Gap Intelligence’s 2011 Printing Industry Year in Review
As we wind down the year, Ithink 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 snakebit, but in my opinion all of those hopefully short-term events took secondstage to some very interesting technology and channel trends. And the opportunities provided by these transitions suggest that 2012 will be afun one.
With that, and in honor of the SportsCenter Top Ten List, which reminds us each night that it doesn’tmatter if you win or lose, it’s how you look in the highlights, I give you the top ten printing themes, trends, and events of 2011.
10# Inkjet Technology
Yes Inkjet Technology.While some readers with a strict office focus may be surprised to see inkjet technology crack the top ten, it had a major impact on the 2011 printingmarket from a variety of angles and promises to do the same for years to come.
It wasn’t more than a week into2011 that I stumbled upon my first Memjet printer, quickly snapping photos and jotting down specs before the Chupacabra of the printing industry ranoff into the Nevada desert. But this time, the page-wide array freak of nature was here to stay. The debut of Lenovo’s Memjet-basedRJ600N at CES was really the first in a procession of partnership announcements and product launches throughout 2011, targeting a variety of uses witha focus on smaller and emerging markets. And although Memjet’s 2011 impact was not as big as the buzz it created, the company and itstechnology showed plenty of potential for 2012 and beyond, especially as it partners with larger vendors and begins selling into establishedmarkets.
2011 also brought the second generation of Xerox’s solidink-based ColorQube series, providing modest spec changes, but interesting adjustments to its hardware cost and highly-touted CPC structure (inopposite directions). Although the ColorQube series hasn’t changed the game yet, this year brought the first evidence of EP vendorstesting their own hybrid billing capabilities, suggesting that the line’s tiered billing plan certainly captured competitors’attention.
Inkjet technology continued to have a huge impact on the production market in 2011, as inkjet systems increased in number and brand,while approaching size and pricing levels that made the technology applicable to more mainstream commercial printers. We also saw the printingindustry’s household names bring inkjet technology further into their strategy, as Ricoh finally began its integration of InfoPrint, KonicaMinolta signed on a Screen Trupress reseller, and Canon’s Oce portfolio expanded to include everything except continuous feed, but its new VPSimagePRESS models at least allowed them to sell into the same Prismasync environments. Last but not least was Xerox’s new waterlessink-based CiPress 500 system, which touts an interesting value proposition based on its ability to print on lower-cost plain paper, and drew a heck ofa crowd at Graph Expo.
Meanwhile the “enterprise” inkjet AiO segment continued to shine as a bright spot for inkjet vendors. Although the inkjet players’ definition of “enterprise” is a bit different than my friends’ in the MFP or MPS worlds, theseSOHO-class devices were a bright spot for vendors. Enterprise inkjets still make up a relatively small piece of the inkjet pie and face somechallenges sneaking their low ink yields and paper capacities past IT managers. However, there is no doubt that the segment offers both steadyrevenue and profit growth now and in the coming years, making it a potentially disruptive force for low-end color lasertechnology.
#9 The Yen
Like my 2010 list the nine spot is devoted to the strength of the yen. And like last year, most manufacturers would agree that the yen had as big of an impact on their financial performance as any other event ortrend. Although out of mind for many, the strength of the yen has impacted almost all of us including the Japanese manufacturers selling to theWest, the US subsidiaries that have to negotiate with Japan, the many Western vendors who source engines from Japan, and the dealers and end-usersthat pay more because of it. Now more than ever, it’s a global economy.
In fact, with the yen at 77 to the dollar, the 84 yen to thedollar days of 2010 are looking pretty good right now.
8# Global Imaging GetsAggressive
Xerox’s Global Imaging Systems subsidiary has arguably been the most active direct sales organization in recentyears, executing a number of high-profile acquisitions throughout the recession, but 2011 brought some moves that made previous years seem quiteconservative.
