"No question, every store's lost revenues because of digital," said Edward Y. Lee, a photography analyst at Lyra Research.

According to Lyra Research, the overall market for cut paper is growing at an annual rate of only 3.8 percent.

"The industry started out on a bad foot," said Jim Forrest, a senior analyst at Lyra Research.

"It's a classic razor-and-blades business model," said Jim Forrest, an analyst who follows the imaging industry for Lyra Research.

According to Lyra Research, another research group, last year Americans bought some $132 million worth of home-sized photo-printers.

"I'm not sure that Danka has the experienced personnel to sell high-speed digital devices," said Edward Lee, a senior analyst at Lyra Research.

"There's no question, Polaroid's instant cameras are going gangbusters," said Mr. Hoffenberg of Lyra Research.

The Hard Copy Observer is a regular publication of Lyra Research.

The success of the publication spawned what grew to be a much larger marketing research organization, Lyra Research, headquartered in Newton, Massachusetts.

"Distributors can make Canon's products more widely available, and that will help it be a major player in this arena," said Edward Lee, an analyst at Lyra Research.