It’s no secret that MFP OEMs have used the promise of ongoing consumables revenue as a way to support low initial purchase prices for consumer-class inkjet MFPs and printers. It’s the classic “razor/razor blade” business model. What may come as a surprise is that some device models restrict the scan and fax functions (if present) of a device if one or more cartridges is out of ink—even though those functions do not rely on ink being present in the device.
So, one customer is taking action; David Leacraft has filed a lawsuit against Canon USA for disabling the scan and fax features when ink levels are depleted on the Pixma MG6320 all-in-one printer he purchased. The case, which has been submitted to the court for class-action status, alleges deceptive marketing practices and unjust enrichment, seeking $5 million in damages plus injunctive relief.
“There is no reason or technical basis for manufacturing the All-in-One Printers with an ink level detection function that causes the scanner to stop functioning when ink is low or empty,” the complaint contends. “Canon designed the All-in-One Printers in such a way to require consumers to maintain ink in their devices regardless of whether they intend to print. The result is an increase in ink sales from which Canon obtains significant profits.”
Lawsuits like this are not unique to Canon, of course—previous legal efforts have been filed against HP, Epson, Brother, and other manufactures for reasons relating to device consumables, such as not allowing the use of third-party consumables. And the functionality (or lack thereof) is also not unique to Canon devices; Keypoint Intelligence analysts have seen other inkjet devices that disable all MFP functions when ink is out.
In a forum post back in 2016, Canon personnel responded to this issue with another Pixma model by saying that the feature is meant to protect the printheads:
“If you are experiencing a ‘Low Ink’ warning, you will still be able to scan, but not print. If you are getting a ‘Ink Out’ error, you will not be able to use the unit until the ink is replaced. These precautions are in place to prevent damage to the printer from occurring if printing with no ink is attempted. The printer uses the ink to cool the printhead during the printing process. If no ink is present, the printhead could be damaged or the unit would require service.”
Of course, scanning (and faxing, as long as no fax-confirmation sheet is required) does not put the printheads in peril, so this is an interesting rationale. A Keypoint analyst had been told by another manufacturer that the feature was meant to ensure that the device does not sit too long without ink, since that can also negatively impact the printheads. The thinking there is that if the device is a complete brick, the customer is more likely to replace the ink and avoid potential damage. If the case against Canon moves forward, it will be up to a jury to decide if these arguments hold water. And other OEMs that have had devices that take a similar tack will no doubt be watching the outcome.
The Bigger Issue
We don’t have an opinion on the legal outcome of this matter because we are not lawyers or legal experts. But we do know a thing or two about the print industry, so we can tell you why this lawsuit is happening: the industry is struggling to monetize its products in a world where demand for certain hardware segments is in decline.
One of the ways Canon (and its competitors) makes money is by manufacturing printers and then selling extended warranties, service packages, ink/toner, and other print consumables/accessories. This method created steady year-over-year demand. Folks needed print because paper was the best way to store and manage information. Every year, you could rely on so many people buying your printer at $X and paying multiples more in service and consumables costs over the life of that device. And customers were satisfied to pay for it because the device, consumables, and services played a big role in helping them make a living.
This method also allowed the manufacturer to sell their hardware at as low a price as possible, knowing the continued supply sales would more than make up for any revenue lost on the device itself. This, in turn, helped drive sales as it kept the cost of the printer down for consumers, making it a more enticing purchase and helping to sell the device as a standard household item.
How as-a-Service Models Show a Solution to Avoid Further Lawsuits
The reason this lawsuit is happening is because the print industry (not just Canon) is not properly monetizing their multifunction products because reliance on one of those functions (print) is declining. The equation is no longer more print = more ink/toner = more money. A better business model would be embedding the devices in as many processes as possible and collecting a fee when/where said device adds value to the process by making it more reliable, faster, and less expensive. There are four functions on the device—all can be monetized as sources of continual revenue.
Software-as-a-service has become so popular (in part) because it allows the developers to earn income on products they’ve already sold, and products must be continually updated to ensure they are secure and compatible with other software (such as the operating system). Print manufacturers should look at this strategy: Print-as-a-service can work too—and it is becoming increasingly popular in the consumer and business segments.
Outside of software offerings, we have seen some manufacturers toying with smarter ways to monetize devices. For example, in summer 2021, scanner OEM Fujitsu released the EdgeXperience Capture Service, an imaging solution-as-a-service (ISaaS) that bundles distributed capture and workflow automation solution Fujitsu PaperStream NX Manager - Cloud with a Fujitsu fi-7300NX network scanner for $129 a month. And just recently, the HP Work From Home program was announced, which “puts printing and computing devices, along with associated support and services, on one monthly bill in a program designed to meet the evolving needs of enterprises and their hybrid workforces.” In both cases, customers “are getting what they paid for”. In these examples, HP and Fujitsu are embracing the value of subscription models to preserve device revenues.
Our Take
Even if Canon doesn’t have to pay a judgment or settlement, the lawsuit is a blemish on its brand and the industry at large. The last thing you want to do when reliance on your machines is declining is risk angering your customers by looking greedy. People still value print. It might not be as much as they did 20 years ago, but that doesn’t mean there isn’t money to be made.
And, in the meanwhile, people are scanning more—our IST primary research and IT Decision Maker surveys found that scan volumes are on the rise—which means they still require devices. The value remains present, it is just that it needs to be packaged and sold in a different way. Print cannot and should not be expected to entirely drive the revenue stream in multifunction devices.
In other words, if your customers are scanning, then make it as easy as possible for them to scan…and charge them for it.