*NEWS*HP & LEXMARK TARGET SMALLER BUSS

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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.”

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December 15, 2006 at 12:21 PM