Gap Intelligence’s 2011 Printing Industry Year in Review

by Jake Fishman, Gap Intelligence

I think it is safe to say that 2011 was an interesting one for the print industry. Between the impact of currency, natural disasters, recessions and civil unrest, it was hard at times to not view the market as a snakebit, but in my opinion, all of those hopefully short-term events took second stage to some very interesting technology and channel trends. The opportunities provided by these transitions suggest that 2012 will be a fun year.

With that I give you the top five printing themes, trends and events of 2011.

A4 push continues

A4 MFPs maintained their momentum in 2011 as key market trends continued to play in the segment’s favor and remaining traditional A3 players finally brought their own “copier brand” enterprise A4s to market.

This trend began with a trickle of relatively unambitious copier brand A4 desktops starting roughly 10 years ago, followed by Sharp’s Frontier experiment in 2008 and 2009, but 2011 finally brought the first truly enterprise-class A4s from Ricoh, Canon, Konica Minolta (in Europe) and Fuji Xerox (in Asia). Although U.S. versions of the new Konica Minolta and Fuji Xerox (via Xerox) models have yet to materialize and more enterprise A4s from traditional A3 vendors are surely on the way, the last 18 months still brought a 35 percent increase in active copier brand A4 MFPs, while the same vendors’ active A3 lines consolidated by 3.5 percent.

There is no doubt that each of these trends will continue, given the position of MPS and emerging markets on most vendors’ priority lists, especially in light of ongoing page volume trends. This shift is very exciting (at least to me) and should be eagerly anticipated among vendors and dealers looking to gain share, as the transition creates new opportunities.

However, questions still remain regarding how these “copier” vendors plan to use their growing A4 portfolios. Ironically, the primary goal for many of these highly anticipated A4 models is to protect the vendors’ A3 installed bases, despite the many factors that prompted them to expand within the A4 segments in the first place. Given the traditional “copier” players’ current installed bases and channel structures, it is hard not to blame them for using these highly anticipated models for more tactical purposes, but there is little doubt that the market will be far kinder to vendors that embrace a more organic A4 strategy going forward. Meanwhile, the traditional “printer” players that have been cleaning up by providing dealers with A4 supplements to their A3-centric lines had better begin preparing for far more well-rounded competition from their copier-selling adversaries.

No. 4 — The Wild West of cloud and mobile

Prompted by the emergence of tablets and the growing mainstream relevance of cloud computing, OEMs and third-party vendors rushed cloud and mobile printing solutions to the market in 2011 to ensure connectivity with the new frontiers of the network. While 2011 will surely be viewed as the early days of cloud and mobile printing, the technologies have come a long way since last year, when cloud and mobile were also the No. 4 theme on Gap’s list, but the number and capabilities of available solutions were far less impressive.

In the last year, the cloud and mobile printing market expanded beyond the handful of offerings from HP, Xerox and Ricoh, who were met halfway by industry outsiders like Google and Apple as well as third parties such as EFI and Cortado. After a busy 2011, mobile print offerings are available from nearly every vendor, and a growing number of cloud printing and scanning solutions have emerged across product lines and pipelines.

Now what this trend needs is one of the quickest standardizations in history, as the idea of several dozen proprietary solutions gaining acceptance in today’s mixed-fleet, mobile and interconnected environments will not work. One possible step toward this standardization may have occurred in October, when HP took a page out of its 1984 playbook and allowed Toshiba to add ePrint to its MPS offering. Twenty-seven years after HP’s printer command language (PCL) became the desktop printing standard — paving the way for network printing as we know it — ePrint (aka ePCL) could be headed the same direction. However, it is extremely doubtful that competing vendors are willing to hand that to HP just yet, suggesting that standardization could be driven through the current loosely assembled cloud printing alliances or even a widely partnered third party such as EFI. Either way, before standardization happens, 2012 is sure to bring its share of new mobile and cloud printing developments; let’s just hope that the actual act of cloud and mobile printing grows at a similar rate.

