Multifunctional Devices: Color-Laser Multifunctionality Gains Ground

Color laser technology will constitute the fastest growing laser segment and will propel the overall laser technology growth. At the same time, operating cost considerations will drive users to adopt tools that control color printing.

The dynamics of multifunctional devices market is changing rapidly. The industry has been registering mixed sales, as organizations are demonstrating controlled purchasing of print devices and opting for managed services.CIOs and IT managers are exploring the use of effective technologies as part of overarching technology adoption to maintain a profitable business model.

The Indian multifunctional devices industry is estimated at Rs. 2745 crore with the devices accounting for 61 percent of the market and the balance 39 percent contributed by consumables. The industry is projected to reach Rs. 4020 crore in 2012, a growth of 46 percent over 2011, with consumables and MFD expected to contribute Rs. 1660 crore and Rs. 2360 crore, respectively.

Multifunctional devices may be segmented as inkjet and laser MFD. On the technology front, laser multifunctional devices may be further classified as copier-based and printer-based.

In 2011, the MFD market is estimated at Rs. 1670 crore. Sales of laser MFD is estimated at 5 lakh units with 85,000 units of copier-based and 415,000 units of printer-based in 2011. The reconditioned and second-hand devices, essentially copier-based, catered to by regional, unorganized players accounts for an additional 1 lakh units.

In value terms, the total laser MFD market is estimated at Rs. 1350 crore in 2011, where copier-based constitute Rs. 850 crore, and the printer-based Rs. 500 crore. The inkjet MFD remain a comparatively smaller segment valued at Rs. 320 crore, with sales of 8 lakh units.

The copier-based laser MFD witnessed a growth of 13.3 percent in 2011 compared to 2010, with Canon and Ricoh commanding a combined market share of 46 percent. Toshiba, Sharp, and Xerox are each neck-to-neck with a combined market share of 36 percent. Konica Minolta and Kyocera each achieved a market share in the vicinity of 6-10 percent.

Rajiv Bhatia, COO, CBG Group, Ricoh India, elaborates on Ricoh's initiatives, "The robust product portfolio and extensive reach across country, for the last two consecutive years, have enabled the company to command a leadership position in the A3 color MFP market. The company intends to strengthen its position in the mono-MFP market. It has also consolidated its presence in the segment 2+ enterprise laser printer business and has ambitious growth plans for this product segment. Ricoh will continue to focus on strengthening and expanding its product range and services to its customers, with A3 and A4 MFPs and laser printers, both in color and mono A3 MFPs for the same. Ricoh has also forayed into the projection business in 2011 and has launched over 15 models and variants for the LCD projector business, including a unique short throw projector for key applications in the display and advertising business, including offices and entertainment industry."

Commenting on Kyocera's strategic initiatives for the market, K Swetharanyan, managing director, Kyocera Document Solutions India Private Limited, says, "The company charted out a growth plan of 60 percent in 2012 and is confident to become a dominant force in the MFD arena. Kyocera Document Solutions is a late entrant in the MFD Industry in India. However, the products and print management/accounting solutions provided by the company have made it acquire a fourth strong position in India, according to IDC. The solutions include user-wise, group-wise, and floor-wise records of usage and prevention of misuse by giving administrator rights access to people who can determine quotas per person/color printout rights."

HP led with 39 percent market share, followed by Canon with 23 percent, and Samsung with 20 percent in the printer-based segment. HP dominated the inkjet MFD market too, with a whopping 67 percent market share, followed by Epson with 17 percent, and Canon with 14 percent share of the market. In a recent development, Lexmark has decided to exit the inkjet printer business and will focus more on its profitable software and imaging business.

Elaborating upon HP's key activities, Nitin Hiranandani, director, printing systems, PPS, HP India, asserts, "The company will continue to deliver cloud-led and Web-connected innovations that allow people to seamlessly integrate print into their digital lives, no matter where they are. With the SMB market growing in India, the company is helping SMB customers reduce costs, improve their environmental impact, and drive additional value to their customers with products and tools that are easy to implement and use. The company is also extending its managed print services (MPS) to SMBs through channel partners. It targets about 350 listed mid-market accounts for MPS in metro cities and plans to extend the services to other cities in a phased manner."

He adds, "Print consolidation and Green initiatives are driving corporates to re-look at their printer deployment and explore opportunities for savings, an area where HP is working with such organizations in providing solutions for balanced deployment and print fleet management, manage their work flow, and help adopt eco-friendly methods to save printing costs."

Global Market

For 2011, the global market experienced year-over-year growth of 0.7 percent with shipments approaching 126 million units. The color laser market continues to show growth in the overall hardcopy peripherals market, according to IDC. This segment increased seven percent year-over-year to more than 1.9 million units shipped in Q4 11. As color continues to penetrate the overall hardcopy market, the multifunction peripheral (MFP) market is weathering the current economy better than its single function counterparts, as products continue to make the transition toward multifunction, posting a 17 percent year-over-year increase compared to a one percent decline for single function printers.

It is expected that the overall inkjet, color, and monochrome MFP markets will increase as the switch from single-function printers continues in 2012. The MFP market will increase in the high single digits in 2012.

HP maintained its lead in the global HCP market with more than 41.5 percent market share in 2011. The vendor declined 0.7 percent year over year. Despite showing growth in Japan, the vendor experienced year-over-year contraction across all other regions.

Canon, the number 2 ranked vendor, captured close to 18.4 percent share in the total hardcopy peripherals market with shipments of 23.2 million units. Canon enjoyed double-digit growth in the United States and in Central Europe, the Middle East, and Africa (CEMA).

Epson strengthens its position as the number 3 vendor with nearly 14.1 percent share and more than 17.7 million units shipped in 2011. Japan was Epson's best performance region with 33 percent year-over-year growth, followed by Western Europe at 13 percent. Samsung and Brother followed with 5.7 percent share each respectively.

