Analysts say that the relationship between the two companies, while contentious at times, had offered benefits to both. "Both companies are going to suffer from this," said Gary Peterson, director of research for market researcher ARS. "Dell, like it or not, is a pretty big reseller of HP products. HP is going to miss that." At the same time, Peterson said, HP has been a significant supplier to Dell and noted that it owes a fraction of its PC sales to the fact that it has been able to bundle HP printers. "Dell is going to be missing HP a great deal," he said. It's too early to predict how Dell would fare with its printers, said Bear Stearns analyst Andy Neff. "This is still a war on paper only at this point -- Dell does not have printers yet (and it) needs to detail its plans and execute those plans," Neff said in a note to clients. Merrill Lynch analyst Steven Milunovich estimated that HP printers sold through Dell represent approximately 3 percent of HP's $9bn (£5.8bn) in imaging hardware sales, but said that other partners could quickly make up for that $300m in lost sales. Lucrative ink sales are Dell's key motivation for entering the printer market, but Milunovich questioned whether Dell would be able to persuade consumers to buy printer cartridges by phone or over the Internet. "The vast majority of supplies are bought through retail, not over the Web," Milunovich said. However, Neff said that it may be premature to count Dell out. "As to the conventional thinking that 'no one will buy ink cartridges direct', one could have said the same about PCs 10 years ago," Neff said. Lexmark is likely on the short list of companies with which Dell might partner, a list that could also include Xerox, Epson and Canon, Neff said. "Dell will push for favorable economic terms from a vendor and may choose more than one vendor (i.e., one for laser, one for inkjet)." Peterson said he expects Dell to offer both inkjet and laser printers under its own brand, and to aim largely for low-end models that it can bundle with its PCs. "They are going to have a minimal impact on the market," Peterson said. "What people don't understand is that HP is the Microsoft of the printer world. To think that Dell is going to get even 10 percent of the market is preposterous." News.com's Michael Kanellos contributed to this report.
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