about 5% more. The lowest supplies cost on the new 45 ppm MFPs is 2.1¢, which compares to 1.8¢ on the current 35 ppm models, or roughly 18% more. On the existing 55 ppm models, the lost possible supplies cost is 1.3¢. On the new 50 ppm models, the comparable cost is 2.1¢, or a whopping 60% more. And on Lexmark’s new, industry-leading 70 ppm A4 monochrome MFPs, the lowest possible supplies cost is 1.2¢, or just 7% less than on today’s 55 ppm models.
So Many MFPs. No matter how you slice it, Lexmark announced a whole lot of new MFPs and printers on October 18. The press release mentions 18 “smart MFPs,” but Lexmark’s published price list shows 50 new, separately configured, individually priced laser MFPs. Eight are color, and the other 42 are B&W. Many of the configurations differ only slightly in paper handling, reflecting the fact that Lexmark sells its machines preconfigured through distribution.
It is an interesting sign of the times and a telling indication of where Lexmark is headed that there are twice as many MFP configurations (50) as printer configurations (26) in the new line. And these are only the models Lexmark sells through open distribution to resellers. A subset of models derived from the new range will not be openly marketed.
Rather, there will be available exclusively to members of Lexmark’s Business Solution Dealer (BSD) program.
The 50 new MFP configurations are clustered around a smaller number of individual models — three color and eleven monochrome — that are mostly differentiated by speed, user interface and solution support. These models, in turn, reflect an even small number of core platforms. All of the new color models share a single platform, and the new B&W models rely on just two platforms. And only one of these platforms appears to be a completely new design. The others are updates to existing platforms from 2008 and 2009.
Lexmark has also introduced a more intuitive model numbering scheme. A “CS” or “MS” prefix now indicates a color or monochrome printer, while a “CX” or “MX” prefix indicates a color or monochrome MFP. Previously, “C” was used for color printers, “E” or “T” was used for B&W printers, and “X” was used for both color and monochrome MFPs. Lexmark continues to use several lowercase letter suffixes to designate paper handling, networking or a hard drive.
Color MFPs. There are fewer differences between Lexmark’s new A4-size color MFPs and their predecessors than is the case with most of the new B&W models, and there are also a lesser number of new color MFPs.
Lexmark’s new color MFPs are the 25 ppm CX310 and the 32 ppm CX410 and CX510. The CX310 and CX410 replace the 21 ppm X543 and the 25 ppm X544 and X546 launched in 2008 (The MFP Report, Oct 08). The CX510 replaces the 25 ppm X548 that shipped last year (The MFP Report, Apr 11), as well as the unrelated 30 ppm X734 from 2009 (The MFP Report, May 09). The CS310, CS410 and CS510 are the corresponding new printer models.
The MX310, MX410 and MX510 use an updated version of the X540 series platform, which was Lexmark’s first A4 engine to use separate toner cartridges and drum units. Prices for the new MFPs are comparable to those for the existing models. The eight new MFP configurations are priced from $499 to $1,749, while the seven existing configurations are priced from $599 to $1,749.
Aside from faster print speeds and the changes associated with the new Unison consumables, most of the other changes in the new color MFPs are the kinds of things ex- pected after a few years: more memory, faster processors, high-speed Ethernet, and a higher duty cycle. In addition, more of the new models include a color touchscreen with Lexmark’s e-Task user interface and support for solutions.
The $499 CX310n becomes Lexmark’s least expensive color laser MFP. This 25 ppm network printer/scanner/copier reduces by 17% the cost of entry to this segment of Lexmark’s product line. The controller has an 800 MHz dual core processor, 512 MB of memory, Gigabit Ethernet, and a USB device port. PCL and PostScript emulations for printing and simple network scanning are standard. Controller options include 2 GB of memory for $99, WiFi for $49, and various font and forms cards priced from $199 to $379.
The new 60-pound desktop MFP has a 2.4” color LCD on the control panel, a 250-sheet input tray, a single-sheet bypass, a 150-sheet output tray, a letter-size scanner, and a 50-sheet simplex document feeder that scans at 32 ppm in color and B&W. Customers can add a $199 “duo tray” that has a 550-sheet tray and a 100-sheet bypass, and either a $249 swivel cabinet base or a $299 stand with open shelves.
