Lexmark; Can They Make a Comeback?


I’ve been servicing office equipment for the last 13 years. When I first started servicing printers, HP was the main contributor to our income with about 75 percent of the calls. Lexmark held its own with 20 percent and the other 5 was everybody else. Over the years I have seen a steady decline in Lexmark with a rise from other manufacturers. This last year I have noticed a resurgence of Lexmark. I still haven’t been servicing them much but I’ve seen a few new models in customer’s offices and more advertisements as far as promoting new products. In this article I would like to discuss a brief history of the company, my opinion, and where their future may be heading.

The Rise

In 1991 the Lexmark brand was bought from IBM by the investment group Clayton, Dubillier, and Rice.  They took the printer division and setup shop in Lexington, Kentucky. Over the next several years, under the direction of a former IBM vice president, the company grew larger than anyone would have predicted. By the end of 1994 Lexmark was fourth in the retail market, they officially dropped the IBM logo, and with their huge impact in the market place everybody was taking notice.  With huge endorsements from Microsoft and Lexmark’s unique LAN based software, Markvision (1995), which allowed users to track machine status, view all machines on the network and allowed IT personal to change settings and fix machines before calls were even being made, Lexmark had created their own identity. Companies could now contribute their increase in efficiency to Lexmark’s products and services. 

For the next  five years Lexmark continued to grow with new technologies like the affordable inkjet, supplying machines to Compaq, six new laser printers, and a huge market increase outside of the United States. Between 1998 and 2000 laser printer sales almost doubled, inkjet sales went through the roof, and supplies sales surpassed printer sales.

The Decline

In 2000 Lexmark suffered greatly from what is called the technology downturn. Consumers cut back on new printer purchases and supply sales dropped. Lexmark cut jobs, relocated plants outside the United States, and in 2002 lost their deal with Compaq after Compaq was bought by Lexmark rival, HP. Lexmark countered with a deal with Dell. However, profits continued to decline. Lexmark blamed it on price wars with rival companies and a decline in consumer demand. Analysts argued that Lexmark wasn’t investing in new technology and were feeling the effects of the ever-growing remanufactured cartridge market. In the past five years large resellers have pulled Lexmark from their shelves, inkjet sales fell drastically, and their marketing structure has failed to deliver.  Lexmark’s supply sales have kept them going but with fewer new printer sales it’s becoming obvious this can’t maintain them.

The Future

Lexmark announced this year that their CEO of eleven years has stepped down and will retire next year. Lexmark has invested a lot of time and money in new printer development and consumer advertising. Best Buy has recently put Lexmark back on their shelves. Lexmark has reached out to other manufacturers and is supplying printers to companies like Sharp, Ricoh/IBM Infoprint, and Okidata. So, while the future may be looking bright, do these changes come too late?

While Lexmark has been declining other manufacturers have taken their place. Brother has blown the market place away with its durable, cheap laser multifunction series, a wide variety of affordable inkjets, and a strong laser printer line. Okidata, best known for their dot matrix, has launched a new campaign with several new printers in all categories and large corporate size multifunction equipment. The Xerox Phaser, while flawed with equipment failure, has the best quality color printers out there. So Lexmark has their work cut out for them. But, with their reputation and a good marketing campaign they should be able to re-emerge as a front runner.

My Opinion

Lexmark, with its Optra R, S, and T series, for years had the competition beat including HP. As far as print speeds, print quality, and large capacity cartridge they were in their own category. The problem was they focused on large corporate business. Walk into any school, financial institution, hospital, or government facility and you would find Lexmark printers. However, they are becoming old an outdated. New printer purchases are going to HP because Lexmark has failed to keep up with marketing and new technology. Go to any small, midsize, industrial, or large privately owned company and you will find HP 95 percent of the time.  Lexmark should have focused on competing with HP laser printers and laser multifunction printers, which have 5 to 7 times the life value of an inkjet. They focused on inkjet machines instead, which might last 1 1/2 to 3 years at the most. Most people become upset when their printer doesn’t last as long as they expected it to so they move on to the next manufacturer. Lexmark is then viewed as a poor quality product and the chances for future business in any category is ruined.

