The purpose of this blog is to track 20 common stocks for a full year. The idea is to beat the S & P 500 like a mutual fund without the very high churn rate. These stocks will be held in a portfolio until next December 31.

Wednesday, August 29, 2012

How to kill your own business model...

http://articles.marketwatch.com/2012-08-28/markets/33439500_1_lexmark-market-for-inkjet-printers-inkjet-products

Lexmark announces that they are exiting the printer business..
“It’s symptomatic of an industry that’s under a lot of pressure,” De Silva said. “It’s sort of the culmination of [Lexmark’s] strategy, to exit inkjet altogether. People are printing and printing less, and not just in the consumer space.”

Let us take a look at this...Without any scientific study except for my family I will tell you why people print less.  Because ink cartridges are such a rip off.  My children would print all day long...Music and pictures.
Printing is fun.  Reading from pages is easier than reading from a computer. But our printer is only hooked up to one computer and only necessary work can be printed.  It has long been noted that printer companies practically give away the printers to sell the ink cartridges and now people hate paying $30.00 for a $5.00 ink cartridge.

It reminds me a merry-go-round at the mall near my home.  My children loved it, but a ride was $2.00 for about 2 minutes.  We are talking about $60.00/hour for fun and that is not cheap.  Usually the merry-go-round was mostly empty.  They would get 1 ride only and then we stopped going near the merry-go-round because it was so expensive.  Now if they lowered the price of the ride to $.50 cents, I would let the kids ride it 6 times and so would all the other parents who had some shopping to do.  The ride would be filled and I would happily let my children ride the merry-go-round until they were dizzy.
It is the old reverse capitalism model.  If business is slow, raise prices to make up for lost profits...

Just as I would let my children wall paper their rooms if ink did not cost so much.

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