Spitting Image: An Empirical Analysis Of The Printer Industry

Literature Review
The following are excerpts from “Spitting Image”, an article that has been featured in the Economist Magazine. (For further information please see appendix). The excerpts tell us about the impact the quest to develop the inkjet printer had on Hewlett Packard & Cannon.
“Hewlett-Packard 's efforts began on Christmas eve, 1978. Together with David Donald and a group of other engineers, Mr Vaught began idly to discuss concepts for an ideal printer. The team had just delivered the engine for HP 's first laser printer and was working on a gravure printer for the commercial-publishing world. Despite this, the team wanted more—especially colour, speed and, most important of all, low cost.” “In 1978, the inkjet concept caught Mr

printer peripherals. The market for a printer itself, however, is oligopolistic as the number of firms producing in the group is limited. This is evident from the essay “The Effect of Markets for Technology and Vertical Integration on Exit, Entry, and Price: An Empirical Analysis of the Laser Printer Industry” by John Figueiredo and Brian S. Silverman, where they say that at the peak of the Laser printing industry in 1990, there were 144 firms in the industry and by 1996, this number had come down to 97. On conducting a consumer survey, we realized that in today’s market there are only about 4-5 firms that are competing in the market which clearly indicates an oligopolistically competitive market

Companies like HP and Cannon provide a good after sales service and thus many people buy their printers. Their services include free maintenance up to 3 months and a 6 months warranty. This gives the consumer a sense of security and thus they purchase printers. As per the distributors and some servicing centres that we visited,” the printer is one such electronic good that requires a lot of maintenance”. This is because many households do not use printers on a regular basis and leaving the printers unused only increases the maintenance cost because the ink dries up the tubes and pipes get clogged. Thus the firms earn a lot from their after sales