Still Bullish About Laser Printers
In the movies, they call it the daily rushes. In the courtroom, they call it the daily copy--the complete transcript of that day’s testimony--which lawyers want as soon as possible to plot the next day’s strategy.
That is why Xscribe Corp., the country’s largest manufacturer of computer-aided transcription systems for court reporters, has added laser printers to its systems.
“We did it for the speed of production,” said Ron Angerarme, Xscribe’s vice president of manufacturing. “A typical daisy wheel printer prints two pages a minute. A laser printer prints six to eight pages a minute. The faster the daily copy of the transcript can be printed, the faster our clients can go home.”
Office Automation Systems, a rapidly growing San Diego manufacturer of laser printers and image processing controllers, is supplying Xscribe’s laser printers. After nearly 400% growth in 1986, Office Automation grew 40% last year and projects 60% growth this year. The closely held company generated $15 million to $20 million in revenue in its fiscal year ending in May, according to president Peter Steiner.
Many Other Uses for Laser Printers
Court reporting is not the only application of the company’s laser printers. When New York-based Kassor Automated Systems developed stringless labels for jewelry, the bar-coded tags had to withstand the strong ammonia solutions jewelers use to clean their merchandise. The tags are produced by Office Automation Systems laser printers.
Last year, Caterpillar Tractor Corp. required subcontractors to bar-code components they built. Instead of buying a bar-code machine, Omaha Steel Castings added an Office Automation Systems laser printer and software to its existing computer network, linking it to its data base. “The data base keeps accurate records of Omaha Steel’s products,” said Steve Campisi, a consultant who worked on the project. “When linked to the printer, it produces any label needed by the company.”
Besides industrial and bar-coding applications, laser printers are quickly finding spots in offices around the country. “Most of our customers are individuals and small corporations,” said Hal Schmidt, president of U Publish, a San Diego computer resale outfit specializing in desktop publishing systems that carries Office Automation’s printers.
Laser Printing a Formidable Force
In a short time, laser printing has emerged as a formidable force. Since 1985, low-end laser printers--those that print fewer than 10 pages a minute and cost $1,500 to $6,000--have enjoyed a compound annual growth rate of 86%, according to CAP International, a Norwood, Mass.-based market research company that tracks office automation products. CAP estimates that, in 1988, this segment of the business will generate about $3.2 billion in sales.
Laser printers use technology similar to that found in photocopiers to produce high-quality images on paper. To the untrained eye, documents produced on a laser printer look professionally created. The printers also can print high-quality graphics and use a variety of type fonts.
Office Automation was established in 1983 as a research-and-development company to develop image-processing controllers. Controllers translate information from computers into codes that printers understand. The company introduced its own laser printer in 1985. At the time, it was the lowest-cost printer on the market, with a suggested retail price of $1,895.
“They were one of the earliest players,” said Cathy Dingman, a CAP analyst. “And they were able to get a share of the market, although a small share.”
The desktop publishing slice of laser printing is dominated by Hewlett-Packard, which has about a 60% share, followed by Apple and QMS. “We are not a threat to H-P, but we are a recognizable company,” said Steiner.
In the mid-1980s, many analysts expected the demand for low-end laser printing to increase even more rapidly than it did and the price to drop more quickly than it has. “Lasers have had a huge impact,” said John Blackford, managing editor of Personal Computing magazine. “They replaced daisy-wheel printers and created desktop publishing.”
‘Hard to Make Them Cheaper’
But, he added, “it is hard to make them cheaper than they are. They have a lot of moving parts. So it will be a while before they will be able to compete with dot matrix printers. And dot matrix printers have improved a lot.”
Although dot matrix printers have dropped in price, the cost of laser printers has stubbornly stayed around $2,000. First, virtually all the printers’ engines--the mechanism that transfers the image to paper--are manufactured in Japan. Canon is the world’s leading supplier of the engines. Office Automation buys its engines primarily from Tokyo Electric Corp. Since the value of the dollar has sunk against the yen the last several years, the cost of the engines has gone up.
U. S. import quotas on Japanese semiconductor manufacturers have driven the price of memory chips up at least threefold in two years. Chips that once cost $3 each now cost $9 to $14. And a laser printer uses memory chips to convert computer information into forms usable by the printer.
Finally, according to Steiner, manufacturers’ efforts to drive laser printer prices down when costs were going up led to problems. Some engines would just stop working. Others would print skewed images or the print quality would be inconsistent. “They found that there was more magic in electrophotography than they believed,” he said. “When they lost the recipe, they did not know how to get it back. Part of the recipe was luck.”
More Expensive Engines
To get the luck back, engine manufacturers built more expensive engines. Steiner expects laser-printer prices to rise over the next year. The least expensive laser printer costs about $1,650, said U Publish’s Schmidt.
After the introduction of its two original printers, Office Automation created its Express line. With prices ranging from $1,995 to $4,000, Express printers turn out eight pages a minute and have a print life of 300,000 pages. The printers are built at Office Automation’s 43,000-square-foot headquarters in Sorrento Valley. The company employs 121 people.
For its top-of-the-line Express Gold printer, the company is testing a cartridge that would make the printer Postscript compatible. Postscript is a popular page description language that enables printers to be used in a panoply of desktop publishing environments.
“You don’t really need it except in very sophisticated graphics applications,” said CAP’s Dingman. “But it is a buzzword that has been associated with laser printing.”
“It is a buzzword world,” said Steiner. “We are doing (Postscript) because it was part of the tools that we had to have in the marketplace.” The two most popular desktop publishing software programs--Aldus and Ventura--both understand Postscript.
Office Automation also sells controllers to other manufacturers of laser printers and custom-designs controllers for large companies. In June, it bought Micro Trends, a developer and manufacturer of interface boards for IBM mini- and mainframe computers. “The marketplace for laser printers there is less crowded,” said Steiner. The company uses the interface boards with its own printers and plans to sell them to other manufacturers.
Other Avenues
With the market for low-end laser printers expected to cool--CAP estimates only a 14% growth in unit sales over the next five years--Office Automation Systems has positioned itself as a digital imaging company. It is exploring opportunities in scanning devices and optical character recognition readers, equipment that reads information into computers.
It is also building alliances with major software manufacturers to enhance the performance of its printers. The company recently closed a deal with SSI Software, publisher of Word Perfect, the best-selling word processing program for microcomputers. The latest version of Word Perfect teams with the Office Automation Systems’ printers to provide the most standard fonts in the industry. A similar arrangement with a major database manufacturer is in the offing.
And the long-term outlook for laser printing looks strong. Said CAP’s Dingman, “There are still a lot of places laser printers haven’t been and they are replacing other types of printers. If you have a laser printer, it is very simple to make your correspondence look more impressive.”
“There will be no revolutions,” said Steiner. “But I am bullish.”
