NEW YORK, Jan 20 (Reuters) - Ricoh Co (7752.T) will invest $300 million to bulk up its document management business, capitalizing on corporate demand for services such as paper scanning and storage while cutting its reliance on printer sales.
The Japanese company, which will make the investment over the next three years, is the latest of a string of rivals including Xerox Corp (XRX.N) and Canon Inc (7751.T) to announce expanded offerings to corporate clients. [ID:nSGE6811BK]
"We have to focus much more on information management with our customers as opposed to just the copier and the lease on the copier," Ricoh U.S. Chief Executive Jeffrey Hickling said in an interview.
As demand for new printers wanes, companies are looking to recoup profits by becoming one-stop shops for a range of services from managing records to serving information technology needs.
Ricoh is aiming to generate $3.3 billion of its annual revenue from its managed document services business by fiscal year 2013, the company said on Thursday.
Its other target is for its non-hardware revenue, now 50 percent of its total revenue, to reach 66 percent, also by 2013. Ricoh's global sales were $21 billion in the year ended March 31, 2010.
Gartner's Pete Basiliere is one of the analysts who support Ricoh's efforts to build up the services side of its business.
"Margins continue to shrink across the printer industry, so printer manufacturers need to expand into other services," he said.
Ricoh's Hickling said the company would hire new staff globally and retrain current employees as part of the changes. He did not say how many new employees would be brought on board.
The company took its first major step to diversify its printer business date in 2008 when it acquired Ikon Office Solutions, which sells and leases office equipment, for about $1.62 billion in cash.
Ricoh has a leg up on some competitors because it already has strong relationships with its customers, since it sells them printers directly, as opposed to a company like Toshiba Corp (6502.T), which sells its printers through a variety of channels, said Cross Research analyst Shannon Cross.
But Xerox, which acquired Affiliated Computer Services in 2009, is the current leader in providing these services and Ricoh might have a hard time catching up, she added.
"Ricoh's competitors are pretty far ahead of them," Cross said. (Reporting by Liana B. Baker; Editing by Gary Hill)
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