Market Intelligence: The Long Tail
The 17- to 19-inch inkjet printer market is a specialty market worth examining for the simple reason that it may be illustrative of other wide-format printing sectors in the future.
The 17- to 19-inch inkjet printer market is a specialty market worth examining for the simple reason that it may be illustrative of other wide-format printing sectors in the future. Having peaked in 2008 in unit volume, declined nearly 25 percent in 2009, and then recovering with about 10 percent growth in 2010, the assumption made was that it would continue to recover in 2011 and forward. Alas it was not to be, and actual unit volumes in 2011 declined by the same percentage as the decline from 2008 to 2009.
The explanation that unit volumes dropped because of Hewlett-Packard’s exit from the 17- to 19-inch printer segment is not sufficient. The problem appears more systemic; professional and amateur photographers are no longer incented to upgrade their printers as frequently as the level of quality and productivity for this segment of product has reached its zenith and there are not enough new photographers interested in owning a dedicated medium size format printer in their homes and studios.
Despite the fact that the unit volumes are projected to be in decline from 2012 forward, the long tail of the installed base continues to make this a market of interest. As illustrated in figure 2, the installed base remains relatively stable despite a projected 10 percent retirements annually and a decline in new unit placements.
This matters greatly as the installed base is what drives the annuity on ink and paper for manufacturers.
For Epson, Canon, and HP this installed base is what will continue to provide a relatively steady and predictable annuity stream for years to come. For HP in particular this is a highly profitable annuity since it is no longer investing in the development of new generation products.
Bottom Line
The key to sustainability of the 17- to 19-inch market is to sustain the interest of professional and amateur photographers while balancing the investment for the next generation of printers.
Epson, the clear leader in this segment, 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 the 38xx-series is because the newer generation inkjet heads found in the Epson Stylus 79xx/99xx series 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 A-2 size prints (17x24 inches).
Whatever the reason, both Epson and Canon will need to find compelling reasons for photographers to continue to invest in upgrading their 17- to 19-inch inkjet printers. 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.