Like previous years, GIS proved to be the most aggressive USsales subsidiary, acquiring six dealers between April and August. However, it was during this acquisition spree that Global began pursuing a newavenue for growth. In early August gap intelligence learned that Xerox had begun transferring a number of its smaller direct accounts to GISbranches in 15 metros in a move that was intended to right-size its direct sales client base, while expanding the footprint of the targeted GISbranches. Xerox has since colored this transition as the first step towards a new reorganized direct sales structure that will allow its directoperations to focus on larger GDO (Global Document Outsourcing) accounts and GIS branches to serve clients on a more intimate locallevel.
Considering that servicing any size account costs 10 to 12 percent more through a direct organization than through a dealer-styleorganization (like Global) and that SMBs do not provide the scale to offset these costs, this move makes a lot of sense. Xerox of course did notinvent this strategy, as similar economic motivations drove HP EMEA to transfer numerous direct accounts to its partners in preparation for its 2010QuickPage launch, and will cause it to do the same with its acquired Printelligent accounts. However, Global’s positioning asXerox’s SMB-focused direct organization provides the vendor with a unique ability to shed less-profitable smaller accounts from its enterprisedirect division, while still keeping the business in the family. That said, I’d bet Xerox’s partners and agents would preferHP’s version.
Global also proved that it is willing to invest in talent in addition to dealerships, as the sales subsidiary landedrecently-departed Kyocera Mita America CEO Michael Pietrunti in August, appointing him to the position of senior vice president responsible foracquisitions, corporate service, and marketing. And given Pietrunti’s experience at Kyocera Mita and Sharp, the new GIS executive arriveswith a unique knowledge of where some hidden opportunities exist and should be motivated to take advantage of a level of acquisition funding that wasnot available to him in his previous role.
7# March 11, 2011
Inaddition to the terrible human impact, the earthquake and tsunami that hit Japan on March 11, 2011 served as arguably the most significant outsideinfluence on the printing market this year. The immediate impact of the earthquake and tsunami were quite visible as manufacturing plantsquickly shut down due to structural damage from the earthquake and stayed closed as power, workforce, and infrastructure challengeslingered.
While initial levels of transparency regarding the impact of the disaster varied by manufacturer, nearly all vendors eventuallyadmitted that inventory shortfalls were expected. Before long, dealers began experiencing these shortages first hand and messaging fromthe manufacturers shifted from maintaining a steady flow of new MFPs to keep pace with demand, to a more pragmatic goal of keeping sufficientinventories of key supplies and maintenance items in stock to ensure support for their current install bases.
Unfortunately, despite impressiveefforts to get plants up and running, shortages of key parts kept many manufacturers from producing complete MFPs for some time, impacting inventoriesof specific product lines for as long as six months. While inventories of more sophisticated MFP systems were most impacted, we also identifiedsignificant shortages of laser printers and inkjet MFPs, as many “active” products were listed as backordered by May 2011, and by June2011 channel inventories were nearly 70 percent lower than levels at the same time in 2010.
Looking back, vendors were able to successfullysupport their current fleets, and although the financial impact was still severe, by the start of the fourth quarter it appeared everything was backon track. I will leave it at that, and hopefully won’t have to include the impact of the Thailand flooding in my 2012retrospective.
#6 – It’s a Long Way From the Top
To thedelight of early Occupy Wall Street protesters, 2011 proved to be a bad year for the print industry’s leadership, as top US executives fromSharp, Kyocera Mita, and Ricoh vacated their respective offices between June 1 and July 25.
Sharp led-off this trend as Ed McLaughlin stepped-down after nine years as SIIC’s CEO inJune. While Sharp made a number of management adjustments in the weeks preceding McLaughlin’s resignation, perhaps in preparation for thismove, the vendor became the last to actually fill its executive vacancy, when it named former American Express and Samsung executive, Doug Albregts,to the role in late November.
July brought the departure of Ricoh U.S. President and CEO Jeff Hickling. However, rather than naming areplacement, Ricoh Americas Chairman and CEO Kevin Togashi eliminated the position, assuming control of all U.S. sales and operations. This moveboth followed and preceded a number of other executive announcements and departures at Ricoh, that initially brought an influx of IKON’sleadership into Ricoh’s executive ranks, but has since evened out.
