HP & LEXMARK TARGET SMALLER BUSINESSES

[Anonymous]

LEXMARK, HP TARGET SMALLER BUSINESSES
For
years now, major printer companies have worked with the world’s largest
businesses — banks, retailers and manufacturers — to ensure their
printing needs were met.But for the past two years, companies such as
Hewlett-Packard and Lexington’s Lexmark International have begun to
focus on big business’s little brothers.Both companies, and others,
have introduced managed print programs aimed at small and medium-size
businesses to help them track printer fleets, toner usage, error
messages and just about anything else an exasperated IT manager would
ever need to know.The programs offer various degrees of complexity, but
all hinge on the notion that printing has become more convoluted to
customers who prefer simplicity.Few start-up companies have an IT
department on day one. As they grow, they buy printers that suit their
immediate needs, resulting in a hodgepodge of hardware.Small
businesses, and particularly medium-size businesses, often have too
many printers, a key problem, said Larry Jamieson of printer industry
tracker Lyra Research.”It’s not necessarily the cost of the printers
themselves, but the cost of printing,” he said, noting that companies
can print too much on older models with high costs per page.It might
sound like a printer company’s dream — more pages on more printers
equals more profit-turning toner cartridges — but those companies
realize, Jamieson said, that their customers will work to get those
costs under control.”Each of the (printer companies) is saying ‘If we
can get this under control, we’re going to have more control over their
printing. If we’re the guys they’re going to, they’re going to use our
equipment,'” Jamieson said.Enter managed print offerings. These tools
allow printer companies or resellers — businesses that sell printing
products and services to end users — to track printing at a firm.A
successful print audit can reveal inefficiencies and even point out
statistics that show, for example, how often a certain printer breaks
down. Managed printing also offers just-in-time delivery of toner,
meaning no more trips to your local office supply store when the
cartridge runs out.Such programs can also be paid for with standard
monthly fees that make budgeting easier, though some also set a
pre-defined limit of pages and attach overage fees when a company
exceeds the maximum.”Companies are still trying to figure out what the
best model is,” said Philip Grote, an analyst with the research firm
Current Analysis.

HP’s answer
Industry
leader Hewlett-Packard unveiled its Smart Printing Services program,
aimed at small and medium-size businesses, in November 2005.Customers
pay monthly fees, which include hardware delivery, installation options
and supplies delivery, said Tami Beach, U.S. business operations
manager for the program.The fees are based on projected toner usage,
Beach said, but are updated annually based on the amount of toner a
customer actually uses.Smart Printing Services, though, is available
only for HP printers, leaving companies with other brands to purchase
more HPs or step up to a higher-level program, Beach said.Although the
program is available from HP, the company also allows resellers to work
with it, offering commissions based on a contract’s value.

Lexmark’s answer
Lexmark
took a different approach. Calling rival offerings like HP’s
essentially finder’s fee programs, it offered resellers the Lexmark
Fleet Manager, which made its debut in October.Unlike HP, which can
retain lots of control over its program, the Fleet Manager’s “focus is
on choice,” said Marty Canning, vice president and general manager of
Lexmark’s Printing Solutions and Services Division.”We want to give
choice: choice to the customer in how they buy and choice to our
partners on how they sell,” he said.The Fleet Manager, run completely
by resellers, tracks any brand of printer and can allow resellers to
track clients on a global scale, showing Lexmark “really listened to
the needs of the resellers,” said Grote, of Current Analysis.Canning
said: “It recognizes our partners’ needs to meet their customers’
diverse environment and our (resellers’) desire to improve service
levels with their customers.”In demonstrating the program, Lexmark’s
Jannette Baker showed how the company tracks its own printer use across
the globe.Lexington office products reseller Electronic Business
Machines got a look at the program before it launched, and president
Michael Hicks said he already has three customers interested in the
managed services.”They’ve given me the opportunity to service the
customer better in every angle,” he said.Lexmark doesn’t require users
to purchase Lexmark printers or supplies through the program, instead
banking on various training and usage fees.But the company has waived
those in 2007, Canning said, “to allow our partners to get out and get
off to a fast start with the use of this program.””We’re investing in
our partnerships. Our belief is by enabling our partners … it’s going
to drive more Lexmark hardware and supplies,” he said.

Downstream expansion
Since
the managed programs moved from larger customers to small and
medium-size businesses, is it conceivable they might one day target
home offices? Or even consumers?Not likely, most say. Low usage and low
numbers of printers make such a situation too easy to manage,
especially since printer software already warns consumers when they’re
running low on ink.Plus, from a printer company’s perspective, “it just
seems that’s probably the lowest margin market now,” Grote said.”I
don’t really see it…” Jamieson said, “but somebody may get really
innovative.”

[Author]

December 15, 2006 at 12:22 PM