In a 2017 speech at the RT Media Summit in Zhuhai China, I warned the group of cartridge remanufacturers and those who manufacture non-infringing new compatibles. There is a more significant threat to both their business models than the threats from each other. That threat would be from the OEM’s as they would naturally attempt to get back their annuity business in a declining market. I suggested the OEM’s would compete like never before.
The market is consolidating and most definitely there is a reduction in customer demand. The remanufacturing and the new build compatible industry has never been a majority of the overall cartridge business. Some experts say they have around 20-25% of the market and much less with color cartridges.
Over the last couple of decades, Clover has bought most of the significant independent remanufacturers and along the way cornered the market on the collection of empty cores. Clover will soon, if not already, be collecting more empty cartridges than they reuse. When this happens, their business model is broken. I believe it has already happened. Clover’s broken model and their debt troubles will be significant benefits to the OEM’s. HP has already been putting pressure on Clover by applying substantial price reductions to shut them out of key accounts.
The good news for HP is that Clover is only one competitor, and the fight will be much easier than fighting individually the hundreds of independent remanufactures, Clover gathered up. Now the OEM’s will strike with a vengeance. It does seem that a failing Clover will turn out to be a win for the OEM’s. HP with the world’s largest base of customers will see the quickest gains if Clover fails.
HP’s recent news of their agreement with Xerox will cost the remanufacturing industry tens if not hundreds of millions. Xerox was likely the largest buyer of NON-OEM HP toner in the world. This new agreement will now mean Xerox will use HP OEM supplies in the millions of HP printers that Xerox has on Managed Print Service Contracts. It is safe to say that the day of that announcement was not a happy day for our friends at Clover.
The OEMs will focus on beating down the largest remanufacturer then they will focus on the nonpatient infringement new build manufactures. I think that some of the OEM’s will, in fact, partner with or acquire these new build manufactures allowing them to lower their supply cost. The OEM’s are not going to lay low in a declining market and will fight viciously for their aftermarket business.
Clover is still hundreds of millions in debt, and if they continue to lose considerable accounts to HP, they will struggle under a model which collects more cartridge cores than it fills or, remanufactures.
The silver lining in this competitive landscape. Is that the smaller regional remanufactures might have a play and will not concern the OEM’s as they will focus on finishing off Clover and watching for those new build manufactures who violate patents.
The alternative cartridge business will reduce in percentage, and those who survive can provide alternatives to end-users. One thing for sure you wouldn’t want to be the largest and find yourself collecting more empties than you remanufacture.
Read a related article about HP and Xerox by Ray Stasieczko at https://www.rtmworld.com/featu...e-the-check-to-carl/
Editor: Ray Stasieczko will be a speaker at this year’s Summit in Zhuhai on October 16 predicting what will happen next in the world’s largest printer and consumables market.
Note from Art: Ray gave permission to use this and we wanted to let you know that you view this article here on RTM World
The tales of overselling A3 devices. I blame on manufacturers.
Manufacturers that are willing to subsidize pricing for A3 along with neglecting A4 cost per page. The perfect A4 devices would have the A3 cost per page model with all speed ranges.
No manufacturer has yet to go that route, not even Lexmark. All we see is lame attempts from the manufacturers to please dealers with sprinklings of sub par A4 devices.
Next are the quota’s placed on dealers and direct. Most direct and dealers have some sort of revenue quota on sales peeps. Revenue quotas drive sales peeps to sell on price, which fuels the commodity purchases.
After almost 40 years of selling to SMB accounts both under GP, revenue and gp/revenue comp plans I don’t see a solution.
If I were King, I would develop two types one for A4 and one for A3. All would be color, all would have the same cost per pages model. All would have the same speed for print and scan. I would then offer annual renewable scan and print speed licenses for our different clients.
Ever try training new reps? It’s a fracking disaster, too many models, too may options, too many configurations. Maybe one out of ten hang around for more than 3 years.
Here's @Ray Stasiezcko original blog
It seems when industries are in disruption, its actors waste too much time selling each other on why they're still relevant, instead of selling themselves on a new relevance.
Recently, I attended a gathering of leaders from the Imaging Channel. These events are numerous, and lately, they all seem to have a commonality, I describe as; "The Selling of Yesterday's Merits."
The crowd is gathered to hear about an alternative solution designed to help the dealer diversify. The presenter will spend their first 15 minutes talking about how print will be around forever, or how valuable printers and printed pages are to all business workflow, and more than likely, these presenters will eventually quote some survey which determined that pocket protectors and legal pads are flying off the shelves because millennials like taking notes on paper.