By late July, Kyocera Mita America President and CEO, Michael Pietruntiresigned to pursue other interests. Kyocera Mita was able fill KMA’s president role with Kyocera Mita veteran Norihiko Ina within threeweeks, but by late August Pietrunti emerged in a senior vice president role at Xerox’s Global Imaging Subsidiary, suggesting that this may bethe one departure that was voluntary. Or at the very least, Mr. Pietrunti was the most successful at landing on hisfeet.
#6b – Leo and Tito’s Summer to Forget
Going into the 2011 season, things were looking-upfor my favorite baseball team and one of my favorite vendors. The Boston Red Sox tore a few more pages out of its checkbook during theoffseason, compiling one its strongest teams in years and emerging as an early title favorite. Meanwhile, HP began the year with significantmomentum, under the leadership of a new CEO and touting a new ecosystem strategy, intriguing cloud and tablet roadmaps, and enjoying a big head-startin the MPS and mobile printing arenas.
However, neither Red Sox manager Terry “Tito” Francona nor HP CEO Leo Apotheker would bearound to lead their respective teams into 2012. And their exits were not pretty. So unattractive, in fact, that they are bestcommunicated in a timeline.
Leo and Tito Timeline:
March 9,2011 – HP reveals plans to install WebOS on every PC it ships, touts the strategic advantage of its ecosystem ambitions, and increasesdividend by 50 percent
March 31, 2011 – Red Sox welcomed home from positive Spring Training by a front page headline onthe always sensational Boston Herald, touting them as the best Sox squad ever.
April 16, 2011 – Red Sox start 2-10,Dustin Pedroia reminds everyone that it’s a 162 game season.
May 17, 2011- HP cuts full-year forecast on poor PCdemand
May 24, 2011 – HP acquires Printelligent, setting stage for major channel MPS overhaul
May 31,2011 – Red Sox surge throughout May, climb to 35-25
July 1, 2011 – HP launches TouchPad, with significantfanfare
July 31, 2011 – Red Sox go 20-6 for July, everyone is happy.
August 1, 2011 - The TouchPadexpands to 11th retailer, giving HP a second place 12 percent Tablet shelf share.
August 18, 2011 – HP reveals plans toacquire Autonomy for $10.3 billion, discontinue all WebOS products (including tablets), and evaluate sale or spin-off PC unit,PSG.
August 31, 2011 – Pitchers Josh Beckett, Jon Lester, and John Lackey eat chicken – Lackey double-checks his contract for a weightclause
September 22, 2011 – HP fires Leo and names Meg Whitman as CEO.
September 28, 2011 –Red Sox lose 18 of final 24 games to miss playoffs by one game
September 30, 2011 - Tito Francona resigns under pressure frommanagement. Bostonians tell each other “wait till next year”, watch the Francona smear campaign in disgust, and thank god for thePatriots.
The good news for HP is Meg Whitman quickly did her best to reverse everything she could and appears to have brought the company backon course. And although both teams are back to “waiting till next year,” HP and Red Sox fans alike are not overly optimisticto think that next year could be worth the wait. Both teams have a solid fan base, a strong lineup, plenty of talent, and no shortage ofmoney – all of which are vital in succeeding in both business and baseball.
In other good news, this is the last of 2011’s top tenthat could be viewed as a negative event.
# 5 – A4 PushContinues
A4 MFPs maintained their momentum in 2011, as key market trends continued to play in the segment’s favor andremaining traditional A3 players finally brought their own “copier brand” enterprise A4s to market.
