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July 18, 2006 1:18 pm

Dell makes bold foray into Japan

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Dell on Tuesday made a bold foray into the home territory of the world’s most competitive office equipment manufacturers with the launch in Japan of colour printers at less than half the price of comparable domestic products.

The US maker of PCs and office equipment said it would start selling a colour laser printer at under Y90,000 ($770), challenging heavyweights in the sector, such as Canon, Ricoh and Seiko Epson.

Concern that the entry of Dell into Japan’s fiercely competitive printer market would put pressure on the profitability of domestic printer makers sent their shares lower on Tuesday, with Canon losing over 3 per cent, Seiko Epson 4.6 per cent and Ricoh nearly 3 per cent.

The move by Dell had been anticipated, given that it has been investing heavily in colour laser printers and has been looking to expand its Asian operations.

Japan’s colour laser printer market stands at about 300,000 units a year and is growing 20 per cent annually, the Nihon Keizai newspaper said.

However, despite investor fears, the overall impact on major Japanese printer makers of the entry by the aggressive US company into their home market could be limited.

Canon, for example, is not likely to be materially affected since Japan accounts for just 8 per cent of the worldwide colour laser printer market, writes Shin Horie, analyst at Goldman Sachs in Tokyo.

Strong demand for Canon’s laser printers helped boost revenues of its computer peripherals business last year by 8 per cent. Canon’s strong grip on the business-use laser printer market has helped it to keep profit margins high.

Canon, the world’s largest laser printer maker, also supplies printers to Hewlett-Packard for sale under the US company’s brand in the US. One of its laser printers supplied to HP sells for $599m, Mr Shin points out.

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