By Sharon Epperson Correspondent
updated 2/7/2006 10:01:39 AM ET 2006-02-07T15:01:39

Computer ink is getting cheaper and refillable printer cartridges are quickly gaining share in the $6.5 billion aftermarket for these products.

If you need a new cartridge for your printer, you can now go to a store like Cartridge World -- or even go to your local drug store -- and they'll take care of you in minutes. Inside a Walgreens store in midtown Manhattan is an Ink-O-Dem machine. “It takes the old ink out of the cartridges and replaces it with new ink and cleans the print head and electrically tests it,” says Harry Nicodem, CEO of TonerHead. All in three minutes or less.

But what’s really luring customers to these machines is the cost – a refilled cartridge is about half the price of a new cartridge from the manufacturer. A Hewlett-Packard 78 color inkjet cartridge costs only $27.50 at a Walgreens Ink-O-Dem kiosk -– on H-P’s website, it’s $54.99.

The kiosks -- designed by toner head -- will be rolled out at 1,500 Walgreen stores starting next month.

Refillable cartridge franchises, like Australia-based Cartridge World, now have over a thousand stores worldwide and have quickly established a foothold in U.S. And some analysts estimate the refillable ink cartridge market will double to nearly $2 billion by 2009. That’s a tiny fraction of the $23 billion ink cartridge business of manufacturers like H-P and Lexmark International.

But the big guys are taking notice -- though H-P says its had “similar competition for some time and we feel we've had better customer satisfaction. We still feel we have the best overall value,” says H-P spokesperson Sarah Steven.

Lexmark International says it believes the impact of the refillable market on its business is "very small,” according to spokesperson Tim Fitzgerald.

Indeed, unless the quality of these cheaper cartridges stacks up, the refillable business won't catch on.

“The challenge for emerging refillers is to make sure their quality is really good,” says Charlie Brewer of Hard Copies Supplies Journal. “You have one chance to attract a buyer over to alternative products. If that chance is not maintained if value slips at all, you're not going to get that customer back."

Even though the market for recycled cartridges is a very small compared to new printer cartridges, it could start to eat at sales of companies like H-P and Lexmark. But for now, it's just an industry that they're watching.

© 2012 CNBC, Inc. All Rights Reserved


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