Lexington, KY - October 10, 2006 - After a disastrous 2005, the imaging industry profitability shows signs of rebounding for the first half of 2006. But according to The Photizo Group, increased competition in an already crowded market will cause profitability to drop yet again. The Photizo Group is a leading provider of imaging industry insight to the investment community. The Photizo Group's recently released Imaging Industry Profitability Index showed slight growth to 1.025, versus 1.02 in the first quarter of 2006, said Photizo founder Edward Crowley. (The Profitability Index appears regularly in the TrendLine Report, a quarterly publication that provides the only detailed financial analysis of the hard copy imaging market.) Most importantly, this is a marked improvement from second quarter of 2005, when the index dipped to 0.86 due to the intense price war during that time. Crowley said the slightly upward trend has been driven by a relatively benign pricing environment during the first half of 2006 as vendors recover from the intense '05 price war. Additionally, several vendors have pulled back from their aggressive strategies of gaining share by offering the lowest price points, such as Lexmark in inkjets, Konica Minolta in color lasers, and Samsung in monochrome lasers. The financial models have proven to be unsustainable, and as a result this concept is a "no-win" strategy, he noted. Crowley does not think this growth-friendly environment will continue. During the second quarter, the promotion activity in the inkjet market has already started to increase as HP offers rebates to clear inventory and make way for new models. "We expect HP to announce a new lineup of laser printer products with new multi-function printers (MFP) in the second half, which will increase price pressure in the workgroup MFP and monochrome laser printer space," he said. "The digital print / production printing segment will be under increasing pressure as Canon's new ImagePress products begin shipping, along with Oce's new VarioPrint product and Ricoh's new high performance Aficio products." The Photizo Group believes the industry continues to have too many competitors given the industry's maturity, and continued price pressure is inevitable until the industry further consolidates to a few major players, Crowley said. He called this period of calmness the "eye of the hurricane. During the second half, we expect significant increases in price pressure and subsequent reductions in operating profit margins." The Imaging Industry Profitability Index was developed by the Photizo Group to track the profitability of this market. The base period for comparison is the first quarter of 2004. The index includes supplies, hardware, and services profitability for the imaging divisions of 14 of the top industry participants. Further information about the "TrendLine", a quarterly report tracking the imaging industry for the Wall Street investment community, is available at www.photizo-financial.com.