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anyone else hear this? This was a comment that was posted to my blog today.

Nathan Maust said...
Anothe rumor I heard today from a dealer principal that is on the Ricoh Dealer Council is that of Canon acquiring Lexmark. Just imagine the printer giant that would create if HP were to then acquire Canon since Canon already makes all of their printer engines, & they have deepened the level of their partnership in recent months.
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Neither of these scenarios really make sense to me.

Canon does not need A4 engines, they make all of HP's. So why acquire Lexmark? If Ricoh could afford it (both money and integration capacity-wise) that would make more sense.

Canon is a proud and rich company and is not going to be acquired by HP or anyone else soon. It made over $30b last year too.

HP sees itself as a solutions and service provider, not a manufacturer, it would much rather Canon take care of the manufacturing and the headaches that go with that - HP would not want to buy its supplier.
It's all about the consumables, if Canon got the right deal it would be a no brainer for them. They would just phase out the lexmark engines and replace them with thier own, similar to a manufacturer buying a dealer then dumping the existing line an replacing with thier own.

There are roughly 13 players in the "toner/ink on paper" business, clicks seem to be migrating downward with MFP's and Printers (You may have the numbers on that, I'm giving it a good guess). I'm thinking there's another round of consolidation ahead and it's going to be copier manufacturers by printer manufacturers or vis versa, the other item to consider is that manufactuers may now look to buy major MPS companies to capture additional pages.

Anyone else have any thoughts on this?
As a Canon dealer for over 20 years, I know enough about them to know that Canon will never sell to HP, or anyone else for that matter. Their relationship with HP is strategic and long-term, however, and not to be taken lightly. I can't see what the value of Lexmark would be to them, though, unless it would be simply to elimimate another player that is creeping into the cheap-cpc business model via the dealer channel. That would hardly seem to be enough reason for acquisition-reluctant Canon to move forward. My $0.02.
It could be attractive for a vendor like Samsung

- has plenty of $
- Wants to build its dealer and IT VAR channel
- Wants to have direct/major accounts sales
- Lacks a good MPS program
- Wants to have a complete imaging portfolio, but still does not have consumer inkjet

I still think it would make the most sense for Ricoh if it wasn't still trying to swallow IKON too
That whole scenario seems a little ridiculous to me. We are a Lexmark BDS dealer and I could never see anything like that happening. The only company that I could possibly see buying Lexmark would maybe be Xerox and that's it. All Lexmark A3 products are Xerox boxes already. I know Ricoh owns Infoprint but I think that might be as far as Ricoh is going to go with Lexmark. Just my 2 cents!
Hey Art,

I think you got it backwards!

Hp is about 10 times a large (based on market cap) than Xerox.

The conventional wisdom is that printers and toners make them a lot of money. That is no longer true. In fact, printers and toners have the lowest margins of all their divisions, and have been flat in margin growth (even laptops and computers have better margins for HP than printers and toners).

Over the past ten years they have lost their highest volume placements to digital copiers. They do not have "feet on the street", so the do not control any facet of MPS. Their prime strength is on retail (low margin), and major accounts (low margin).

Mark Hurd is a bottom line kind of guy. Don't look for HP to acquire. Look for them to sell.

It makes the most sense in terms of where the company is headed.

Canon has the value distribution (direct branches and dealerships ie "feet on the street")that HP lacks. It would make the most sense for Canon to buy their printer division.
Chuck, with all due respect, have you actually read HP's financials? HP IPG operating margin is ~17%, PCs are more like 3%. For comparison sake, Ricoh's OP was something like 3.5% when they last reported (it's been a rough year for them, it used to be more like 9-10%). What you are saying is not borne out by the facts.

Losing high vol pages to digital copiers? According to IDC, the digital copier segment is eroding due to pages shifting to MFPs. Looking at MFPs, A3 MFP share has gone from ~95% in 2006 to ~65% in 2009 while A4 share went from 5% to ~35%, many of those being printer-based MFPs. Now that's not to say they were all HP by any means, but do you have data to cite to support what you just said? HP printers are displaced by A3 copier-based vendors, sure. That's the sales strategy for those guys. But the overall trend suggests there's more to the story.

No feet on the street? Are you selling to SMB only? HP has an enterprise-focused direct sales force that sells transactional and MPS deals to global customers. They also have on-site delivery people to run the MPS engagement. Below that level of customer, the guys at LaserNetworks seem to be able to make a good business out of it. There must be more to the story.

Like I said, Chuck, I respect your point of view, but to me it sounds like FUD unless you provide facts to back it up.

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