The CX310n ships with imaging units, developer units and a photoconductor that are all rated at 40,000 pages; a 36,000-page waste toner bottle; and 750-page starter toner cartridges. Lexmark then sells black toner cartridges that yield 1,000 or 2,500 pages, and color toner cartridges that yield 1,000 or 2,000 pages. The monthly duty cycle is 60,000 pages, with recommended usage of 500-5,000 pages.
For another $100, the $599 CX310dn adds duplex output and comes with 1,400-page starter toner cartridges.
Next is the 32 ppm CX410e, priced at $699. In addition to being faster, this simplex model has a 33.6 Kbps fax modem, a 4.3” color touchscreen with the e-Task interface, and a USB host interface for direct printing and scanning.
The CX410e has a higher 75,000-page monthly duty cycle, with recommended usage of 800-6,000 pages. It can also use higher-capacity toner cartridges that yield 4,000 black pages and 3,000 color pages. And in addition to the optional duo tray, this model can be equipped with another 550-sheet tray for $199, which pushes the maximum paper input capacity to 1,451 sheets.
For $799, the CX410de adds duplex output; and for $999, the CX410dte also comes with the duo tray.
The 32 ppm CX510 series rounds out the new color MFP line. The duplex 4-in-1 CX510de is $1,399. It has a 7” color touchscreen and a second USB host port but does not include the duo tray. This model also supports toner cartridges that yield 8,000 black pages and 4,000 color pages, and these are the cartridges that ship with the unit. In addition, Lexmark quotes a higher 85,000-page duty cycle, with recommended monthly usage of 1,500-7,000 pages.
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Lexmark CX510dhe
The $1,549 CX510dhe adds a 160 GB hard drive to enable support for Lexmark’s Java-based Embedded Solutions Framework (eSF). The CX510dhe thus becomes Lexmark’s lowest-priced, solutions-ready color MFP. The $1,749 CX510dthe adds the duo tray to the solutions model.
Mono MFPs. On the monochrome side of Lexmark’s new A4-size MFP product line, the models are spread across two platforms. Speeds range from 35 to 70 ppm, with prices going from $399 to $5,499. The 35-50 ppm MFPs are based on a cleansheet platform, while the 55-70 ppm models utilize an enhanced version of an existing platform.
Lexmark’s new line of small workgroup A4 monochrome MFPs encompasses the 35 ppm MX310, 40 ppm MX410,
faster, as well as the switch to the new high-yield Unison supplies, most of the other changes in Lexmark’s large work- group monochrome MFPs mirror those made in its new small workgroup monochrome MFPs and new color MFPs
One noteworthy enhancement scheduled for availability in 2013 is a new stapling finisher with hole-punching. That will be the fourth compact finisher available for Lexmark’s console-style models. Even with the growth in the A4 MFP market, models that offer finishing — let alone a choice of finishers — are the exception rather than the rule.
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Lexmark MX710
The MX710 and MX711 series are fairly straight forward, encompassing five fax-equipped configurations. The 63 ppm MX710de is the least expensive of these at $2,299. The controller is the same as previously described, with an 800 MHz dual core processor, 512 MB of memory (expandable to 2.5 GB for $99), Gigabit Ethernet, dual USB device and host ports, and a slot that accepts networking, font, form and legacy datastream printing cards. The network printing, network color scanning, and fax capabilities are the same as for Lexmark’s new small workgroup monochrome MFPs.
The MX710de has a monthly duty cycle of 275,000 pages and recommended usage between 5,000 and 25,000 pages. The imaging unit is rated at 100,000 pages, and the MFP ships with a 10,000-page starter toner cartridge. Lexmark then sells 6,000-page and 25,000-page cartridges, as well as the new 45,000-page extra-high yield cartridge.
The new MFP has a 7” color touchscreen with the e-Task user interface. Paper handling consists of a 550-sheet tray, a 100-sheet multipurpose tray, duplex output, a 550- sheet exit tray, a legal-size CCD scanner, and a 150-sheet single-pass document feeder. Scanning is rated at 70 ipm for both color and B&W in either simplex or duplex mode.
