Epson Continues Seeking to Displace Laser with High-Capacity Inkjet

The Epson Innovation Center in Japan.

As it continues to develop offerings for the business-inkjet printer market, Seiko Epson of Tokyo, Japan, outlined its latest corporate – and inkjet – strategy in its Mid-Range Business Plan released today.

For its Printing Solutions group, Epson stated that in both the SOHO and office segments, it’s continuing to transition away from a business that’s reliant on consumables (ink cartridges) by “accelerating the displacement of laser printers and ink-cartridge printers” with high-capacity ink models such as Epson high-capacity refillable ink-tank printers, as well as high-speed line-head inkjet copier/MFPs for high-volume office use.

In the commercial- and industrial-printer segments, Epson says it will “rapidly expand” its lineup of  products through collaboration with partners, as well as through sales of inkjet print heads to partners. Last, it hints that it will create “new printing services.”

Overall Strategy

Epson stated that it will work to strengthen global sales company functions under its head-office control, as well as strengthen its B2B solution selling.

Epson’s financial targets are as follows:

FY2018 Outlook*1 FY2021 Target
Revenue ¥1,070 billion ¥1,200 billion
Printing Solutions ¥710 billion ¥780 billion
Visual Communications ¥198 billion ¥225 billion
Wearable & Industrial Products ¥162 billion ¥195 billion
Business profit*2 ¥65 billion ¥96 billion
ROS 6.1% 8%
ROE 9.5% Sustain over 10%
Exchange Rate  USD/EUR/Other*3 ¥110/¥127/92 ¥110/¥125/92

Reference: FY2025 Target

FY2025 Target Revenue ¥1,700 billion
Business profit*2 ¥200 billion
ROS 12%
ROE 15%
Exchange Rate USD/EUR/Other*3 ¥115/¥125/100

Developing Robotics as a Core Business

One of Epson’s goals is to develop its robotics business as a core business, via investment and collaboration with others. It says it will also use artificial intelligence to further improve usability.

Our Take

Like most Japanese printer/copier companies, Epson is not only redefining and expanding the role of its printer/copier products into commercial printing, but continuing to diversify its business. For Epson, this includes expansion of its robotics, projector, and wearable tech businesses. For others, such as Canon and Konica Minolta, this diversification includes expansion into medical technology, for example.

Epson’s strategy in the inkjet printer market has been to gradually transition its business model from low-priced consumer models that require high-priced ink cartridges (the “razors-and-blades” model), to higher-priced models optimized for business and with lower-cost consumables and operation. The sales proposition for these new models is that, although they cost more up-front, in the low-run, they cost less because their consumables are priced much less. (However, we note that in order for customers to justify a higher upfront costs, their print volume must be high enough to recoup their higher upfront cost. Customers who print at lower volumes will have difficulty recouping their higher upfront investment.)

Epson published its most recent financial results in January, for its third fiscal quarter (the nine months ending on December 31, 2018), reporting virtually flat results: revenue was down 0.5 percent to 829.0 billion yen, and business profit at 58.0 billion yen was essentially the same, with both versus the nine months a year earlier.

For this period, sales for Epson’s Printing Solutions business were down 9.8 billion yen to 201.7 billion yen versus the same period a year ago. Printer sales were down 11.8 billion yen to 143.8 billion yen, with inkjet models making up 85 percent of those sales. However, sales for Epson’s Professional Printing group were up 0.7 billion yen to 53.1 billion yen.

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