Can This `Rogue' Outrun Hp?

Roy D. Barker has a personal Holy Grail: a color printer that prints photo-quality images and sells for under $2,000. And he wants his company, Tektronix Inc., to be the first to produce it. President of Tek's printer division, Barker thinks he's at the halfway mark: a color printer for under $5,000 that is faster, simpler, and less expensive than any color laser printer. He hopes that the new machine, introduced on Mar. 8 as the Phaser 340 but code-named "the Rogue," will catapult Tek from the graphic-arts niche to the mainstream office-computing market.

Tektronix, which pumped $100 million into developing the new machine, has a lot riding on the Rogue. The Wilsonville (Ore.) company, once known as a staid producer of oscilloscopes, has made a dramatic turnaround under CEO Jerome J. Meyer, with seven straight quarters of rising profits. Tek's fastest growth has been in color printers: Sales have been jumping 40% and account for 30% of Tek's $1.3 billion revenues.

NECK-AND-NECK. While color printers last year were just $2 billion of the $22 billion desktop printer market, some analysts believe the market is poised to explode. According to International Data Corp., color machines will grab 40% of the worldwide printer market by 1998 (chart), as the same forces that made color ubiquitous in PCs drive color printing. Color communicates better and gives more impact--an actual red line in a budget spreadsheet, for example. "This is the first time a color printer becomes really viable in the office market," says Barker of the Rogue.

But first, Tek will have to take on Hewlett-Packard Co. The $25 billion computer and instrumentation giant is neck-and-neck with Tek in high-end color units--each claims a third of the market. But HP dominates in black-and-white laser printers, and its low-cost ink-jet color printers gave it a huge 60% of the overall 2.3 million-unit U.S. color-printer market in 1994.

Still, the corporate market is wide open. HP's popular liquid- ink-jet color printers appeal to consumers and small businesses, but corporate buyers find them slow and inconsistent. Color laser printers have better quality, but some have as many as 12 replaceable parts and require expensive laser paper. Output quality can also be inconsistent. So only about 5,000 color lasers were sold for desktop PCs last year. "The corporate color market isn't growing to the degree we thought," says Dana Morris, HP printer product marketing manager.

Barker thinks Tek's Rogue can change that. It answers concerns about cost per copy, ease of use, special paper, speed, and price. The machine relies on solid-ink technology--replacing powdered copier toner with crayon-like solid ink in four colors, each in a distinct shape so users won't drop the magenta cartridge into the yellow slot. The printhead, which sprays tiny dots of melted ink onto paper, is as wide as the page, so there are fewer moving parts.

There are trade-offs. The Rogue takes five minutes to heat up and prints color and black-and-white at the same rate of four pages per minute. Color lasers print black and white at at least 10 pages per minute.

And despite the Rogue, analysts continue to bet on color lasers for the office market. IDC's Marco G. Boer thinks that the color laser market will hit 200,000 units by 1998, far outpacing other high-end technologies--liquid ink-jet, laser, solid ink, thermal wax, and very high-resolution dye-sublimation. What's more, color lasers are getting cheaper. In response to Tek's announcement, on Mar. 13 QMS Inc. slashed its color laser printer price to under $5,000. "This is just going to explode the market," says Terry H. Harbin, executive director for U.S. marketing at QMS. "This is tough for Tek to contend with."

Tek is hedging its bets. It's the only company to offer color printers in all five technologies. Solid ink is its homegrown technique, but it builds other models around print engines from Japan, which it marries to its own controller cards. Tek is No.1 in solid ink, thermal wax, and dye-sublimation--selling to graphic artists and corporate marketing departments.

When will businesses switch en masse to color? Tek's Barker thinks it will happen by 2000. Even Boer, the most skeptical analyst, expects 50% of printer revenues to be color by then. Since only 9% now are color, the crusade to bring color printing to the office has just begun.

Before it's here, it's on the Bloomberg Terminal.