Competition to get consumers printing photos at home is at an all-time high, and manufacturers are investing more and more in designing cutting-edge photo-printing technologies that simplify the at-home photo-printing process in an effort to promote uptake. While it is widely known that printer makers lose money on the initial hardware sale in anticipation of making up revenue in downstream consumables, manufacturers are finding that consumers are not printing photographs on their home printers as often as the industry had hoped they would. Canon, Epson, Lexmark and HP have each brought to market branded inks that are designed to promote longevity, brand awareness and brand loyalty (not to mention, to discourage ink remanufacturing), but they are still facing a lack of consumer usage.

To encourage at-home photo printing, manufacturers are working to master the delicate balance of features, simplicity and price. Hewlett-Packard Co. recently unveiled the PhotoSmart 8250, its first single-function inkjet photo printer to feature the company's new, scalable print technology. HP pulled out all the stops with this printer. From new color technology that touts staggering text and print speeds to a six-color individual cartridge system designed to combat those of Canon and Epson, HP has reset the bar for what consumers will demand in an at-home photo printer-all to persuade them to step away from retail/online photo finishing and do the job at home.

Product analysis
The HP PhotoSmart 8250 prints color text at a speed of 32 pages per minute (ppm) and 4 x 6-inch color photos in as little as 14 seconds. The printer can print either one-sided or two-sided photos from memory cards or a PictBridge camera without a PC. Users can preview, select and edit images using the 2.5-inch flip-up color image display. Photos can also be viewed on an HP photo proof sheet. Further, the user can transmit images from notebooks, PDAs, camera phones and other wireless devices with an optional Bluetooth adapter. The 8250 includes an automatic photo tray.

Using new 02 Vivera inks and HP Advanced Photo Paper, the 8250 prints photos that are resistant to both water and smudges. The new ink and media are designed to work together so that the ink dries almost instantly. The printer produces photos that are up to 8.5 x 24 inches, with or without borders. The printer also incorporates HP's new page-completion feature, which ensures that a page or photo will not run out of ink midway through printing. With six individual ink tanks, a first for HP, the 8250 allows the user to replace only those cartridges that are empty, thus keeping the cost of maintenance low.

The 8250 uses a single, factory-installed long-life printhead. Innovations in this new HP printhead allow the printer to deliver breakthrough speeds and outstanding quality for photo and document printing. The 0.54-inch-tall printhead has tightly compacted nozzles-3,900 of them, or 650 for each color-along with integrated components that allow the HP PhotoSmart 8250 series to deliver precise, accurate drop placement for fast, high-quality printing and consistent, reliable results over the life of the product, the company said.

The HP PhotoSmart 8250 measures 17.59 x 15.16 inches, stands 6.28 inches high and weighs 18.7 pounds. The printer is packaged with six ink cartridges (black, cyan, magenta, yellow, light cyan and light magenta), along with a "quick-start" booklet, user's guide, power supply and power cord.

In terms of software, the 8250 comes with HP Instant Share, which allows users to send and receive photos without large e-mail attachments; HP Real Life, which automatically removes red eye and enhances detail in dark areas; and HP Image Zone, which organizes, edits and enhances photographs, particularly for photo projects.

Production cost
It's clear that lower manufacturing costs can result when IT and consumer electronics products are outsourced, but how will manufacturers meet razor-thin margins to stay competitive in today's personal-photo-printing market?

To answer that question, we examined the HP PhotoSmart 8250 at a product volume of 500,000 units under the premise that the model was produced in Malaysia. To do that, we estimated the purchase costs of commodity components, manufacturing costs of fabricated components and location labor rates.

The result was a production cost of $199.81 per unit. The materials and components in the machine account for $177.22 of the cost of manufacturing.

At the product's release, the suggested price was $199.99. However, with a production cost just 18 cents below the retail price (not accounting for tariffs and taxes), it is apparent that HP is looking to profit on the consumables for this model, not the actual machine. Further, the device is often promoted with 10 percent instant savings, which brings the price down to a staggering $179.99.

HP's flagship PhotoSmart 8250 is now available throughout retail and e-commerce sites, and on HP's direct site. The company is touting it as "the world's fastest photo printer," a simple message already resonating well with consumers looking to make a home printer purchase.

The potential success of this photo printer poses a danger for the consumer printing industry. With the impressive print speeds and individual ink cartridge design, the PhotoSmart 8250 will surely set the bar for all forthcoming HP photo printers, and force Canon and Epson to dramatically improve their print speeds (and, most important, report text-printing speeds for $179 to $249 photo printers). The PhotoSmart 8250 is the first consumer single-function printer to deliver true and seamless versatility, and consumers will surely embrace the innate ease of use built into the design of its six-cartridge system.

In particular, the launch of the PhotoSmart 8250 means that consumers may not have to think about purchasing one printer for photos and another for fast text printing. This will not only nullify the need for a two-printer household, it will have the immediate potential to hurt mono laser printer sales. Simply put, HP's new Vivera inks, lightning-fast text speeds and easy-to-use design have raised expectations for what consumers will expect from their home printer.

The ramifications for the rest of the consumer printer industry are high. Small-office, home-office laser printer manufacturers, vying for position as the idea of laser photo printing becomes more mainstream, face continued pressures of price drops to make their hardware more affordable for a home user-but this time they are competing against an inkjet photo printer that cranks out 30 ppm or more. Further, HP's consumer inkjet competition, constantly embattled by the need to improve photo-printing performance and speeds, must immediately react with cutthroat promotions. While HP has long been the dominant player in consumer printing, it has now created an environment in which its competition is in reactive mode; this means more value and better quality for the consumer.

Bells and whistles
The key to the PhotoSmart 8250's success will be not only in how many units HP sells, but also in how HP will encourage photo printing. HP has accepted the losses suffered on initial hardware purchases and is betting on increased photo printing as a source of growth. Chock full of nearly every bell and whistle needed to facilitate a fun and inexpensive at-home photo-printing experience, the model has everything a consumer could imagine in a photo printer.

However, HP-and the industry as a whole-must come up with innovative partnerships with wireless-phone carriers, increase bulk bundle ink purchases, and promote scrapbooking and keepsake art to find long-term benefits from the initial losses on hardware purchases. Today's consumer photo printers sell themselves because they are fun, easy to use, affordable and provide output that rivals silver halide. The real battle isn't building quality printers; it is getting the consumer to print images at home.

Amber Shore (ashore@currentanalysis.com), principal analyst of printing and imaging at Current Analysis (San Diego)