Color laser technology will constitute the fastest growing laser segment and will propel overall laser technology growth. At the same time, operating cost considerations will drive users to adopt tools that control color printing.

Xerox and HP continue to dominate the global MPS market in terms of overall global scale and market presence. Xerox is in a class of its own, with a mature enterprise MPS offering that extends to business process outsourcing (BPO) and IT outsourcing (ITO), strengthened by its ACS acquisition. HP's stronghold in the office printer market continues to boost its MPS business, and closer ties with its professional services arm is better leveraging its BPO/ITO capability. Meanwhile, Ricoh and Lexmark are both making strong progress. Ricoh's major investment in its global MPS infrastructure is paying dividends while Lexmark continues to gain new customers, particularly those needing to manage print across disparate locations or countries.

Strong performers, such as Canon and Konica Minolta, continue to globalize their offerings and move further up the value chain by embracing a services-led business model. Canon recorded impressive growth in Europe in 2011, more than doubling its customer base. Konica Minolta has also made significant progress in harmonizing its MPS programme in the United States and Europe. Its increased investment in its MPS infrastructure and its expansion of IT service partnerships should help it increase its presence in the mid-market where it has a strong focus.

MPS is no longer the preserve of larger enterprises, as more vendors develop packaged services to target the small- and mid-sized business, often targeted via the channel. While Xerox is ahead of the game with a strong set of services for its channel partners, others are catching up. HP's acquisition of Printelligent promises to expand its multivendor channel offerings, while Ricoh is also transitioning its channel partners to a services-led approach. The channel is not completely sold on MPS, and those vendors that are most reliant on channel partners will need to create a viable and simple proposition to compel them to fully embrace the MPS model.

Asserts Alok Bharadwaj, Senior VP, Canon, "The year 2011 was a challenging year for the IT peripherals industry because of supply line disruption on account of Japanese Tsunami and Thailand floods, which increased the prices of key components. Toward the end of 2011, rupee devaluation also caused discomfort and decline in purchase. However, the long-term optimism is still high. There is definite shift that Indian enterprise and SMEs are exhibiting in terms of IT peripherals purchase. There is a move from printer-based to copier-based multifunctional devices to keep the running cost low. The domain for MPS has been gaining traction in India and almost all players are actively pursuing this segment."

Growth Drivers

Government, SME, and the education sector remain key contributors to the growth. Price inflation and impending macro-economic pressures resulted in subdued consumer sentiments toward the second half of 2011, which rebound to some extent in Q1 12.

New models in both inkjet and laser segments are expected to be launched in the coming months. Vendors have been expanding their retail presence in the recent past across the entry-level laser printers, anticipating a migration across consumers from inkjet to laser in the near future. Further, education segment is expected to remain buoyant owing to seasonality and back-to-school campaigns, which are being driven by vendors in the MFD market. The volatile currency is also expected to adversely impact the market even as a price hike across brands remains imminent.

Adoption of Managed Print Services

MPS market in the Asia-Pacific region is anticipated to break through the USD 1.5 billion barrier within the next five years, with growth rates considerably outpacing the overall ICT market. MPS will become a feature of enterprises within the next five years generating a revenue of USD 1595 million at a compound annual growth rate (CAGR) of 17 percent by 2016.

Vipin Tuteja, executive director-technology, channels & international business, Xerox India, elaborates, "The primary drivers for moving toward MFDs and MPS are efficiency and effectiveness. Enterprises are operating in a highly competitive world today. On one hand, they need to continuously innovate to gain market share, while on the other they are pushed to reduce their costs to ensure profitability.

Document management is one of the areas which often not a key focus for the organization, but could constitute four to eight percent of the total operating costs of an enterprise, typically with a potential of up to 30 percent savings. Therefore, it is a prime candidate for outsourcing as it not only saves the cost that goes straight to the bottom line, but also releases management energy to focus on their real business of getting customers and revenues."

The Indian MPS market is estimated at `263.31 crore (USD 51.63) in 2011. For print vendors and their channel partners operating in India, it is clear that the traditional print business model must be supplanted with a services and software strategy, providing better margins and arguably tighter, longer relationships with clients, as is already happening in the developed markets in the region. However, the MPS maturity in terms of adoption is expected to remain fragmented in the short term and many opportunities are likely to arise in specific markets that host organizations with similar characteristics.

S M Ram Prasad, deputy general manager-consumer products, Epson India, explains, "Document management tools and MPS have remained mainly jargons in media and nice to discuss in boardrooms. The relatively poor take-off of these solutions is due to the fact that unlike the homogeneous enterprises of the United Kingdom and the United States, India has complex heterogeneous enterprises with varied requirement in document management or print solutions. Epson India as a pioneer in digital imaging solution intends to address the Indian enterprise segment with its India-centric products and solutions rather than stereotype offerings existing in the market."

Enterprise organizations across the region shows that end-user indifference in emerging economies to print practices continues to hinder MPS growth, especially as they continue to focus on building out IT infrastructure and allocate spending to hardware. Shailendra Aragula, country manager, Lexmark India, concludes, "There has been an increasing trend of enterprises of all sizes moving toward multi-functional devices (MFDs) to be more productive and simultaneously save on printing costs. Furthermore, in today's competitive business world, it is more important than ever to ensure that workgroups are armed with all the tools they need to stay productive. One of the most effective ways to achieve this is by integrating high-performance MFDs, which consolidates critical document functions into a single space-saving device. In the current scenario, MFDs not only lead to increased productivity, but also help in streamlining tasks and potentially decrease costs and maximize the use of space."

This article is based on the research conducted by Communications Today in September, 2012.