Right now it doesn’t take too much reading to understand HP quality, support, and consumer relations is on the downfall and people are looking for alternatives. Perhaps if Lexmark had done a better job with the marketing of their laser categories people would be switching to Lexmark now and not other manufacturers.

What can be done?

Smart companies are asking consumers what they want, advertising the results, and then showing what they are offering to correct the issue. If you want a strong inkjet market, give the customers what they want; a durable printer with a high capacity ink cartridge. Smart consumers have stopped looking at the immediate low cost machines and have focused on cartridge yields. They will do anything to keep their old printer running rather than wasting $150 on a new one that they will spend twice that in a year on cartridges just to have a break down three months out of warranty.

Businesses have focused on purchasing large multifunction printers. What happens when it breaks? They call their service provider and demand it fixed right away because business has stopped. Lexmark needs to let businesses know they have relatively low cost printers that can do the same job as the large multifunction machines and customers can afford to keep another printer around to handle work overflow as a backup if the main printer fails. In some instances you can buy two or three nice midsized printers like the Lexmark x650 series rather than a large Xerox or Ricoh.

HP has turned its nose up on small businesses. They fail to realize, in large part,  that the smaller resellers have gotten them to where they are today. I’ve talked to several small service business owners and they are all basically focused on selling printers from manufacturers other than HP. Service companies need to be able to service the equipment from the time it leaves the store and a reseller/service provider is ripe for the taking. If you can become service authorized for a low cost it makes sense that you will be selling Lexmark products. And, since the customer will be calling you, as the seller, if the printer breaks under warranty, other service companies can’t swoop in and take your service business. Lexmark has done this, in my opinion. I talked to them a few months ago about becoming an authorized service provider again and found they have lowered their fees and make it really reasonable for smaller services companies to take advantage of their offerings.

Multifunction laser printers have increasingly become the new thing.  Brother, right now, makes the best as far as performance, options, and price. But HP is the best known. I’ve talked to several customers and they swear they will not buy another HP multifunction. HP takes its smallest engine, puts a scanner on top of it and sells if for $300 more dollars. The ADF’s don’t function correctly and the firmware has so many glitches that businesses are afraid to ever turn it off. Lexmark can take full advantage of this current market situation to get their printers in the door. Once a customer works with the Lexmark printer, sees its cost, speed, and capability, they will question their strict devotion to HP. And, just maybe, they will see they’ve been brainwashed by the constant HP logo shoved in their face.  Maybe they will see others have the same product and services, if not better.

Conclusion

In this huge market of printers and printing solutions there is room for several manufacturers. History has shown that typically the largest manufacturer looses touch with their market and one of the lower guys will swoop in and save the day. It’s all about patience and being there when the other one fails. Lexmark still makes some of the best laser printers, if not the best. I’ve looked over their new laser printer and multifunction lines and have been very impressed with their pricing, customer friendly website, and variety of products. If they would reach out to resellers and advertise more for the small to midsize businesses, corporate business will follow. I believe consumers would be willing to give them an opportunity if they knew what they had to offer. Lexmark just needs to stay focused on printers with long life spans, like their lasers, and less on their low end inkjets unless they are willing to start over and make an inkjet printer that will last and that has high capacity cartridges.

The one thing that has really caught my eye is the Lexmark X650, 700, and 800 series. These printers really stand out and could change the marketplace with the midsized printer and copier market. Copier companies should take notice and start making changes.

Again, thanks to Market Point for allowing me to voice my opinion. I see change in the marketplace. Large manufacturers are eager to get a foothold in this ever-changing industry. Market Point and I will greatly appreciate your feedback and opinions. Feel free to email Market Point or myself and let us know how you feel about Lexmark’s past products and services and what you would like to see from them in the future. I would like to give credit to the link below for providing me with the history of Lexmark.

http://www.answers.com/topic/lexmark-international-inc

Thanks,
Kevin
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Kevin Gumpp is a certified printer technician and freelance writer for Market Point. If you have a question for Kevin regarding this topic or have any other printer repair related questions or topics you would like more information on, please send an email to maryp@marketpoint.com.

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