Office-Printing Market Year in Review: Steady Progress in the Face of Change

In some respects, the office imaging and printing business in 2014 was not so different from any other year recently. Hardware prices declined steadily. Print volumes in most segments waned as paper gives ground to digital display. Inkjet continued its persistent march into the office workgroup. The transition to solutions and services fueled by a steady diet of mobile and cloud-enabled applications leads the industry’s efforts to expand beyond hardware. Everyone is dealing with the impact of mergers, acquisitions, and various market entrants and exits.

Yet, despite what looks and feels like turmoil in many areas, the office printing market steadily trudges forward. Unit shipments for the most part are flat to declining, and many OEMs reported decreased shipments in various hardware segments on a quarterly basis. Even so, vendors seem to be benefiting from segment creep: the strategic decision to transition the product mix into higher priced segments to drive page volumes and better margins. As a result, revenues were sustained somewhat in 2014, despite the downward trend for hardware.

Product trends

There are numerous shifts occurring in the industry that just never seem to abate: the transition from single-function to MFP, from monochrome to color, from A3 to A4, and from transactional to contractual environments. The migration of pages from A3-size devices to A4 machines began with the convergence of the copier and printer markets and has been strengthened by the transition to MPS.

Organizations are paying much closer attention these days to the costs of printing, which of course is the primary factor leading to increased adoption of managed print services. But that same issue has helped business uncover significant over capacity and under-utilization of A3-sized machines. The A4-size MFP offers a compelling value proposition for MPS installations, with a low acquisition price, fewer service interventions, reduced service costs, and the ability to push devices closer to the user.

As a result, several vendors introduced new A4-size MFPs to the market in 2014. The ongoing migration to A4-size hardware has put increased pressure on traditional copier/MFP vendors and the BTA channel. Most copier vendors are actively engaged in pushing their own A4 strategies. Along with Canon, firms such as Toshiba and Sharp introduced A4-size product families, and most of these new machines are designed with fully integrated support for embedded solutions and cloud connectivity. At its analyst briefing in July, Konica Minolta claimed that it planned to double its A4 business over the course of the coming year.

Meanwhile, the battleground for pages between color and monochrome seems to have reached a bit of an impasse. Growth in office color hardware sales slowed significantly in 2014 and in fact may have peaked in several segments, which is placing increased emphasis on the importance of monochrome-only hardware. Several vendors introduced new monochrome printers and MFPs in 2014, spanning the full range from entry-level machines to departmental devices.

The monochrome printing market has developed a longer tail than many might have suspected, and for good reason. Businesses understand that color is expensive, often as much as eight times the cost of monochrome, even in contractual environments. Color for the sake of color is no longer a viable notion and organizations are placing increased scrutiny on access to color devices. Today, color is basically viewed as a luxury, and businesses are reigning in color expenses by closely monitoring both the acquisition of color devices and the usage of color in the office. These trends helped fuel increased activity in office inkjet technology, which gained significant ground in 2014 and looms large for the future of office workgroup color.

New products

Technology achievements in printing hardware are difficult to come by today, which makes it virtually impossible for vendors to differentiate products. Each year, there are fewer and fewer product introductions that seem to raise the bar or break new ground. HP’s Officejet Enterprise Products were perhaps the most notable machines introduced in 2014.

The Officejet Enterprise series are the latest machines to utilize HP’s page-wide array inkjet printing technology. With print speeds up to 72 ppm for monochrome and color, the Officejet Enterprise products are the most formidable business inkjets introduced by HP to date. These devices are clearly designed for the office workgroup environment, with a robust engine design that features advanced scanning functionality, and the same controller as that used in HP’s workgroup laser products, including embedded support for HP’s solutions platform.

But it is the inkjet imaging platform that separates the Officejet Enterprise platform from its laser-based counterparts. To begin with, it features very low operating costs for both monochrome and color, putting it among the most competitive machines in the workgroup segment. At the same time, the Officejet Enterprise products support tiered color billing and the ability to print “highlight color” or “spot color” pages at a price equivalent to monochrome, or 1.1 cents per page. Designed as a serviceable product that utilizes high-yield, user-replaceable supplies, the Officejet Enterprise color products certainly provide dealers with a low-priced alternative in the workgroup color market.

It is too early to tell how successful HP has been with its Officejet Enterprise platform, but early indicators have been positive. Meanwhile, HP also took steps to expand its ink subscription services in 2014 with the launch of Instant Ink Professional. This service provides small businesses with the opportunity to purchase ink supplies on a contract basis, with prices based on a certain number of pages per month. It is basically a packaged MPS solution for printers with print volumes ranging from 400 to 2,000 pages per month.

Ink in the office moves forward

No matter how you view it, ink in the office is a topic that continues to foster heated debate within the imaging and printing market. New ink-based technologies and recent product introductions from vendors such as HP, Brother, Epson, Memjet, and others have only ramped up the discussion. Including the SOHO and SMB segments, inkjet technology already accounts for approximately 40 percent of unit placements in the office-printing segment, and penetration is expected to move to 55 to 60 percent by the end of 2016. Much of that growth will come from the mid-level workgroup segment, which will have important implications for hardware, supplies, and contractual print services.

One trend gaining momentum in 2014 is the consumerization of the workgroup MFP. Vendors are placing greater emphasis on the design and functionality of the user interface of the MFP, with features such as color touch screens, built-in support for custom applications, and cloud integration. To put it bluntly, printers and MFPs are being designed to look and behave more like smart mobile device platforms.

