Color Copiers Represent Small but Fastest-Growing Segment of Market : Innovation: Increasing use of office graphics and decreasing technology costs are expected to expand U.S. installation numbers from 16,000 in 1989 to 178,000 by 1994.

Machines that make color copies represent only a small part of the office copier market, but the segment is the industry’s fastest-growing as the technology comes down in price and companies place increased emphasis on graphics.

By 1994, the number of color copiers installed nationwide is expected to grow to 178,000, compared with 16,000 at the end of last year, according to Dataquest Inc., a research firm in San Jose.

In comparison, there were about 5.6 million black-and-white copiers installed in the United States by the end of last year.

The United States typically accounts for about one-third of the world copier market, said Richard Norton, vice president of Dataquest’s copying and duplicating research service.

Desktop publishing, increased use of office graphics and the advent of a new generation of lower-cost computer printers are expected to fuel demand for color copiers in offices, but the high cost of the technology will continue to remain an obstacle. Today, color copiers are most commonly found in commercial copy shops.

“Most people don’t perceive the need to copy color on a day-to-day basis,” Norton said. “But I would be hard-pressed to think of a department in a company that couldn’t use color in some form.”

A spokeswoman for Colorocs Corp., a Norcross, Ga., color copier firm, said customers use the machines to copy engineering and design documents, real estate portfolios and advertising brochures, among other applications.

Analysts also said they expect demand for the office machines to increase as managers realize that investing in their own equipment is less expensive than using outside services, particularly in companies that make a lot of color copies.

Current leaders in the color copier market include Japan’s Canon Inc., Eastman Kodak Co. of Rochester, N.Y., and Colorocs, all of which offer electrophotographic copiers.

Similar to conventional black-and-white copiers, these machines copy documents by using light signals to create electrostatic patterns on a special drum. These patterns, in turn, are used as guides for colored toners, which the machine mixes to match the colors of the original before creating a copy on plain paper or a transparency.

But cost remains a hindrance to the market’s growth. Not only are the copying machines themselves far more expensive, but paper, toner and service costs for color copiers can be far higher than those for black-and-white copiers.

While a black-and-white copy costs only a few cents per page, high-quality color copies can cost up to $4 per page, including equipment and service costs.

Nevertheless, many manufacturers are confident that the use of color in the office will advance enough to make in-house color copying fairly widespread.

Among others, Mead Corp., the Dayton, Ohio, firm best-known for paper products and electronic publishing services, acknowledged that it is accepting reduced earnings while developing Cycolor, its color copying technology.

Lawrence Ross, a financial analyst who follows Mead at Paine-Webber Inc., estimated that Cycolor is costing Mead about 45 cents per share per year. Mead’s 1989 net income was $215.8 million, or $3.33 per share, on sales of $4.61 billion.

“We are building a market,” said Mead Chairman Burnell Roberts, who does not expect profits from Cycolor to begin showing up on Mead’s balance sheet until the end of 1992.

Meanwhile, rival Kodak offers its ColorEdge color copier, the industry’s fastest, for the list price of $59,000. Canon offers a range of machines, including a relatively slow version listed at $24,500.

Colorocs’ machine, manufactured by Japan’s Sharp Corp., is priced at $17,000.

Xerox Corp. of Stamford, Conn., one of the best-known names in the business, is not a major player in the color segment, analysts said. A Xerox spokesman said the company is developing new products to replace its 1005, a $38,900 color copier that is no longer being manufactured.

Machines based on Mead’s new Cycolor technology cost as little as $6,000 but are slower than conventional copiers. In addition, the Cycolor machines require special, more expensive, coated paper.

The cheaper machines, however, might be attractive to customers who make fewer than 500 color copies a month, Dataquest’s Norton said.

Shipments of Cycolor copiers began in 1989 with machines made by Brother Industries Ltd.; Seiko Mead, a joint venture with Japan’s Seiko; and Noritsu America Corp.