Back in 1987, Michael Levin had just graduated with a degree in engineering from Lehigh University. He began Cadapult, a consulting business from the basement of his parents’ home, and his initial work led him toward graphic arts.
“I started my business in 1987 with a focus on providing consulting services for computer aided design (CAD) systems, particularly emphasizing high-end systems,” said Mr. Levin, who is president and CEO of Media Sciences International. “In some cases, we were installing graphic arts systems, and thus started servicing color printers. We decided to acquire some small resellers, and most importantly, we started selling aftermarket ink and toner supplies for Tektronix printers. We found we could save customers a significant amount of money while we made better margins. We became a newly public company and decided to acquire UltraHue, our vendor for the ink. This was the beginning of Media Sciences.”
Today, Media Sciences is a $15 million business focused on work group color supplies, including solid ink sticks used for the Tektronix – now Xerox – Phaser models.
“It’s a razor-and-razor blade model,” Mr. Levin said. “The printers have become darn near free, but to buy a set of inks will cost $100 or more. We offer customers the ability to save money, which is good for our economy.”
Of course, the OEMs make much of their money selling consumables, and Tektronix was no exception. In 1999, after years of facing a variety of questionable competitive practices, Mr. Levin brought suit against Tektronix and Xerox, which acquired Tektronix in 2000.
“We initiated the fight due to unfair competition,” Mr. Levin said. “The OEMs are trying to carve out and protect their market, whether it is setting up intellectual properties or marketing programs such as prebates that punish distributors for selling aftermarket competitors, although they don’t punish the same distributors for selling competing printers.
“We’ve also seen tactics such as denying service for printers, which they can’t legally do,” Mr. Levin said. “You can’t tie the warranty to the use of OEM supplies, unless non-OEM supplies damage the printer.”
To assuage concerns of potential customers, Media Sciences implemented a guarantee that ensures that any damage from its product will be repaired.
“The consumer should have confidence they are using a safe alternative,” he said. “We have a full warranty that is very robust. Should anything happen to the printer, we’ll pay for repairs. We stand behind it. Customers have got to know our products are a safe choice.”
The case against Textronix has since been settled, and Mr. Levin said that it worked out well for Media Sciences.
“A year and a half later, we settled out,” Mr. Levin said. “We’re still here and our business is growing. We are now a leading manufacturer of consumable toners and ink sticks for work group color printers, which excludes ink jet for the SOHO market. We now market supplies for 14 Tektronix-Xerox models.”
Media Sciences has developed a worldwide reputation, with 30 percent of its business coming from outside the U.S. The company is particularly strong in Western Europe.
“The market is ours to grow,” Mr. Levin said. “No one has our technology and distribution for work group products. Ink sticks have very vibrant color, and are stable and clean. Our cartridges are all newly built, and we believe we can build a new product with the savings customers want.
“The market is growing substantially within the monochrome world, where 20 percent to 27 percent of cartridges being sold are aftermarket,” Mr. Levin said. “In the color world, the aftermarket for cartridges is just beginning.”
Media Sciences is presently offering INKlusive, a program in which it leases Phaser printers combined with Media Sciences inks. Through this program, the company expects that more businesses will turn to color capabilities.
“One of the things we have done is create programs for customers to help them migrate to color,” Mr. Levin said. “It’s a serious business and we are at the very early stages of the color work group aftermarket. We have very ambitious goals and we will achieve them.”