The maximum paper input capacity is 3,300 sheets. Customer can add any combination of up to three 250-sheet trays for $199 apiece or three 550-sheet trays for $249 apiece. Lockable versions of these same trays are available for $239 and $299. The maximum paper capacity is achieved with the combination of a 550-sheet tray and a 2,100-sheet tray, which is $499 plus $349 for the required caster base.
For $2,599, the 63 ppm MX710dhe is a solutions-ready version of the MX710de with a 160 GB hard drive. The $3,199 MX711de and $3,499 MX711dhe are the 70 ppm versions of the 63 ppm MX710de and MX710dhe, while the MX711dthe includes an extra 550-sheet paper tray, too. The 70 ppm models also have a larger 10.2” color touch-screen; they come with 1 GB of memory, which can be expanded to 3 GB; they ship with a 25,000-page toner cartridge; and the monthly duty cycle is 300,000 pages.
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Lexmark MX810
It is with the MX810 and MX811 that Lexmark has gone way over the top with its insistence on creating so many unique configurations. There are 27 individually configured and priced models in this series — seven each at 55, 63 and 70 ppm — all within a relatively narrow price band spanning from $3,499 to $5,499. Only four of the configura
tions are even listed on Lexmark’s datasheet for this series. All configurations are solutions-ready. The base models are the 55 ppm MX810de, 63 ppm MX811de and 70 ppm MX812de. They have respective prices of $3,499, $4,099 and $4,699. Each has a 300,000-page monthly duty cycle and is recommended for 5,000 to 35,000 pages per month.
They share the same consumables as the MX710 and MX711 series. Each ships with a 100,000-page imaging unit and a 25,000-page toner cartridge, and can also use the new 45,000-page toner cartridge.
The controller in the base models is the same as in the solutions-ready versions of the MX710 and MX711. Each of these 220-pound MFPs has a 10.2” color touchscreen, dual 550-sheet paper trays, a caster base, a 100-sheet multipurpose tray, duplex output, a 550-sheet exit tray, a legal-size CCD color scanner, a 150-sheet single-pass duplex document feeder that scans at 70 ipm, and a 500-sheet offset stacker. The maximum input capacity is 2,300 sheets, which is attained by adding two 550-sheet trays, each priced at $249.
All of the MX810 and MX811 models ship with a compact inner finisher. On the “de” models, it is a 500-sheet offset stacker. Other models come either with the 4-bin mailbox unit or with the 500-sheet staple finisher. The maximum output capacity is 1,050 sheets on each MFP.
Other models in this series are configured with 2,750 sheets of paper capacity, which is fixed. This consists of a 550-sheet input tray, a 100-sheet multipurpose tray, a 2,100-sheet tray, and a caster base. Each of these models also has a compact inner finisher. It can be either the 4-bin mailbox, the 500-sheet staple finisher, or the up- coming 500-sheet staple finisher with hole punch.
Wrap-Up. With this massive product launch, Lexmark solidifies its position as an A4 MFP technology and product champion, even if that does not correlate to the top revenue spot in the business. There are no gaps in Lexmark’s A4 lineup, and no vendor does a better job delivering a consistent UI, controller and application plat- form, even if virtually all of the available applications are from Lexmark. And Lexmark is now delivering more MFP capability than ever while keeping the same old prices.
The issues we have with Lexmark in this lineup are twofold. First, the new Unison supplies should be leading the way toward more economical A4 printing in the office. Instead, Lexmark is leveraging the new technology to raise cost per page, presumably while increaseing its profits as well. Given the precarious state of office printing, this is a risky strategy and one that may backfire.
Second, Lexmark has crossed the line beyond what is necessary or reasonable when it comes to the number of new hardware and supplies SKUs. Introducing 50 MFP and printer configurations that are associated with 80 individual supply items is ridiculous and arrogant. At some point, dis- tributors, resellers, users and MPS providers will have had enough. The logistical and administrative headaches Lexmark is choosing to create are simply unnecessary.
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