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 user 2005-04-07 at 12:37:00 pm Views: 50
  • #8679

    The Printer Market

    Are you pursuing the opportunities?


    IN 2005, there will be 3,029,009 monochrome
    laser printer placements in the U.S. market. How many of them will
    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 U.S. market this
    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
    , a strong commitment to the printer market is a


    “There is an
    ever growing emphasis from Ricoh corporate, even Ricoh Japan , on
    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


    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 United
    is actually going to decline. By 2008,
    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 United States ,
    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.”


    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


    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
    . “We offer printer models to enhance our product line-up.
    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


    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


    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.”


    For 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

    Percentage of Unit Placements

    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

    “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.”