Is ProDot poaching printer OEM's market

Walk into the lanes and by-lanes of the
channel marketplaces in Delhi, Mumbai or Bangaluru, the local refill
dealers sport their low-cost compatible printer supplies. Be it an
HP, Canon, Epson or Samsung printer, the consumers can have locally
made, price-friendly toner powder, refill kits, cartridges and
ribbons. Blame it on the soaring price of the printer OEMs, who have
miserably failed to keep down the price-levels, giving a way to
embrace such readily-available options. Take an instance of
Delhi-based ProDot-a brand of Datalink Industrial Corporation,
which is growing steadily in the compatible consumables business. The
company today maintains five warehouses and sells its compatible
products through more than 150 distributors and over 2,500 resellers
in the country.

The printer OEMs are significantly
loosing their market share to the locally-grown manufacturers.
Flouting the CVC norms, several of the PSUs and government
departments are sourcing consumables from the ProDot. Besides, SOHO
and SMB segments, the company's clientele include Indira Gandhi
National Open University, Steel Authority of India, Punjab National
Bank, State Bank of India, Indian Oil Corporation and the Supreme
Court of India, among others. Canon has recently initiated the US
International Trade Commission (USITC) Section 337 complaint against
a China-based vendor, claiming infringement on two of its patents for
toner cartridges. HP alone holds more than 4,000 patents for
consumable supplies, and spends huge amount in R&D activities and
innovation.

The generic print consumables has posed
a serious threat to the industry giants, who are experiencing more
than 50 percent YoY sales decline. Alarmed with this viable scare,
the vendors like HP are contemplating to install chip with a
sequencing code on the printers' head so that they could easily
identify, if the cartridge is original by keying the code onto the
website. A source in Epson said that, the company does not facilitate
warranty repairs if the compatible cartridges are being used in their
printers. QualityLogic 2010 study revealed that more than 60 percent
of all refilled cartridges tested were found DoA or of a low quality.
Compitables' hazards include failure in printing ahead of schedule,
shorter yield than originals, poor quality of image and direct impact
on printers' head. The sluggish and laid-back attitude of printer
OEM's biggies is fueling compatibles' growth in Asia, and India in
particular. Canon did not respond to The DQ Week's query,
despite of repeated attempts. Nitin Hiranandani, Director- Enterprise
Sales and Services, IPG at HP India, when asked about the presence of
local manufacturers like ProDot said that, they advocate and educate
customers and partners to use original printer supplies. "Supplies
play a critical and integral part of printing and lot of customers
buy counterfeit cartridge assuming them as originals," said
Hiranandani on the sidelines of a recent press conference.
Questioning the legitimacy of its printer supplies, ProDot choose not
to answer.