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The Printer Market
Are you pursuing the opportunities?
IN 2005, there will be 3,029,009 monochrome
laser printer placements in the
be placed by your dealership?It is a big
number, particularly when one considers that, in contrast, Gartner forecasts
that 1,715,227 monochrome copiers will be placed in the
year. Yes, the margins are better on copiers and MFPs. Yes, monochrome laser
printers are commodity products. And, yes, Hewlett-Packard dominates, claiming
approximately 60 percent of the printer market. But one cannot simply ignore the
huge volume of pages coming off of printers.The reality, of
course, is that most traditional office technology dealerships are not ignoring
the printer market. Lou Slawetsky, president of Industry Analysts Inc., cites
the findings of his research. “Eighty percent of dealers are carrying printers,”
he says. “That’s up from nearly 73 percent last year.”That increase is
due, in part, says Slawetsky, to the growing number of printers being introduced
by the traditional copier OEMs. In addition, Hewlett-Packard has become more
active again in the BTA channel, he says, noting that nearly 40 percent of
dealers who sell printers include HP among their product offerings, more than
any other brand.One could
surmise that the OEMs’ growing presence in the printer market has to do with a
drive to displace HP printers. That is likely part of the reason. However, says
Ron Potesky, director of product and field marketing for Ricoh
necessity.“There is an
ever growing emphasis from Ricoh corporate, even Ricoh
printers as an important part of our core product line,” he says. “The interest
for all of us is in capturing the pages that are coming out of customer
workflow, whether it’s copy pages, fax pages, e-document pages, stored pages or
printed pages. As we look at the overall market, most of those pages are coming
from printers. So, for Ricoh and our dealers not to participate in that very
significant part of our customers’ workflow would be a mistake, I think, for all
of us.”Certainly, says
Potesky, Ricoh dealers, like all dealers, have captured a growing number of
printed pages through connected MFPs. “But we don’t have as many dealers who
have really embraced standalone printers, because they’re inexpensive,” he says.
“I mean, ultimately, they are a very low revenue product up front.“And the service
model is something that dealers are very insecure about, because most HPs and
Lexmarks and others, even Ricoh products, are going out with one-year
warranties,” he continues. “‘How do I put that on my cost-per-page plan? How do
I capture the aftermarket? Do I have to compete with IT distribution?’ All of
those things come up. So, many dealers are still not engaged in capturing those
pages and that’s what we’re working on.”The results of
an e-mail survey of a small group of Office Technology dealer readers appear to
confirm the minimal emphasis on printer placements, even though most dealers
offer printers, as Slawetsky’s research reveals. Among those responding to the
survey (38 readers), the majority (55 percent) indicates that monochrome laser
printers accounted for only 1 to 5 percent of total unit placements during the
past year, with 13 percent of respondents placing no monochrome printers.
Meanwhile, 55 percent of the survey group indicates that 0 to 5 percent of unit
placements in the last year were color laser printers, a product category
generally seen as one of significant opportunity in the coming months and years.
Naturally, the low number of printer unit placements results in a minimal
contribution to the dealerships’ annual revenues. Eighty-two percent of the
survey respondents indicate that both monochrome and color printers only
generate between 0 and 10 percent of total annual revenue.Comments shared
by some survey respondents reveal a low level of optimism for the future of the
market. The readers were asked about their expectations for the monochrome laser
printer market. “We are not actively marketing single-function laser printers
because we’ve not been profitable doing this in the past,” writes one
respondent. “We’ve done installations at no charge and have not reaped the
financial benefits from the time and effort we’ve invested.”Regarding the
color printer market, another respondent writes: “These products certainly
appear to be consumer-type products, i.e., buy them on the Internet at the
cheapest price and ‘someone’ will service them. These types of buyers probably
tend not to purchase supplies from a dealer because the perception is the dealer
is more expensive.”However, other
survey respondents share optimism for the future of the printer market. “We
expect to grow this area with Kyocera printers tremendously,” writes one
respondent, regarding the monochrome laser printer market. “We sell HP also and
service quite a few under cost per print, and we’re upgrading HP with Kyocera.”
