Lexmark sees future in color inkjets

LEXINGTON, KY.-Its headquarters are located in the Bluegrass state, a color that has little relevance now for the 4,000 employees of Lexmark International Inc.

The only hint of leftover IBM culture can be found in isolated areas of a three-million-square-foot facility, including one line that still builds Wheelwriter typewriters.

For Lexmark, a company that was formed in March 1991 when the investment firm of Clayton, Dubillier & Rice Inc. acquired IBM Corp.'s information products business, red is now the predominant color on everything except the balance sheet. In that area, it's fading.

While revenues last year exceeded $2.5 billion-an increase of 10 per cent from 1993-the US$1.5-billion debt load the company inherited from IBM at the time of the sale has been whittled down to US$150 million.

In Lexington, Lexmark currently manufacturers print engines, keyboards and printer supplies, as well as laser, dot-matrix and inkjet printer lines.

The company has achieved several firsts; for instance, it was the first company to mass market a 600 dots-per-inch laser printer. And last year it became the first vendor to introduce a true 1,200 dpi line with its Optra family.

The technology is solid, yet according to Bill Fournier, senior market analysts at Evans Research Corp. in Willowdale, Ont., the company is suffering from an identity crisis.

The buyer readily recognizes the name Hewlett-Packard, he recognizes the name Canon," says Fournier. "He doesn't readily recognize the name Lexmark."

Lexmark, he adds, has "decent" desktop laser products but must resolve certain perceptions. One of them being that it is strictly a laser printer vendor.

They can fix it but they haven't at this stage," he says.

That may change now that the company has stepped up its activity in the inkjet market and expanded its product line.

It's been a year away for the last 10 years but I think it finally is here," says Dick Rodgers, general manager of the inkjet division. "The software is here, the systems that are able to run the software are here, and the hardware is here."

I personally find it astonishing to see the quality of images you can create with a US$300 machine."

According to Rodgers, a key market lies in color inkjets which he says, based on cost, could displace the four-page-per-minute and under laser printer market.

Lexmark recently introduced two new models, the WinWriter 150C with a street price of $549 and the higher-end WinWriter 4079 which lists for $3,700.

The 4079 contains a print resolution of 360-by-360 dots-per-inch, 39 Type 1 scalable fonts and 256 levels of color for cyan, magenta and yellow.

The 150C has a minimum print speed of 2.5 to seven minutes per page for color or three ppm for black draft.

Fournier, meanwhile, questions Rodgers' prediction.

To some extent it will happen but that's been going on forever," he says. "You get the cannibalization coming from the top-down. It will cannibalize some of the sales of the low-end laser but (it) still has its own place for people who don't care about color and need speed, quality and low consumable costs."

As for rumors that IBM is considering getting back into the low-end laser printer market, Paul Curlander, Lexmark's executive vice-president, isn't concerned.

In this business there's clearly only one company that we focus on and that's Hewlett-Packard," he says. "They're clearly number one in the marketplace."