Supplementary memorandum by Hewlett-Packard
INTRODUCTION
The first section of this paper provides an
overview of the complex printer cartridge market in the UK, focusing
on the policies and practices of Hewlett-Packard (HP). Its objective
is to provide an insight into the current status of the market
and address some of the common misconceptions about the relationship
between Original Equipment Manufacturers (OEMs, companies such
as HP, Epson, Canon and Lexmark) and the remanufacturing community.
The second section is intended to provide a
brief overview of the current IT Eco Declaration system. Further
information about the IT Eco Declaration and HP's role in its
development is available on request.
THE UK PRINTER
CARTRIDGE MARKET
About HP
HP is the largest IT and technology services
company in the world with over one billion customers, a presence
in at least 170 countries and last financial year generated revenues
of over $104 billion. HP has a sizable UK operation which is a
microcosm of the global business conducting every service from
product design and software development through to manufacturing,
sales and marketing. Approximately 10,000 people work for the
company in offices across eight sites in England, Scotland and
Northern Ireland.
HP and printer cartridges
HP is the worldwide market leader in imaging
and printing. There are two types of printers which dominate the
consumer and commercial markets—inkjet and LaserJet. The
consumer market is mainly served by inkjet printers and commercial
customers tend to use LaserJet technology. The technologies of
these printing systems are quite different. Inkjet cartridges
use liquid ink which is sprayed onto the paper while laser printers
fuse a powder called toner onto the paper.
The life of an empty printer cartridge can be
extended in a number of different ways. It can be reused—either
through a process known as remanufacturing, in which it is re-engineered,
where parts are replaced, cleaned and refilled, or simply through
replenishing the ink or toner. A cartridge can also be recycled
by allowing the use of its materials in the manufacture of other
products, including HP print cartridges. HP recycles printer cartridges
as part of its lifecycle approach to reducing environmental impacts.
HP supports the right of customers to choose
and of remanufacturers and refillers to compete in the printing
supplies marketplace. Our operations do not in any way preclude
the remanufacturing or refilling of HP cartridges, nor do we seek
to inhibit the activities of this industry.
The printer cartridge market
According to ETIRA, the European Toner and Inkjet
Remanufacturers Association, remanufactured monochrome toner cartridges
have a 27 per cent market share, and remanufactured inkjet cartridges
currently have 15 per cent market share across Europe. They predict
potential growth to 40 per cent in the next few years.[3]
According to research from the sector's leading
independent market research organisation InfoTrends, the European
inkjet printer cartridge aftermarket (remanufacturers and refillers)
will see continuing growth in its market share both in terms of
units and revenue, moving from sales of 55 million units in 2005
to an expected 67 million units by 2010.[4]
Customer choice
HP's priority in developing products is to meet
the needs of consumers by delivering quality and reliability across
a wide range of applications and price points. We design our printers,
print cartridges and paper to work together as an effective and
integrated system with enhanced features and functionality which
set it apart from its competitors. This approach offers the performance
and value customers expect from HP and is the result of a
1 billion annual investment in R&D in our printing
business.
Independent testing consistently reveals that
HP's focus on performance results in unsurpassed quality and reliability
for consumers. According to research from leading European testing
house Innovationstechnik, original HP cartridges print 34 per
cent more pages than compatible alternatives and 69 per cent more
pages than refilled cartridges.[5]
In 2006, a further study by QualityLogic, another independent
research organisation, showed that on average 70 per cent of refilled
inkjet cartridges and 80 per cent of remanufactured toner cartridges
had some form of reliability problem compared to just 2 per cent
of HP originals.[6]
As consumers increasingly demand photo-printing
technology in their homes, fade resistance has also become a benchmark
of print quality. Again independent research indicates that HP
original supplies outperform their aftermarket counterparts. A
study conducted by Wilhelm Imaging Research in 2006 showed that
photos printed with refilled cartridges fade significantly in
less than two months while photos printed using original HP inkjet
cartridges in HP printers and using HP paper would take 73 years
for noticeable fading to occur.[7]
While these results demonstrate HP's commitment
to quality and reliability we believe customer choice is essential
and therefore support the right of the remanufacturing industry
to offer products to consumers less concerned by these factors.
We compete in this market on the grounds of superior print quality,
reliability, functionality and overall value.
