RIDING THE WAVE OF WORKGROUP COLOR
A new generation of workgroup color products are breaking down the price barriers and bridging the gap between black & white and color copying.
By Scott Cullen
It’s been described by industry analysts as the only growth area left in the office equipment market. It’s color and manufacturers are unleashing an amazing array of workgroup color devices that are removing many of the obstacles of bringing color to the mainstream office.
Indeed, color is the latest evolution taking place in the copier industry. It started with the transition from analog to digital and now it’s what Jon Bees, editor of the Better Buys for Business office equipment buying guides is calling “B to C” or “black & white to color.”
Two Color Camps
At the moment there are two camps vying for this B to C business within the mainstream office. The first camp are those vendors such as Xerox and Minolta with its DiALTA CF1501 and CF2001 color copier-printers that produce 15 and 20 ppm, respectively in both color and black & white, and Xerox with its DocuColor 3535, a color copier-printer that outputs at 35 ppm in black & white and color. Although the prices and speeds of these models are extremely attractive for color machines, the black & white operating costs on these models are higher and speeds are a bit slow for the price compared to dedicated black & white copiers. However, for businesses looking for an affordable color copier-printer with no compromises on speed and excellent image quality, the Xerox and Minolta models are ideally positioned for color applications within corporate environments.
The second camp encompasses those manufacturers who are marketing machines where color is positioned as a feature. Consider the latest generation of workgroup products from Ricoh and Toshiba. These devices are a harbinger of things to come. While Ricoh holds the pioneering position in being the first to market with workgroup color devices—the Aficio 1224C and 1232C--where color is positioned as a feature, Lou Slawetsky, president of Industry Analysts in Rochester, NY, predicts that every manufacturer will eventually have a similar device. No surprise there since the office equipment industry has historically been known for its lemmings-like approach to the market.
Realistically most output on these devices where color is a feature will still be in black & white. After all, with the exception of certain vertical markets where color is a necessity, some industry estimates note that color output in mainstream offices will likely be 20-30% of the total document output.
As manufacturers hone their messages to their dealer and end-user audiences, opportunities for this B to C transition will continue to revolve around the two camps with the faster and slightly higher-priced machines, which use tandem engines targeting those higher volume color users. Meanwhile devices where color is a feature will likely be the device of choice for offices where 20-30% of their document output will be in color.
Toshiba Enters the Workgroup Color Market
In July of this year Toshiba introduced its latest workgroup color MFP products, the e-STUDIO3511 and 4511. The new units operate at 35 and 45-ppm, respectively in black & white and 11-ppm in color. In addition to the requisite copying and printing, the new e-STUDIOs offer faxing, scanning, e-Filing and network connectivity out of the box.
“This is big stuff,” notes Jon Bees, editor of the Better Buys for Business office equipment buying guides. While the Toshiba machines will be positioned identical to the Ricoh 1224C and 1232C, there will be no premium for color. Bees points out that there is a small price premium for color on the Ricoh units but the difference is minimal. In addition, the Toshiba units come with the print controller as standard.
The Ricoh and Toshiba units use multi-pass technology, which accounts for the modest color copy speeds (12 ppm on the Ricoh’s and 11 ppm on the Toshiba) as compared to some of the higher end color products on the market where color speeds are closing in on black & white speeds. With multi-pass technology, a sheet of paper makes four passes for each color and one pass when copying in black & white. Bees explains that this is one of the reasons vendors are able to bring prices down and make color more attractive to mainstream offices where fast color output speeds aren’t a primary requirement.
Users Speak
The Norwell, MA market research firm CAP Ventures (www.capv.com) recently published a new report on workgroup color—“Workgroup Color: The Next Frontier.” This report offers valuable insights into the way end-users are using their color copier-printers. Fully 73.9% noted that their devices were connected (note that’s a lower figure than many manufacturer and dealer estimates). According to end users, about 40.2% of their color copies are made using the platen while 59.8% were from a digital file. CAP declares this is indicative of the high number of paper-based documents that still exist in the workgroup. The company expects the number of paper-based documents to drop in the future.
