The company noted that HP’s use of “jumbo” cartridges is a unique feature of the subscription service.
Nubeprint has added to its study of HP’s Instant Ink programme, with a piece focusing on the OEM’s use of “super capacity ink cartridges in an exclusive way”. CEO Antonio Sanchez Navarro states that the programme “keeps generating lots of expectations”, with the high-capacity, “jumbo” cartridges “a small though important detail” to be studied.
Asking “why would someone manufacture customised cartridges just to be used in a programme that represents so little business” as Instant Ink does for HP, Navarro notes that other OEMs “like Lexmark” do use special cartridges, but Instant Ink has seen HP “manufacture a special cartridge just for this programme” that is “available nowhere else for sale”.
In trying to answer his question, Navarro notes that the answer is “a combination of factors”, including revenues, costs and the environment. On revenues, he states that HP’s “significant investment in [its] manufacturing plant implies that it has big expectations about the expansion of this programme industry-wide”, with two models for its Pro version and seven for the standard.
Cost-wise, HP “needs to recuperate the investment” in the high-capacity cartridges, with saving opportunities “easily identified if taking a lean management approach”: including delivery costs, which are “significant compared to the value of the item shipped”, therefore “the less times HP needs to ship, the less [the] variable delivery cost that impacts the profit”.
The OEM can also save as “the risk of losing cartridges diminishes”, because this risk “is embedded in each cartridge delivery”; and by breaking down the cost of a cartridge, the container (including the print head and ink unit) represents 35 to 40 percent, which is “twice as much as the ink itself”, a fact Navarro says is confirmed by Embatex, who stated that the ink cost is 20 to 30 percent of the cartridge’s cost.
Navarro adds that “under lean principles”, companies may want to reduce marginal costs by “increasing the volume of ink in each cartridge”, which is a practise that has “expanded among the cartridge remanufacturers as a way to keep costs low compared to equivalent OEM cartridges”. Moving onto environmental factors, he adds that over time, the waste generated “is the item that has the greatest impact in printing”.
Whether the cartridge is remanufactured or “disposed of properly”, there are carbon dioxide emissions, and so the “most effective way of reducing the environmental footprint is to obviously minimise the amount of cartridges used over time, with no impact on the volume printed” – which HP is aiming to do with the high capacity cartridges.
Navarro concludes by noting the ironic similarities the Instant Ink programme shares with remanufacturing in choosing jumbo cartridges, but adds that the advantage for HP is that it can “make [them] fully compatible with [its] printers, while the remanufacturers have to live with a printer that does not recognise the extra capacity”. This disadvantages remanufacturers in MPS contracts, though Nubeprint’s Enterprise system “adjust[s] its cartridge level indicators with the remaining toner or ink capacity” to help.
He states that HP “has made a very clever move” with Instant Ink, as not only is it “very aggressive” but it has “proprietary advantages” including the exclusive high-capacity cartridge “that cannot be easily replicated by other players”.