Misconceptions regarding cartridge remanufacturing
Despite all the evidence of growth in the aftermarket
for printer cartridges, a number of misconceptions about the role
of OEMs, such as HP, in constraining the remanufacturing industry
remain:
1. Smart technology
In response to consumer demand for more information
about their printing system, a so-called "smart technology"
capability (whereby the print cartridge and printers are linked
and can exchange information using an electronic chip) is available
in many OEM cartridges. Smart technology was developed to enable
consumers to identify when cartridges are not installed properly,
alerts them when the cartridge is running low and instructs them
about how to recycle the cartridge at the end of its life.
Some remanufacturers claim that the introduction
of smart technology is a deliberate move by OEMs to hamper remanufacturing.
In fact the role of smart technology is to enable the printer
and cartridge to work in tandem to manage overall print quality,
calculate cartridge ink and toner levels and administer other
advance printing functions.
Neither smart technologies, nor related firmware,
preclude cartridge reuse by remanufacturers and refillers. Customers
who choose to use remanufactured cartridges may not experience
all HP smart printing features or the same level of print quality
that an original cartridge offers.
It is possible for a cartridge remanufacturer
to also invest in the technology to either re-set or replace the
smart chip. However, this is a matter for those businesses and
ultimately customer choice.
2. Increasing number of printer and cartridge
models
Over the past decade, with the rise of digital
technologies, customers have found more and more ways to use printers.
Consequently, HP has advanced its printing technologies and developed
a broad portfolio of products to match the varying needs of increasing
numbers of customers. While some remanufacturers suggest that
the rapid technological innovation is intended to stifle their
business, HP strongly believes that offering a wide array of products
and features helps ensure customers are able to choose a product
that best fits their needs. In our view, any attempts to hamper
innovation amongst OEMs to protect the interests of the remanufacturing
industry, which already benefits from our investment in R&D
without incurring any of the costs, would impinge competition
and reduce consumer choice.
3. Cartridge materials and construction
Contrary to the belief that HP designs its print
technology to impede remanufacturing, these decisions are driven
to make our products more aligned with customer requirements and
our manufacturing processes more efficient. In fact, a number
of innovations in cartridge design have assisted in their remanufacture.
In recent years, as a result of our Design for the Environment
Programme, the number of components in HP cartridges has reduced
substantially. While the reduction of the number of components
is aimed at cost and environmental performance, a side effect
is that cartridges have become easier to disassemble for remanufacturers.
4. Supply of empty cartridges
Sections of the after-market have levelled the
accusation that OEMs have made a concerted effort to restrict
the flow of empty cartridges, so as to make it more difficult
for remanufacturers to conduct their business. This was never
the case and it is generally accepted within the industry that
there is an excess of empty cartridges in the UK and even the
European market now, due to the efforts of remanufacturers to
collect such cartridges. At this time, European cartridge brokers
export empty cartridges to other parts of the world—a result
of this excess supply.
Environmental responsibility
One of the most important misconceptions about
remanufactured and refilled cartridges is that they are, by definition,
better for the environment than OEM products. HP sees environmental
responsibility as an integral part of our product offering and
we are willing and able to differentiate ourselves in the market
through our environmental responsibility programmes.
HP developed its Design for Environment initiative
15 years ago with the goal of reducing the environmental impact
of products and services. As part of this programme we work with
product designers, research and development teams and customers
to identify, prioritise and recommend environmental design innovations.
Product Stewards are then appointed to each new product to ensure
compliance with regulations, maximise energy efficiency, minimise
material usage and maximise recyclability.
In 1987 HP was a pioneer in developing a convenient
and free method for customers to recycle our LaserJet printer
supplies—Planet Partners. Today, this recycling program
has expanded to include inkjet printer supplies and is now available
in each region throughout the world. The programme has taken back
more than 118 million kilos of printer supplies over its 20 years
of operation. Our recycling strategy is expanding rapidly across
all areas of the business and in 2007 we announced an ambitious
new company-wide target to recycle one billion kilograms of electronics
by 2010.
As a result of this scheme 100 per cent of the
materials in returned HP LaserJet print cartridges and 76 per
cent of inkjet cartridges are recycled or recovered for energy
with the remainder managed in an environmentally responsible manner.
No cartridge returned to HP through the Planet Partners Programme
goes to landfill. In contrast, 35 per cent of the total number
of cartridges collected by the remanufacturing industry are unsuitable
for remanufacturing and, while these could be broken down into
constituent parts and recycled, a "vast majority" end
in landfill.[8]
HP commissioned First Environment Inc to carry
out a life cycle assessment (LCA) comparing the environmental
impact of an HP LaserJet cartridge and an equivalent remanufactured
cartridge.[9]
The LCA examines and refutes assumptions that reused cartridges
are "better" for the environment than original print
cartridges. The LCA found:
—
"No definitive statement can be made about the
environmental preferability of one product over another";
and
—
more than 80 per cent of the environmental impacts
from a cartridge—HP or remanufactured—can occur after
production, during other stages of the life cycle such as use
and end of life.
