Epson 2005 Annual Report Download - page 44

45Seiko Epson Annual Report 2005
(4) Epson might experience a reduction in the market for Epson-brand consumables
Consumable products for inkjet printers, especially ink cartridges, are particularly important to Epson’s
sales and profit. There are third parties who supply ink cartridges that can be used in Epson printers.
These alternatives products are generally sold at prices cheaper than Epson’s brand products, and they
are slowly gaining market share in Japan and the United States, but even more so in Europe and
developing countries. Such third parties will continue to expand their share of the market for these
alternative products in the future, so for Epson to remain competitive, it might have to lower its prices of
such consumables.
In responding to such risks as a decline in its share of the market for Epson-brand products and a
reduction in prices, Epson has will continue to introduce onto the market, in accordance with the demands
and tastes of consumer in each region, its own products that appeal to consumers searching for quality
and ease of use. For example, it will aim to maintain and improve the quality of its products, and it will
strive to boost their user-friendliness, such as by using even longer lasting ink and an array of single-color
ink cartridges. Epson will also take legal measures to if any of its patent rights or trademark rights it
holds over its ink cartridges are infringed.
There is no assurance, however, that any of these efforts will be effective, and if Epson’s profit from
consumable products for inkjet printers declines because, for example, in the future the market share
occupied by the alternative products increases further or Epson must reduce the prices of its brand
products, then Epson’s results might consequently be adversely affected.
(5) A change in the market could affect Epson
Epson is focusing its managerial resources into its 3i business domain, which comprises the three busi-
nesses Epson believes have high growth potential of imaging on paper (i1), imaging on screen (i2), and
imaging on glass (i3). It is engaged in its strategy of establishing ties among and bringing together its
finished products and devices businesses while continuing to expand its myriad areas of business.
1. imaging on paper (i1)
This business aims to break away from the traditional idea of the printer being merely a computer
peripheral and decentralize printing by printers. For example, it intends to increase the opportunities
for printing directly from mobile communication devices and digital cameras without having to con-
nect to a computer and aims to have printers perform “imaging on paper” themselves, had been
performed by printing analogue photographs, copies, and the publishing.
2. imaging on screen (i2)
In addition to further enhancing the presence of Epson projectors in the business market, by capital-
izing on the move toward digital broadcasting and the increase in quality of image contents, Epson
aims to expand its business market by pushing further into the markets for large LCD projection TVs
and for home entertainment.
3. imaging on glass (i3)
In this business domain, Epson aims to develop novel technologies and new applications, such as
small and medium-sized LCDs that stand out as unique from the rest and even more organic ELs.
Epson will also further build on and expand its inherent strengths, and through a fusion of such things
as semiconductor technology and color image display technology create technologies that cannot
be copied by other companies and utilize them in creating new products.
However, because technological innovation and product cycles are so extremely fast in these markets
for Epson’s products into which it is focusing its managerial resources, if Epson is unable to respond
flexibly to such changes and develop and introduce competitive products, or if the product does not
grow as much as is anticipated, then Epson’s results could consequently be adversely affected.