Kodak inkjets target the heart of HP's profit

February 5, 2007: 11:26 PM ET

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Eastman Kodak (EK) today is announcing a line of consumer inkjet printers and a marketing strategy designed to hit market leader Hewlett-Packard (HPQ) where it hurts: in the profit margin.

First, the basics.

Kodak is introducing three printers: The EasyShare 5100 at $150, the 5300 at $200 and the 5500 at $300. The main difference between the three is that the 5100 has no 3-inch LCD screen or memory card slots, the 5300 has a screen, and the 5500 has a 2.4-inch screen and a fax machine. The two lower-end printers will be in Best Buy (BBY) stores exclusively starting in March, with the 5500 due in May; the 5300 (pictured) is positioned as the flagship product.

The real issue, though, is the ink. Kodak will sell black ink cartridges for $10 and five-color ink cartridges for $15. At purchase, the printers will come with ink and a couple of sample sheets of photo paper.

How do these printers stack up? I'll put it this way. HP should worry.

I got a chance last week to spend an hour with a couple of folks from Kodak's consumer digital imaging group, marketing director Bob Ohlweiler and research and development director Susan Tousi. They showed me the printers, walked me through the marketing strategy and let me put out a few prints.

My first impression is that this looks far more polished than the typical first-generation product. I can't vouch for the reliability of the printer or the ease of setup, though these are the sorts of things an experienced consumer company like Kodak would get right; but I can say that the products exude quality and produce brilliant photos.

Tousi told me that in Kodak's internal tests, the quality of the new EasyShare photo printers outperformed professional-grade photo lab printers. Of course I can't independently verify that, but after seeing what the 5300 can do with images from a couple of mid-range consumer cameras, I wouldn't be surprised if it's true. Ink dried quickly on the supplied photo paper, and the process of printing from a memory card onto pre-sized photo paper was quick and painless.

One of the little innovations that make this Kodak product special: the printers read the back of each piece of pre-sized photo paper and they automatically adjust. So when we popped my memory card in and loaded 4"x6" photo paper into the printer's bin, the printer could tell – without being prompted through a setup process or preferences – to size my photos to fit the paper.

Kodak's printers are more expensive than comparable models from HP and others, but people who print a lot will be tempted by the low cost of replacement ink. And once they see the output and ease of operation Kodak's offering, we might just have a consumer inkjet price war on our hands.

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