This trend began with a trickleof relatively unambitious copier brand A4 desktops starting roughly ten years ago, followed-by Sharp’s Frontier experiment in 2008 and 2009, but2011 finally brought the first truly enterprise-class A4s from Ricoh, Canon, Konica Minolta (in Europe), and Fuji Xerox (in Asia). And althoughUS versions of the new Konica Minolta and Fuji Xerox (via Xerox) models have yet to materialize and more enterprise A4s from traditional A3 vendorsare surely on the way, the last eighteen months still brought a 35 percent increase in active “copier brand” A4 MFPs while the samevendors’ active A3 lines consolidated by 3.5 percent.
There is no doubt that each of these trends will continue, given the roles of MPS and emerging markets on most vendors’priority lists and in light of ongoing page volume trends. This shift is very exciting (at least to me), and should be seen with significantanticipation among vendors and dealers looking to gain share as the transition creates new opportunities.
However, questions still remainregarding how these “copier” vendors plan to use their growing A4 portfolios. Ironically, the primary goal for many of thesehighly-anticipated A4 models is to protect the vendors’ A3 install bases, despite the many factors that prompted them to expand within the A4segments in the first place. Given the traditional “copier” players current install bases and channel structures, it is hard not toblame them for using these highly-anticipated models for more tactical purposes, but there is little doubt that the market will be far kinder tovendors that embrace a more organic A4 strategy going forward. Meanwhile, the traditional “printer” players that have beencleaning-up by providing dealers with A4 supplements to their A3-centric lines had better begin preparing for far more well-rounded competition fromtheir copier-player adversaries.
#4 The Wild West of Cloud &Mobile
Prompted by the emergence of tablets and the growing mainstream relevance of cloud computing, OEMs and third partyvendors rushed cloud and mobile printing solutions to the market in 2011 to ensure connectivity with the new frontiers of the network. While2011 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 andmobile were also the #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 went from a handful of offerings from HP, Xerox, and Ricoh, who were met halfway byindustry outsiders like Google and Apple, as well as third parties such as EFI and Cortado. After a busy 2011, mobile print offerings areavailable from nearly every vendor and a growing number of cloud printing and scanning solutions have emerged across product lines andpipelines.
Now what this trend needs is one of the quickest standardizations in history, as the idea of several dozen proprietary solutionsgaining acceptance in today’s mixed-fleet, mobile, and interconnected environments will not work. One possible step towards thisstandardization may have occurred in October, when HP took a page out of its 1984 playbook and allowed Toshiba to add ePrint to its MPSoffering. Twenty-seven years after HP’s Printer Command Language (PCL) became the desktop printing standard, paving the way for networkprinting as we know it, ePrint (aka ePCL) could be headed the same direction. However, it is extremely doubtful that competing vendors arewilling to hand that to HP just yet, suggesting that standardization could be driven through the current loosely assembled cloud printing alliances oreven a widely-partnered third party such as EFI. Either way, before standardization happens, 2012 is sure to bring its share of new mobile andcloud printing developments, let’s just hope that the actual act of cloud and mobile printing grows at a similar rate.
4# – Tablets
The impact of tablets will of course go way beyond the above mentioned raceto build the best mobile and cloud printing solutions. In just 18 months tablets have changed the way many consumers and workers view andcommunicate information, and will certainly change their preferences regarding how and what they print. The same can be said for marketers andpublishers, who now have yet another alternative and often lower cost means of electronically reaching customers.
Who knows, it could be afad…
While convenience and value were already keys to the office and commercialprint value proposition, these two factors will play an even greater role going forward as tablets continue to penetrate the home andoffice.
Despite device consolidation and centralization’s role as a cornerstone MFP and MPS sales strategy, tablets could very likelydrive a device decentralization trend, as the idea of a tablet-equipped worker hiking across the office to wait in line for their job at thecentralized copier seems highly unlikely. And if that print-out is intended for mere convenience purposes, it might not even happen in the firstplace.
On the production printing side, mobility has initially hit offset printing the hardest, but production vendors and print serviceproviders are placing a similar focus on convenience and value, ranging from how jobs are ordered and produced, how they can be personalized, and howthey can link their output back to the mobile device, ensuring that the printed page plays a key role in the digital ecosystem.
