Is The Age Of Printing Over?

[Anonymous]

Is The Age Of Printing Over?

Lexmark and Xerox reported less-than-stellar earnings in the last quarter, as both of the printer and imaging vendors came under the increasing pressure of deteriorating global economic conditions and fluctuating exchange rates. However, Xerox had a shimmer of brightness in its services division, which grew a healthy 7 percent, and that may be the definitive sign that the age of printer vendors is over.

When technology historians write the epithet for printer vendors, the exact date of their demise may be March 20, 2012 – the day Hewlett-Packard announced the merging of its Imaging and Printing Group with the Personal Systems Group to form the new Printing and Personal Systems Group, and the retirement of printing superstar executive Vyomesh Joshi.

It was just a few years ago that printing was seen as a reliable and profitable part of the IT industry. HP printed cash on the strength of its enterprise and consumer IPG business. Xerox, ever the challenger, was a powerhouse in enterprise document management and multifunction printing. Lexmark and others were viable alternatives for desktop and enterprise monochrome and color printers.

 

At least that was the case for vendors. Solution providers, on the other hand, would sell printers, but didn’t gain on the financials. The real profit in printers comes from recurring consumables, which is mostly controlled by direct market resellers, office supply specialists and direct vendor sales.

The bottom fell out of the printer market with the advent of smartphones and mobile devices. As soon as people discovered they could store PDFs and emails on Kindle book readers, they started printing less and reading more. The paperless office hasn’t arrived, but mobile has hit the printer market. Proof: HP’s consolidation, the failure of Kodak to disrupt competitors with a “hardware-first” expense model and the slow down at Lexmark and Xerox.

True evidence of printing’s decline is also in Xerox’s earnings, which noted a 7 percent increase in services and professional services in the last quarter. Like Dell today and IBM a decade ago, Xerox is transforming its business from printing and document management to a portfolio company of cloud, infrastructure and integration services. In fact, analysts say the difference between Xerox and Lexmark is the services division it can lean on in tough times.

Xerox has been on a buying spree over the last several years, snapping up a number of regional and national printing and imaging specialists. In 2009, though, it paid $5.5 billion for Affiliated Computer Services, a Dallas-based national integrator that did much more than printers. The addition of ACS was not unlike HP’s buying of EDS, IBM’s purchase of PricewaterhouseCoopers and Dell buying Perot Systems; it was about expanding capabilities, not enhancing legacies.

Printer vendors are turning to the channel to ignite managed print services as a new source of revenue. The model attaches existing services as ancillary offerings – managed service providers monitor printer performance for operational and maintenance issues, as well as control consumables purchases. While the model has proven quite lucrative for vendors and solution providers, the rate of adoption remains relatively low. Printer vendors such as Xerox and HP will claim big gains in MPS, but the law of small numbers applies: High growth from a low base equals a slightly larger base.

>> CHECK OUT: Managed Print and Trickle-down Economics

Solution providers have consistently told Channelnomics that managed print services are not strategic to their businesses. Rather, MPS is seen as replacement revenue on some levels, and incremental gains on others. The core business, they say, is the sale of other products and services, including unmanaged print devices.

>> CHECK OUT: Waiting for Managed Print to go Mainstream

Few standalone printer vendors remain. Xerox and HP are now portfolio companies. Ricoh has branched out into professional and IT services. Canon, Samsung and Panasonic have always had diverse enterprise and consumer electronics products. And IBM has shed its industrial printing division. All of this is adding up to a transformation of these stalwart companies from their printing legacies to something that matches the increasingly digital and mobile work and personal lives of the cloud era. In other words, printers are no longer a license to print profits.

[Author]

July 24, 2012 at 8:27 AM