It is the end of an era for printer maker Lexmark International as the company plans to close its inkjet printer division to focus on laser printers, software and imaging.
A key factory in the Philippines will close by 2015, and worldwide some 1,700 jobs will be eliminated, representing 13% of the company’s workforce. In January, 625 positions related to consumer ink supplies were already cut.
The company may also try to sell its approximately 1,000 inkjet-related patents.
Revenue for the inkjet division has been steadily falling as customers turn to tablets and smartphones to view documents, impacting the need for printing services. In July, Lexmark reported revenue for inkjet printers and supplies fell 35% compared to the same period last year.
Focus On Imaging, Software Solutions
Lexmark chairman and chief executive officer Paul Rooke says closing the inkjet division was difficult but necessary: “Our investments are focused on higher-value imaging and software solutions, and we believe the synergies between imaging and the emerging software elements of our business will continue to drive growth across the organization.”
Since 2010, Lexmark has purchased Perceptive Software, Nolij Corp., ISYS Search Software and Brainware. These companies together now provide Lexmark’s software, imaging and other services, with profit expected for 2013. Currently, the software unit accounts for 5% of revenue, up from 2% from last year.
It will cost Lexmark $160 million to restructure.
Lexmark’s announcement does not come as a surprise. Research firm IDC showed the inkjet market dropped by 13% during the second quarter, attributed to increased use of mobile devices, a drop in laser jet printer prices and the high cost of inkjet ink.
Weak European office equipment sales have also had an effect.
Rivals Xerox Corp., HP and Canon Inc. have either seen a decrease in sales or have adjusted their profit forecasts. Current top inkjet manufacturers are HP, Canon and Epson Corp., which combined account for 90% of sales.
Key Statistics - World Printer Market
- In 2016, the large format printer market is forecast to reach $12.5 billion globally. For 2011-2016, the market will grow at a CAGR of close to 6%. (source: Markets and Markets)
- Over the period 2011-2015, the printer market will grow at a CAGR of 6% in India. The increased demand for all-in-one printers is a key factor contributing to India’s market growth. (source: TechNavio)
- Over the period 2011–2015, the printer market will grow at a CAGR of 3% in the EMEA region. (source: TechNavio)