These conversations are intended to make the audience feel good about yesterday but are distracting from real threats and opportunities the Channel has in front of it. Why is the Channel, still allowing itself to hear what makes them feel good overhearing what's needed to make them better? And when will the Channel realize it's not about going paperless? Those conversations are distracting to the real threats.
My friends, the channels threats are not about paperless they're about annuity evaporation destroying the benefits of the current delivery model. The industry must reinvent to monetize and profit off the decline. However, first, stop listing to the nonsensical distractions selling the industry that there's still time.
"People still rent movies they just don't need the stores to get them."
Blockbuster's assumption that people would continue renting movies to watch in their homes was, in fact correct. However, the people didn't need the stores to accomplish that. Blockbuster could not imagine a different delivery system. My friends in the Imaging Channel it's time to imagine what could be based on what should be. Don't waste a valuable lesson from Blockbuster.
So, let's think back to these meetings 20 years ago. I guarantee there was no time being wasted selling each other on the merits of the industry. Those in attendance were excited about the industry's growth and all the possibilities that growth presented. My friends, it is time for the Channel to replace today's emotionally draining nonsensical selling of yesterday relevance. With a new passion and excitement for the threats and opportunities that today's relevancy brings.
"Disruptors get excited when the old way refuses to discuss alternative probabilities."
As the market's end-users continue declining in product needs, the industry must focus on capitalizing on the decline. Here are three areas needing immediate attention.
1) Dealers must have an A4 strategy because innovators will bring one to market. The decline in print volume and the data proving the facts that more than 80% of all A3's are oversold based on the realities of customer needs. This product-centric A3 approach opens the door for a customer-centric innovator to deliver A4. Dealers have to acknowledge the realities that not all print equipment customers are equal. For way too long the industry has sold in the same manner to every customer type regardless of revenue. Even today we see 1990 print management strategies being presented as the future savior. Print management in the majority of the SMB accounts is not a needed customer reality. The reality is this. If the SMB customers' were educated on the channel's over selling of A3 and were provided information on the merits of moving to A4. The customer would get more value then some print management program designed to sell software, leasing, and toner.
2) The industry must have a diversification plan in products and acquisition strategies. Dealers and manufacturers must look to alternative deliverable acquisitions, such as CPA Firms, Business Consulting Firms, or even business insurance providers. Dealers, manufacturers, VC, and private equity firms must question continuing to buy declining revenue without any diversification.
3) The industry must look at new ways to finance end-user hardware. Legacy leasing of equipment will most definitely be disrupted as OEM's, and Mega dealers bring to market self-funded products. Such as HaaS, DaaS, and unique programs in order to circumvent the new coming leasing laws. Many of the larger leasing entities are positioning themselves to participate in this new era of Everything as a Service. Don't find yourself stuck holding a five-year lease agreement when the as a service model invades the print equipment industry.
4) Dealers must look at re-building their own Managed IT Infrastructures and upgrade any decades-old technology. Future products and services will not be delivered through 1980 technologies. Both internal and external customers will demand modernization. The time has come for dealers to stop being victims of the outdated technology monopolies which have held back their innovation. Delivering the future to the present takes the ability to leave the past and embrace technologies built for the future.
So, Beware of the Insecure Collaborators.
Those collaborators who refuse to face market realities because the pain associated is the collapse of their yesterday's relevance. You must avoid collaborators who feel they can only benefit by keeping those they collaborate with in the past. These collaborators for yesterday's relevance gather and fool themselves into believing they still have time. However, The innovative evolutionary clock-never stops for complacency.
"Those who say, "We still have time" usually prove they can't tell time"
Today the Imaging Channel's collaborators must look through and past themselves when looking towards the future. It's the visions from open minds where the new threats and the opportunities from those threats are discovered. If the industry's collaborators continue only looking behind themselves, or to those alongside them, they will miss out on what's ahead, and run into defeat. Nearly all disruptions which destroy the old model were brought to market by new players while the former players continued collaborating and competing as they always did.
In Closing:
The Imaging Channel must welcome that which makes them uncomfortable, must imagine new ways to deliver relevancy instead of fighting to keep the old ways relevant. Nothing will come new by saving that which is old, and if the old guard doesn't want to go to the future, then the industry's new leaders, must leave the old guard in the past.
"A company becomes obsolete when they focus on delivering the past to the future instead of delivering the future to the present"
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Ray Stasieczko