No. 3 — March 11, 2011

In addition to the terrible human impact, the earthquake and tsunami that hit Japan on March 11, 2011, served as arguably the most significant outside influence on the printing market this year. The immediate impact was quite visible as manufacturing plants quickly shut down due to structural damage from the earthquake and stayed closed as power, workforce and infrastructure challenges lingered.

While initial levels of transparency regarding the impact of the disaster varied by manufacturer, nearly all vendors eventually admitted that inventory shortfalls were expected. Before long, dealers began experiencing these shortages firsthand, and messaging from the manufacturers shifted from maintaining a steady flow of new MFPs to keep pace with demand to a more pragmatic goal of keeping sufficient inventories of key supplies and maintenance items in stock to ensure support for their current installed bases.

Unfortunately, despite impressive efforts to get plants up and running, shortages of key parts kept many manufacturers from producing complete MFPs for some time, impacting inventories of specific product lines for as long as six months. While inventories of more sophisticated MFP systems were most impacted, we also identified significant shortages of laser printers and inkjet MFPs; many “active” products were listed as backordered by May 2011, and by June 2011 channel inventories were nearly 70 percent lower than levels at the same time in 2010.

Looking back, vendors were able to successfully support their current fleets, and although the financial impact was still severe, by the start of the fourth quarter, it appeared everything was back on track. I will leave it at that and hopefully won’t have to include the impact of the Thailand flooding in my 2012 retrospective.

No. 2 — Channel MPS

Channel MPS was a major trend throughout the year. Vendors hustled to assemble and launch new programs with the intentions of guiding their partners’ transformation into MPS providers and further strengthening their channel relationships. Needless to say, channel MPS has been a learning experience for many vendors, some of which have struggled trying to find the right balance between their resellers’ needs and their own. Although it’s likely that many vendors will find plenty of ways to improve on their 2011 channel MPS offerings, the year certainly brought a number of honest attempts to find that balance. While several vendors launched or expanded their channel MPS offerings this year, including notable moves from Canon and Muratec, the most aggressive channel MPS initiatives came from HP, Xerox and Ricoh.

Xerox bookended its well-received PagePack 3.0 offering with the introduction of its eConcierge and XPPS programs to U.S. dealers. While not exactly MPS, eConcierge provides resellers with a co-branded e-commerce portal through which their clients can order genuine supplies for all Xerox and non-Xerox devices and receive free service for Xerox models with continued consumable orders. Perhaps more importantly, eConcierge introduces partners to more consultative print service practices, in hopes of bringing its less sophisticated resellers up the value chain. Xerox also began the U.S. introduction of its midmarket-focused XPPS program, filling out the high end of its U.S. channel MPS offering. First launched in Europe last year, XPPS is essentially a suite of tools largely based on components of Xerox’s own direct MPS offering combined with recent acquisition Newfield IT’s Asset DB program, encompassing nearly every component of a midmarket MPS engagement, including sales and leasing, discovery and monitoring, assessment and optimization, service, etc. With the two new offerings, Xerox’s often-referred-to “MPS Continuum” claim now has far more clout on the channel side than before and at the very least should help to recruit new resellers, grow the capabilities of existing resellers and fortify the vendor’s channel sales ecosystem.

2011 also brought the launch of Ricoh’s chaMPS program, significantly expanding its channel MPS offering. The chaMPS program is based around the same core “change management” and “continuous improvement” themes that Ricoh introduced through its direct MDS program two years ago and provides its already established methodologies, resources and services through a variety of free and fee-based a la carte options. While Ricoh is certainly not the first vendor to offer its dealers a turnkey MPS/MDS program, chaMPS is arguably among the most complete in terms of the scope of features provided. However, it also appears to carry the most upfront cost requirements, which certainly raised some alarm among the dealers, and the variety of components appears to have created a new challenge, as dealers initially struggled to ascertain which chaMPS components were essential and which were “nice-to-haves.” That said, in the spirit of Ricoh’s “continuous improvement” MPS philosophy, the vendor will surely continue to refine its channel MPS initiative as we move into 2012.