Ricoh recently pushed this concept further with the introduction of its MP 2554/MP 3054/MP 3554 series of products. With these machines, users can utilize their own tablet or other smart device as a personal interface for the MFP itself. Samsung also made some interesting moves in this area with the launch of its MX4 series products, which utilize the Samsung Smart UI, a built-in tablet that runs on the Android operating system.

While technology innovation is harder to come by, there was no shortage of new products introduced in 2014. Vendors rolled out a plethora of machines in all market segments, including new mono and color A3- and A4-sized MFPs, workgroup printers, and a rash of entry-level monochrome single-function printers. But as explained earlier, most of these products seemed more evolutionary than revolutionary in nature.

Changing landscape

One can always count on a host of mergers, acquisitions, and organizational changes to occur each year in the printing industry, and 2014 was no exception. Perhaps the most notable of these was HP’s big breakup. In late September, HP announced plans to split its enterprise services business from its PC and printer operations. The move fostered immediate reaction from all corners of the technology sector.

Inside the printing industry, the question asked most often was: what does this mean for the future of HP’s printing business? Of course, it is still too early to answer that question, although on the surface the positives seem to outweigh the negatives. Historically, HP’s imaging and printing business has not always received the treatment it likely deserved, especially given the fact that it has basically funded HP’s endeavors in PCs and services. But the printing market is mature and printers are not sexy, at least according to several past HP CEOs who always seemed anxious to funnel more R&D dollars to other areas of the business.

It will take time before we can really evaluate the true impact of the HP split, and it will be interesting to see if HP is able to transform its printing business now that it has greater access to R&D spend and other resources.

Another important reorganization occurred more recently, when Samsung announced plans to combine Samsung Electronics America (SEA) and Samsung Telecommunications America (STA) into a single entity. The move basically combines Samsung’s cell phone business together with its consumer and enterprise electronics businesses. There is little on the surface that would seem to impact Samsung’s strategy for its printing organization, except that the move signaled the departure of Tod Pike, who had served as senior VP of Samsung’s Enterprise Business Division for the past few years.

Coming over from Canon Business Solutions, Pike was a veteran of the copier/printer industry who brought immediate legitimacy to Samsung’s enterprise printing strategy. Pike had become the face of Samsung’s enterprise business, making appearances at virtually all the major industry conference and channel events, and he was obviously instrumental in building out Samsung’s strategy and presence within the BTA channel.

Samsung insists its commitment to the imaging channel is unwavering, and it expects to continue to build out programs based on a converged IT strategy designed to help dealers expand and grow their businesses. In reality, Samsung’s success will be measured by its ability to execute on that strategy.

Solutions and services

The imaging and printing market is under attack from a variety of outside threats, and vendors are reacting to changing market conditions in very similar ways. As print volumes continue to decline, OEMs and their channel partners are investing in strategies to expand beyond print.

In some cases, it is a movement toward additional services — whether that is managed IT services, MPS, document services, or some combination. Strategically this makes perfect sense, because vendors and the imaging channel have a strong service infrastructure and a service-oriented sales model already in place. For the last few years, MPS has been viewed as the growth engine for the market, but the reality is that print is only a component of the entire infrastructure, and the overlap between IT and MPS is a strong area of opportunity both for businesses and technology providers.

There has also been a strong movement toward value-add solutions and services, such as document management, content management, capture and conversion, and workflow solutions. These areas represent prime opportunities for vendors and channel partners alike, who are actively looking for ways to take advantage of existing document expertise to drive new revenue streams.

The push to enable embedded solutions has never been more focused, and vendors are now developing complete solutions ecosystems around the MFP. The intent is to help facilitate the delivery of value-add solutions optimized for vertical markets to address real business needs. Architectures such as HP JetAdvantage and Xerox ConnectKey are prime examples of this umbrella approach. Three key elements are always present in every solutions strategy today: mobility, cloud enablement and delivery, and data analytics. Regardless of the approach, vendors remain adamant that solutions continue to be a key enabler for driving the core business of printing.

Namaqua chameleon?

There is an old saying that perhaps sums up 2014 best: the more things change, the more they stay the same. Indeed, the office printing business is very much like the Namaqua chameleon – one of 100-plus different species of chameleons throughout the world, most of which have the ability to change skin color to some degree. When you think of a chameleon, the natural reaction is to envision those captivating creatures that quickly change back and forth between brilliant shades and fascinating patterns. But not all chameleons possess those capabilities. The Namaqua chameleon, which is found in arid regions such as the deserts of Southern Africa, switches colors between dark black and light gray, a survival technique it has developed to absorb or reflect heat. Always at this time of year, one hears a host of predictions for the future of the office printing market, with expectations for radical changes to market share, products, and go-to-market strategies. But each year it is the same old Namaqua chameleon – slight changes that essentially shield the market from outside threats and protect the core. The industry is evolving, for sure, but shoring up the core business of print is what always seems to underline those changes. This is not necessarily a bad thing, because it speaks to the overall viability and longevity of the market. But how long before more brilliant and far-reaching transformation is required for survival?


This article originally appeared in the January 2015 issue of The Imaging Channel.

Robert Palmer is Research Vice President with IDC's Imaging, Printing and Document Solutions team. He is responsible for written research, forecasts, and analysis in multiple practice areas covering managed print services, document solutions, business workflow automation and optimization, and hard copy transformation. Palmer's research also includes a particular emphasis on the office imaging channel and transformational strategies and technologies impacting the future of the office imaging market.