Sales of laser printers grew 8.2 per cent in the second quarter, as vendors cut prices and introduced higher performance products, according to market analysts. However inkjet sales rose only 3.7 per cent year on year.

"The [inkjet] market was dragged down in particular by weak sales of small photo printers in the US and Europe," said Tetsuya Wadaki, an analyst at Nomura Securities' Financial & Economic Research Center in Tokyo.

Small-format home photo printers designed specifically to print digital camera snapshots are losing out to high-street photo printing services, according to new research.

"A string of makers have decided to withdraw from, or drastically scale back, their small photo printer operations because competition from photographic print stores and online printers has made them uncompetitive on price," said Wadaki.

In addition, A4-sized consumer inkjet printers now have the resolution and performance to handle simple photo printing, further discouraging ordinary users from buying a separate photo printer.

HP continues to lead the market, but Japanese rival Canon has seen "substantial" growth in sales of consumables and other non-hardware products, according to Nomura.

Normura's analysts also believe that the printer market could be in for some substantial changes driven by pressure from HP.

"[HP] is looking to advance and refine inkjet technology in order to compete with the laser printer and copier market, and other inkjet printers are increasingly carrying out similar experiments," said Wadaki.