HP’s channel MPS moves were largely internal in 2011 but should have a significant impact on how the vendor supports its partners going forward. Kick-started by its acquisition of Printelligent in May, HP’s Laserjet Enterprise Services (LES) division has undergone quite a transformation, combining Printelligent’s personnel, tool sets and processes with its own to create the new HP Partner Print Services unit. While the new unit did not make its first impact on the channel until November, when HP introduced its first Partner Print Services offering to resellers, more programs with a mix of Printelligent, LES and HP Managed Enterprise Solutions (Enterprise Direct) DNA is surely forthcoming.

No. 1 — Transition to services

Once again honored with the top spot in Gap Intelligence’s annual printing industry review is the transition to services that is taking place across the industry. Considering that we celebrated IBM’s 100th year in existence in 2011 — marked by more than a few noteworthy services transformations along the way— it would be inaccurate for me to call this a new trend, but the changes in 2011 were certainly unique and very telling of where we are headed.

With the benefits of previous service expansions by IBM well proven and the results of similar moves from HP and Xerox growing increasingly clear, 2011 brought an influx of non-printing-related services activity from vendors across the market, resulting in more than a few reorganizations, acquisitions and rebranding initiatives. Heck, even the self-proclaimed MPS “thought leaders” began building up their enterprise services and solutions credentials. And why wouldn’t they? Services present significant opportunities for vendors to grow their business and create a bridge to what they hope is where the future will be.

Canon and Konica Minolta’s U.S. subsidiaries executed two of the most interesting services expansions of 2011, providing each with a new path beyond printing and imaging and the prospect of an even more interesting level of independence.

Konica Minolta started the year with its January acquisition of managed IT services provider All Covered, adding the 22-location, SMB-focused provider to its largely SMB-focused direct and indirect printing sales and service force. Within its first year as a Konica Minolta subsidiary, All Covered expanded to five additional markets through acquisitions, which is even more notable when contrasted with the vendor’s single U.S. dealer acquisition. While Konica Minolta provided few details on cross-selling activity between its IT and print client bases, the vendor originally revealed that it plans to follow a playbook that is very similar to how it operated the Hughes-Callahan integration. The company reports that it was able to successfully migrate about 80 percent of Hughes-Callahan’s IT services clients to Konica Minolta-branded output solutions. Therefore, the suspected plan going forward is to introduce the All Covered team to Konica Minolta customers and vice versa. Meanwhile, Konica Minolta indicated that it would provide All Covered’s IT services through its authorized dealers, allowing these partners to expand their offering to their clients.

Canon USA took a different route in its services transition, opening the largely midmarket and enterprise-focused Canon Information & Imaging Solutions (CIIS) subsidiary without the aid of any acquisitions while maintaining a connection to its imaging heritage. The primary focus of CIIS is to accelerate the growth of Canon’s service and solutions, first through expanding its document solutions business into IT services, followed by the commercialization of Canon’s cloud, medical imaging, display and “new” technologies. Although Canon made this ambitious move without acquiring an existing provider, the vendor is certainly not going it alone, as much of its cloud infrastructure is based on technology from its longtime partner Fujitsu, and two of its early offerings come as a result of its partnerships with SalesForce and Oracle. Canon surely has cross-selling in mind and will see an immediate print benefit from the Salesforce offering. The vendor is still evaluating how the printed page fits into its CIIS roadmap and appears quite pragmatic regarding how it will be sold, careful not to jeopardize the success of CIIS in the name of selling more MFPs.

Unlike the services transitions that have taken place in recent years, which were made by U.S.-based companies with far less of a reliance on manufacturing, these expansions could bring a significant change in the way Canon USA and KMBS USA do business. While both will continue to operate within the confines of their greater worldwide organizations and still source both printing and other technologies from Japan, they will become inherently more financially and operationally independent as we head into 2012. It is also likely that other vendors will follow a similar path next year, possibly changing the way the print industry does business.

 

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