Regarding the color laser printer market, another respondent writes: “Great and
growing.” (For additional reader comments see the sidebar below and the Editor’s
Page.)Those readers
with a more optimistic view of the printer market may have their eyes on the
sheer volume of unit placements anticipated in the coming years. It is worth
noting that Gartner forecasts the number of monochrome laser printer placements
in the
States
the number of placements is forecasted to be 2,873,591, still a substantial
number, but down more than 5 percent from 2004. However, color laser printer
unit placements are forecasted to continue to increase.“I forecasted
about 25 percent growth in 2002 and 2003 and that’s exactly what happened,” said
Peter Grant, an industry analyst for Gartner. “Average selling prices were
dropping as well. As the prices dropped, the markets grew.” This year, Gartner
forecasts 541,600 color laser printer placements in the
increasing to 928,691 placements by 2008.With such
projections OEMs are quick to emphasize the selling opportunities. “Given the
growing trend to printing in color, we recommend that dealers expand their
presence in the printer market as a way of enhancing their entire line-up of
products,” says Bill DiMinno, vice president of marketing for Panasonic Digital
Document Company. “There’s also the added incentive to almost triple a dealer’s
aftermarket revenue by placing a color rather than a monochrome printer. Every
dealer’s goal over the next few years should be to convert monochrome to color
anytime they can.”Dealers
lamenting the nature of printers as a commodity product should recognize that
color printers provide additional reasons for buyers to turn to dealers rather
than to other channels of distribution. “I think there is an opportunity in
color for dealers to go in there and teach people how to use it,” says Grant.
“The push-back has been, ‘Well, I don’t want everyone printing in color’ The
dealer can respond, ‘Then let’s control who uses it and who doesn’t.’ Some of
the new drivers enable you to control who is printing. You can track, monitor
and control some of these things that people haven’t been doing
previously.”Grant adds that
color laser printers also provide dealers a means of displacing the sea of color
inkjet printers that are in use. “What we’ve seen with some of these color
opportunities is, if you’ve got an organization with five or more color inkjets,
you can consolidate that to a single color laser printer, print the same number
of pages or more and still save money,” he says. “So, dealers should be selling
that benefit as well.”Even with such
opportunities on the color side and projections of substantial sales of both
monochrome and color printers in the coming years, undoubtedly, the commodity
status of the printer still quells the enthusiasm of many dealers for the
market. Low prices and low margins, many would say, hardly seem to make it
worthwhile, even with any expectation of aftermarket revenue. Why should a
dealer, then, pursue the printer market? Certainly, the ability to offer
customers a full product line is often cited among the reasons.“Our core
business is the MFP and that’s where our strength lies,” says Cliff Quiroga,
director of product management for Sharp Document Solutions Company of
When you are trying to provide a complete solution, printers are often
obligatory. And so, we believe it’s necessary to offer printers because a lot of
our dealers’ customers like to do ‘one-stop shopping.’”Slawetsky notes
that offering “one-stop shopping” is a necessity for dealers who want to thwart
competitors. “You have to sell printers because if you don’t there will always
be products from another vendor on the network,” he says. “And it doesn’t really
matter at this point whose product it is. If their product is on the customer’s
network you are at risk of losing the entire connected portion of your installed
base to that other vendor.“Some dealers
may say, ‘Well, it’s only Hewlett-Packard and they don’t play in my space,’”
continues Slawetsky. “But, they do, and I’m convinced they will be stronger in
that space within the not-too-distant future. Even now they go up to 75 or 85
ppm with the Konica Minolta manufactured devices they offer. So, they are a
threat to dealers.”Those customers
with HP printers often do have an interest in consolidating to a single brand,
adds Slawetsky. “IT managers or even office administrators who are managing the
network by default because there is nobody else to do it prefer to have one set
of drivers, one set of controllers, one set of user interfaces to minimize
training and administrative costs,” he says.DiMinno agrees,
noting that the BTA channel also has the benefit of its high level of service,
as compared to other printer distribution channels. “HP and other printer
companies have done a tremendous job of placing their products for many years,
but they have not necessarily done a tremendous job of serving, upgrading and
keeping them all consistent,” he says. “A dealer, for example, may find that
there are 16 different types of printers in a customer location with 16
different consumables and 16 different types of driver interfaces and sets of
commands. This positions dealers to play up their ability to set standards in
the workplace, while using printers strategically to penetrate the copier/MFP
market.”Fortunately,
says Quiroga, BTA channel sales reps have made significant strides in their
ability to converse with a key group of individuals who have helped HP reach a
point where it can claim such a significant portion of the printer market — IT
personnel. “More and more, sales rep are not afraid to go directly to IT,” he
says. “So, you should make IT managers a part of your sales process. The sooner
you get them involved and convince them that you are capable as a dealership,
the better equipped you are going to be to close the sale and upgrade the
printers that are already installed.”Finally, there
is one other characteristic of HP and its printer population that provides a key
opportunity for dealers and traditional copier OEMs. “HP has a huge target on
its back,” says Grant. “It has a large installed based of monochrome devices and
it doesn’t know where many of them are located. HP would like to know, but is
just hoping that when customers go to upgrade their HP printers the company will
be on the list. Unfortunately for HP, we talk to a lot of medium and large
companies that are upgrading their fleets of printers, sometimes in the
thousands, and HP isn’t on the list.”Where are these
medium and large companies going when it is time to upgrade their printers?