As mentioned earlier, about 20-30% of documents output on the latest workgroup devices where color is a feature, will be in color, the CAP survey found that 50.5% of documents produced on devices that offer both black & white and color output were in black & white while 49.5% color. Those numbers probably reflect the number of black & white copiers still in use in those installations that also have workgroup color products as well as responses by end users with higher end color copier-printers.
When asked if they would be interested in a universal output device that handles both black & white and color output, 67% were moderately interested or very interested while 33% were not interested or minimally interested. Expect those numbers to change as the number of cost-effective workgroup printers that output in black & white and color become more prevalent.
Same Old Challenges
Even as manufacturers introduce this new generation of workgroup products where color is a feature, manufacturers and dealers must still contend with long-standing perceptions that color is complex and expensive. It’s not surprising then that respondents to the CAP survey noted that they would do 85.3% more color output at a cost per page of .07 cents and 137.8% more at a cost per page of .05 cents. That’s based on the assumption that the current cost per color page is about 15 cents. Looking at this another way, CAP asked end users to estimate what percentage of their back & white output could be output in color if the per page costs were to drop. Fully 12.1% noted the would convert their black & white output to color at a cost per page of .07 cents and 20% would at .05%. What does that mean for manufacturers and dealers? Should costs drop to .07 cents per page and users convert black & white output to color as they claim they would, revenue would climb from $3.6 billion to $4.84 billion, an increase of 34%.
Sales Strategies
No matter how attractive the new generation of workgroup devices with color capability are, dealers and manufacturers can expect to face some obstacles marketing these devices. CAP Ventures maintains that selling color to mainstream offices requires a focused marketing and sales approach aimed at educating customers about new color devices with an emphasis on dispelling some of these age-old misconceptions by contrasting previous functionality and cost with current functionality and cost. According to CAP, “It should be the goal of vendors and distributors to have color printer drivers installed on every desktop when a new color device is installed.”
Another key to growing color within the workgroup is promoting the use of color on documents that have been traditionally run in black & white. Those documents encompass such things as spreadsheets, memos and other general office documents.
Meanwhile, Industry Analysts’ Slawetsky maintains color gives dealers entrée into the IT world since color is the one area where IT managers will talk to office equipment dealers. According to Slawetsky, this is an area where Hewlett-Packard, the darling of IT managers, doesn’t have the same image as it does with black & white output devices. “IT doesn’t care about controlling costs because it’s not their budget,” says Slawetsky. “But they are concerned about color inkjets and looking at ways to control and consolidate color.”
Richard Mattina, president of Digital Marketing Group, Inc., a veteran of the office equipment industry and now a consultant to the industry, believes most dealers selling these products will do just fine, describing workgroup color as “one of the easiest [technologies] to sell.” He notes dealers can use all their outside sales reps to market these products, and that by using full-line reps, minimal training is required. It’s also an opportunity to sell to their existing base. Because workgroup color is designed for general office applications, Mattina notes color professionals are not necessary and that selling cycles can range from one week to 40 days.
Although Mattina is confident in dealer’s abilities to market workgroup color, the CAP report on Workgroup color cautions manufacturers and dealers, noting that they should learn from their earlier experiences selling MFPs. The company says that in the early days of the MFP market, buyers were confused about what the product really was and its benefits. Noting that it was only after those issues were addressed via focused marketing and sales approaches that the concept really took off. CAP cautions that the same thing could happen with workgroup color if vendors don’t put the proper plans in place to clearly define the product and its benefits.
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Sidebar 1
Making a Single Pass
While multi-pass devices are bringing the cost of color copying down to where it’s more palatable to mainstream offices, single-pass technology is raising the bar when it comes to color output speed for those businesses with higher color copy volumes. Consider Ricoh’s color workgroup copier-printer, the AP3800CMF with a list price of $16,345. It offers color copying, color printing, color scan-to-file and faxing. Output is at 38 ppm in color and 38 ppm in black & white. Its single-pass color imaging technology uses four print drums. This is significant says Slawetsky, because unlike traditional four-pass systems, which make a pass for each color, or four passes, the four print drums simultaneously lay down a full-color image, which brings the color print speed closer to the black & white speed. An added benefit for dealers, says Slawetsky, is with four color print drums they have four times as much revenue compared to black & white.
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