As part of myobligation to the industry, I have to note that the increased penetration of tablets will create billions of new pages of printable data, now theindustry just has to fulfill its obligation to ensure that these prints can be made as conveniently and with as much value aspossible.
# 2 – Channel MPS
Channel MPS was a major trendthroughout the year, as vendors hustled to assemble and launch new programs with the intentions of guiding their partners’ transformation intoMPS providers and further strengthening their channel relationships. Needless to say, Channel MPS has been a learning experience for manyvendors, some of which have struggled trying to find the right balance between their resellers’ needs and their own. And althoughit’s likely that many vendors will finds plenty of ways to improve on their 2011 channel MPS offerings, the year certainly brought a numberhonest attempts to find that balance. While a number of vendors launched or expanded their channel MPS offerings this year, including notablemoves from Canon and Muratec, the most aggressive channel MPS initiatives came from HP, Xerox, and Ricoh.
Xerox bookended its well-receivedPagePack 3.0 offering with the introduction of its eConcierge and XPPS programs to US dealers. While not exactly MPS, eConcierge providesresellers with a co-branded e-commerce portal, through which their clients can order genuine supplies for all Xerox and non-Xerox devices and receivefree service for Xerox models with continued consumable orders. Perhaps more importantly, eConcierge introduces partners to moreconsultative print service practices, in hopes of bringing its less sophisticated resellers up the value chain. Xerox also began the USintroduction of its mid-market focused XPPS program, filling-out the high-end of its US channel MPS offering. First launched in Europe lastyear, XPPS is essentially a suite of tools that are largely based on components of Xerox’s own direct MPS offering combined with recentacquisition Newfield IT’s Asset DB program, encompassing nearly every component of an mid-market MPS engagement including sales and leasing,discovery and monitoring, assessment and optimization, service, etc. With the two new offerings, Xerox’s often referred-to “MPSContinuum” claim now has far more clout on the channel-side than before and at the very least, should help to recruit new resellers, grow thecapabilities of existing resellers, and fortify the vendor’s channel sales ecosystem.
2011 also brought the launch of Ricoh’s chaMPSprogram, significantly expanding its channel MPS offering. The chaMPS program is based around the same core change management and continuousimprovement 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 aturnkey MPS/MDS program, chaMPS is arguably among the most complete in terms of the scope of features provided. However, it also appears tocarry the most up-front cost requirements, which certainly raised some alarm among the dealers, and the variety of components appears to have createda 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 initiativeas we move into 2012.
HP’s channel MPS moves were largely internal in 2011, but should have a significant impact on how the vendorsupports 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, toolsets, and processes with its own to create the new HPPartner Print Services unit. And while the new unit did not make its first impact on the channel until November when HP introduced its firstPartner Print Services offering to resellers, more programs with a mix of Printelligent, LES, and HP Managed Enterprise Solutions (Enterprise Direct)DNA is surely forthcoming.
# 1 – Transition to Services
Onceagain honored with the top spot in gap intelligence’s annual printing industry review is the transition to services that is taking place acrossthe industry. Considering that we celebrated IBM’s 100th year in existence in 2011, marked by more than a few noteworthy servicestransformations, 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 weare headed.
With the benefits of previous service expansions by IBM well-proven, and the results of similar moves from HP and Xerox growingincreasingly clear, 2011 brought an influx of non-printing services activity from vendors across the market, resulting more than a fewreorganizations, acquisitions, and rebranding initiatives. Heck, even the self-proclaimed MPS “thought leaders” began building-uptheir enterprise services and solutions credentials. And why wouldn’t they? Services present significant opportunities for vendors to grow theirbusiness and creates a bridge to what they hope is where the future will be.
Canon and Konica Minolta’s US subsidiaries executed two ofthe most interesting services expansions of 2011, proving each with a new path beyond printing and imaging and the prospect of an even moreinteresting level of independence.
Note from Art:
Special thanx to GAP for this here's their link....http://www.gapintelligence.com/category/blog
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