[Pixalo]

Eastman Kodak Co. elbowed its way into the crowded inkjet-printer market Tuesday, unveiling a trio of home printers that produce documents and photos using ink cartridges that cost roughly half as much as the competition's.
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"For far too long, people have felt restrained from printing due to the high cost of ink," said Antonio Perez, Kodak's chief executive. "Our new system gives consumers the freedom to print documents and photos frequently, easily and affordably with exceptional quality that lasts a lifetime."

Replacement cartridges will run $9.99 for black ink and $14.99 for color, Kodak said.

The photography company's long-awaited leap into the rough-and-tumble arena where printers are typically sold at cost or bundled with computers to propel lucrative ink sales could trigger a price war that cheers millions of photo enthusiasts but leaves some manufacturers in the dust.

"The main competitors in this market are Hewlett-Packard, Canon, Epson and Lexmark, and all of them have followed the same razor-and-blade business model for years — cheap printer, expensive cartridge," said Charles LeCompte, president of Lyra Research Inc., which tracks the printing industry.

For its part, Kodak is not shying away from the rumble of battle. It is aiming for a top-three slot in U.S. sales of inkjet printers within five years, analysts say, as it morphs from the world's biggest maker of photographic film into a digital photography and commercial printing heavyweight.

"This is definitely a disruptive model — we really feel that this industry is ready to be revolutionized," said Cheryl Pohlman, a marketing director in Kodak's inkjet systems unit. "We're going to go in with, 'Save up to 50 percent on everything you print, every time you print.' And that is premium ink."

Inkjet printing has been a missing spoke in Kodak's transformation from its century-old film business to digital imaging. It already peddles digital cameras, photo-printing retail kiosks and EasyShare Gallery — the world's leading online photo-storage and printing business.

The $2.35 billion sale in January of its 111-year-old health-imaging unit will help fund Kodak's bold foray. Analysts estimate Kodak has already sunk more than $400 million into the inkjet project since 2003 when it hired Perez, who had helped develop Hewlett-Packard Co.'s lucrative inkjet-printer division.

Priced at $149.99, $199.99 and $299.99, the Kodak EasyShare multipurpose printers each cost about $50 more than comparable machines on the market, enabling Kodak to potentially turn a profit on printer sales alone, said imaging analyst Ron Glaz of IDC Corp., a market research company in suburban Boston

Designed for general-purpose printing as well as making high-quality photographs, the printers also can be used to scan and copy and — in the case of the top-line 5500 model — to fax. They use a proprietary pigment-based ink and a five-ink color cartridge that can spit out a fade-resistant, 4-by-6-inch photograph in 28 seconds. The cheaper models go on sale in March, and the 5500 printer will begin shipping in May.

By slashing the cost of ink cartridges, Kodak might not begin making money until a customer has bought at least four replacement cartridges, industry researchers said. The average inkjet-printer owner buys 4.6 ink cartridges a year, Kodak said.

The cost-per-page is at least "half the standard price" compared with the leading rival, Pohlman said. "For every $15 spent on color ink, you can get 105 Kodak 4-by-6 photos compared to the leading competition where you can only get 48. For black-and-white documents, for $10 you can get 349 pages versus 145 for the leading competition."

Matthew Troy, a financial analyst with Citigroup in New York, said the aggressive pricing strategy "would certainly raise a massive competitive response from entrenched incumbents that have far greater scale and financial flexibility.

"The market is saturated with hardware and printer alternatives, which in quality and speed more than meet the average consumer's needs," Troy said. "So Kodak will be hard-pressed to make a big splash in my view."

About 30 million inkjet printers were sold in the United States last year on top of 29.6 million in 2005, said Robert Palmer, director of printer research at InfoTrends Inc.

Kodak's ink-cartridge offer is "probably about half of what the average cost is today," Palmer said. "Will consumers look at this and say there's enough reason here for me to buy a device because the cost-per-page is a lot cheaper than any other device out there? That's the key question."

Hewlett-Packard, which commands close to half of all worldwide sales of inkjet printers, wants to assess the specifics of Kodak's products before deciding on its response, said marketing executive Karl Schwenkmeyer.

"A number of folks have talked about the disruptions they would cause to the inkjet market over the least 20 years — and some of them have come and gone," Schwenkmeyer added.