Conclusion
HP has always supported customer choice and
the right of the remanufacturing industry to compete in the printer
cartridge market and we continue to see a role for remanufacturers
in providing a choice to consumers who do not require such consistent
quality, reliability or ease of use. Our activities do not preclude
the remanufacturing or refilling of HP cartridges, nor do we seek
to inhibit the industry in any way. This is borne out by the economics
of the market which demonstrate that the aftermarket is continuing
to grow—a trend industry analysts indicate is set to continue
for the foreseeable future.
Throughout our global operations, HP's practices
are driven by customer demands for continuous product development
and the consistently high quality, reliability and value for money
they expect from our product range. We invest billions of pounds
in R&D to design print cartridges and develop ink and toner
formulations that optimise performance for our customers and will
continue to compete in this market on the grounds of superior
printing quality, reliability, functionality and overall value
for our customers.
OVERVIEW OF
THE IT ECO-DECLARATION
The IT Eco Declaration for IT hardware products
has its origins in the early 1990s, when customers, largely from
the Swedish public sector, began to request information about
the environmental properties of the IT equipment they purchased.
As demand for this information grew so did the
number of competing environmental eco labels. This made compliance
slow and very expensive and confused customers rather than informed
them as there were multiple eco labels with different standards.
To address this issue the Swedish IT & Telecom
Association established an industry forum in 1996. As part of
this forum, HP was instrumental in the development of the resulting
programme which allows participating manufacturers to communicate
environmental information in a set format whilst self-verifying
the data.
The self-declaration system combines elements
from numerous ecolabels along with frequently asked questions
from customers. Where a relevant standard exists, the IT ECO declaration
programme includes a set of operating principles to ensure that
each manufacturer measures in the same way and presents results
in the same format. This ensures that purchasers of IT products
can compare products on a like-for-like basis. The scheme also
includes a spot check system to guarantee that all manufacturers
accurately communicate environmental information.
Since its development the IT ECO Declaration
system has become the most widely used product environmental information
tool for electronics in Europe. It has been adopted by the IT
industry in Denmark, Norway, and Finland. In 2004 the US Environmental
Protection Agency incorporated much of it into its system for
helping environmentally-minded purchasers select IT equipment,
known as the Electronic Product Environmental Assessment Tool
or EPEAT. In 2005, ECMA International set up a project group to
harmonise its TR/70 standard with the Eco Declaration, which in
June 2006 became the international standard ECMA-370.
In March 2007 HP announced its participation
in a new IT Eco Declaration for Printer Supplies, including printer
cartridges. As part of this process more than 30 self-declared
environmental characteristics including the weight of the cartridge,
whether the printing supply contains hazardous substances, the
availability of a Material Safety Data Sheet and whether the manufacturer
offers a recycling programme for the product, are disclosed by
manufacturers in a standardised and comparable format.
To satisfy the declaration, member companies
must sign a contract with Swedish IT-Fretagen, verify compliance
statements on request, immediately correct any discovered errors
and pay a small annual fee. Non-compliance can and does result
in exclusion from the system.
February 2008
3 www.etira.org Back
4
InfoTrends European Inkjet Supplies Overview 2005-2010, March
2007. Back
5
Based on average results of 16 European brands tested in 2006-07
by Innovationstechnik GmbH. Test commissioned by HP. Testing performed
on HP 45A, HP 78A, HP 56 and HP 57 Inkjet Print Cartridges. Individual
results may vary. See the Innovationstechnik report at www.hp.com/uk/inktest
for details. Back
6
The QualityLogic Reliability Comparison Study, September 2005
was performed by QualityLogic, Inc. and commissioned by HP. QualityLogic,
Inc. is one of the world's largest, most qualified independent
quality assurance organisations, providing testing services to
every major printer manufacturer. Full report available on request. Back
7
For more details of the testing methodology, visit www.wilhelm-research.com Back
8
MTP Briefing Note: Waste Considerations Relating to Printer Cartridges-http://www.mtprog.com/ApprovedBriefingNotes/PDF/MTP_BNICT23_2007September20.pdf Back
9
LCA study available on request. Back
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