“Xerox, Ricoh, Konica Minolta and others are stepping up and saying, ‘You know,
we can handle all of these printers for you,’” says Grant, noting that the
resulting relationships are in keeping with Gartner’s advice to corporate
buyers. “That’s what we’ve been writing about a lot lately — ‘get assessments,
consolidate your output, right size your output fleet, etc.’”Of course, a
growing percentage of dealerships are poised to take advantage of such sales
opportunities. Slawetsky says these are the dealers who recognize the necessity
of selling printers. “They are now saying, ‘I cannot sell multifunctional
devices and not sell printers,’” he says. “Why not? ‘Because we’re migrating
copies to prints and if I don’t have the printer end of that equation, I
lose.’”But are dealers’
sales reps, in fact, sometimes losing opportunities for printer placements and
future upgrades by not asking customers, “Do you need a printer?” Potesky
advises reps to regularly ask the simple question. “We find in many locations,
where they have taken up the printer mantra and just ask the question, the
answer they get back is often, ‘I didn’t know you sold printers, Mr. Dealer,
but, you know, we do have this old HP sitting over here and it stopped working’
or ‘We have all of these inkjet printers and, you know, we’re thinking about a
faster color laser,’” he says. “It’s really a matter of just asking the
question. What they are capturing is more of the customer, and going deeper into
the customer. And that, of course, is a good thing.”Your
PerspectiveFor this
article, a portion of dealer readers were
surveyed regarding their experiences and observations of the market for
single-function monochrome laser printers and color/monochrome laser printers.
On this page and page 12 are the results of the survey, completed by 38 readers,
including a sampling of their comments.In the past 12
months, what percentage of your unit placements have been single-function
monochrome laser printers? (13 percent selected ‘0 percent’; 55 percent selected
‘1 to 5 percent’; 16 percent selected ‘6 to 10 percent’; 8 percent selected ’11
to 20 percent’; none selected ’21 to 30 percent’; and 8 percent selected ‘more
than 30 percent’)Percentage of Unit Placements
In the past 12
months, what percentage of your unit placements have been color/monochrome laser
printers? (10 percent selected ‘0 percent’; 45 percent selected ‘1 to 5
percent’; 24 percent selected ‘6 to 10 percent’; 13 percent selected ’11 to 20
percent’; none selected ’21 to 30 percent’; and 8 percent selected ‘more than 30
percent’)
What percentage
of your company’s annual revenue is generated from the sale/placement of
single-function monochrome and/or color/monochrome laser printers? (8 percent
selected ‘0 percent’; 74 percent selected ‘1 to 10 percent’; 8 percent selected
’11 to 25 percent’; 8 percent selected ’26 to 50 percent’; and 2 percent
selected ‘more than 50 percent’)Percentage of Unit Placements
What are your
expectations for your dealership as you consider the market for single-function
monochrome laser printers in the months and years to come?“Not great, but
you need to be in the market to hang on to your customers.”“It will have a
major impact in growth and survival.”“Although we
provide access to these products for our customers, it is not a focus, because I
feel these units have become such a commodity with little to no profit. Even
though the supply revenue has good potential, as a small dealer, it just is not
our focus.”“To double or
triple our sales.”“I expect that
the margins will continue to plummet and client loyalty will drop as
well.”“We want
printers to be the door openers for new customers. We should be able to place
them with little or no effort. Our other goal is to ensure loyalty and increase
dollars from established customers. Printers bring in additional revenue from
loyal customers that would go to HP, Brother or another company.”“We plan to put
more emphasis on single-function printers. We’re looking to shift people away
from HP thinking. It’s time for strong dealers to take this market. We need the
revenue currently going to non-dealer suppliers.”What are your
expectations for your dealership as you consider the market for color/monochrome
laser printers in the months and years to come?“We will
definitely increase the amount we sell and will target that customer to keep the
supply business.”“Color printers
are here to stay.”“We expect to
grow this at a much slower rate, but do expect it to grow.”“I think we are
more than a year or two away from color laser printers in the workgroup on any
scale close to black and white. I’d love to be wrong, but I believe until the
manufacturers get the operating costs to be proportional with B&W and
operate in a B&W mode at the same cost as a single-function monochrome unit,
color will not take off.”“We see margins
declining substantially in the next few years. Sales must be handled
electronically or by inside people to get the volume needed to profit from
supply sales.”“I think the
color printer market is a great entry to eventual color MFPs for many customers
and in the long run will help future placements of color MFPs.”“We will have
these as part of our total selling solution.”
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