Are you missing out on your share?

In an age where information is king, what is printed on a page, however increasingly commoditised, is still an essential part of our everyday lives, with more being produced every day.

While on most accounts the market for printers is growing, it is being driven on the whole by falling prices – a trend seen as a double-edged sword.

Pundits say on one hand, the lower end of the market is experiencing impressive year-over-year growth driven by the decline in prices; and on the other, the challenge of securing value growth is under intense pressure.

Small vendors that are fast losing their low-price propositions are gradually adding yet another market dynamic by increasingly looking to expand their offerings to the mid- and high-end markets.

Simultaneously, the relatively established vendors with a broader range spanning the low, mid, and high ends of the market are looking more seriously at managed print services.

Most commentators also suggest market players face a bumpy ride ahead, with business buying decisions impacted by cost constraints, environmental initiatives and technological developments.

Pricing is a key factor when it comes to market strategy, according to Rishi Ghai, program manager hardcopy peripheral research, Australia and New Zealand at IT researcher, IDC.

“The stereotypical price zones once associated with different types of hardcopy peripheral devices have been dissolved by a sharp drop in prices,” Ghai said.

“Average selling prices (ASPs) across all hardcopy technologies are increasingly getting concentrated in narrower bands, and will not only severely constrain vendors’ ability to differentiate their offerings in the long term, but will also add to perplexity for customers,” he said.

“Channels will continue to assume greater importance, as the battles for share of the entry-level and mid-range markets intensify.”

Competition for channel share would likely be seen in the mid-range space where some small players are struggling to establish their presence.

Vendors’ experimentation with solution-oriented selling will begin to gain more visibility, as the ASPs of hardware continue to erode, putting increasing pressure on the industry to look for alternative revenue sources.

“Vendors are trying to beef up production lines so as to compete in higher end lines, while those that were market leaders in the top end are now looking to join the entry-level market where demand is especially high,” Ghai said.

“I believe 2006 marked the turning point for printing and imaging. From that point on there has been an influx and growth in the entry-level market, with laser printers selling for less than $80 and colour lasers for less than $100.

“These lower prices have forced vendors to focus on other products and need to offer a complete balance and diversify into mid and high ranges as well.

“More than ever, vendors are having to look to set up an adequate channel base to provide a good market for their products.

“The channel is already better placed to take initial share in managed services where we have an increasing emphasis on providing a broader base for more customers by widening commoditising services.”

Jackie Yeung, research analyst, Printing Markets at Gartner, said the trend is towards declining serial inkjet printer shipments from the total printer shipments in Australia from 2003 to Q1 2008.

“Differentiation across printing and imaging sub-technologies is also set to become even more complex, as the entry-level market becomes more crowded for both laser and inkjet devices,” said Yeung.

The percentage of inkjet printer shipments from total printer shipment declined from 81 percent in 2003 to 50 percent in 2007.

Page printer shipments increased from 2003 to 2008 Q1. The percentage of page printer shipments out of total printer shipments increased from 18 percent in 2003 to 47 percent in 2007.

In Q1 2008, page and inkjet printer shipments accounted for 53 percent and 42 percent of total printer shipments in Australia. So, the most common printing technologies today are page (laser) and serial inkjet.

The longevity of inkjet and page (laser) printers will continue in the Australian printer market because the two print technologies will target different target users and market segments.

For example, inkjet technology will be useful for home photo printing, SOHO, home office users, personal printers in offices and students. However, page (laser) technology will target SOHO, entry-level personal printer, workgroup, departmental and corporate users in general office environments.
Resellers should consider their target customers, existing end-users/customer base, their relationships with the printer vendors for inkjet and laser technology and resources in order to choose whether to favour inkjet and or laser markets.

According to Yeung, there is a case for managed print services (MPS), with channels establishing a long-term relationship with MPS customers over a specific service period. “So resellers will increase their bargaining powers and position with their customers and their vendors,” he said.

“The primary reasons for resellers to consider MPS are coming from the printer and copier/MFP vendors putting emphasis on the MPS market, while resellers are achieving a better understanding of the customer’s needs and behaviour in printing, copying, and
document management.

“Channels must proactively solve customers’ issues and challenges by providing relevant services and solutions in order to increase their customer loyalty and retain their current clients and they are able to add revenue streams from MPS to diversify their business profits and risks.”

Marketing manager at vendor Samsung, Anthony Toope, said challenges for channels lie in adapting to a rapidly changing technology market.

While inkjet and laser markets are merging and adding functions, the way forward for many channels is in the managed printer services, he said.

“I think the opportunities for the reseller in managed services, which once seen as the realm for vendors, is promising as in our view we want to engage resellers in services to customers that vendors can’t directly offer the consumer and we are looking at resellers to regain the customer and market,” Toope said.

“For the channel the total laser print market in Australia this year is worth $300 million, another $300 million in high-end multi-function machines and another $300 million for copiers,” he said.

“But for solutions or the managed print services including consumables such as toner is worth $800 million. So clearly the opportunities are there for resellers to focus on high-end multi-function machines and managed printer services such as toner.

“So there is very much an opportunity for resellers in the future to focus on the multi-function laser and expand revenue as they get into management print services.”

But according to Toope, Samsung is still betting on the growth in the printer and multi-function printer markets and will release 26 new products in the second half of 2008.

“In the broad picture our products are linked to development in market and what we are seeing is growth of 22 percent in printer market against previous year and multi-function printers growing at 28 percent growth year on year,” he said.

“We are releasing 26 new products in the second half of this year, with some in the copier market and some with enhanced managed print services are being brought to market as well.”

Mr Toope said Samsung is looking to engage resellers with a more tailored and customer specific line up.

“It is a mature market fuelled by price. In our range we are offering splits with retail and channel markets, with different models for different segments. Of the 26 new models we are offering different models for each market place.”
Toope is very optimistic about the future of the printer market. “In terms of total marketplace we expect current trends to continue with growth in the market but characterised by continued price pressure.

“It is an important message for resellers who must align themselves with vendors that offer opportunity in market. And must take account of the pressure on pricing and how to make profit, with an average 22 percent erosion of price each year.

“It is important to think of display, point of sale and product range with channel-specific models targeted for instance to SMBs.

“Resellers must know their customers and we will be personalising specific products for printer customers and tailoring specific solutions for them.”

Hewlett-Packard Australia recently launched a new raft of business printers and printing management systems including two new multi-function products.

Luke Duggan, H-P South Pacific commercial and enterprise manager for its imaging and printing group, said there was a significant shift in the market.

“What we are seeing is a shift from single printer to mulit-function, a trend for consumers and end-users wanting different things from different people,” Duggan said.

“In terms of technology there have been huge changes, in particular, at the high-level multi-function printer.

“Our latest ink-based printer, previously handling jobs run on laser, can dramatically reduce prices in terms of headline product. It offers a lot of features including technology saving power features, it is faster and uses 60 percent less power,” he said.

Other changes to technology included more innovative software, which can be used for administrative tracking.

“We have tools such as Webjet, which allow for admin and colour access control also enables much more control over who is printing what and tracks the different requirements from different groups.

He said the focus of future technology would be on increased environmental efficiency and the cost of the printing environment. Other technical changes and keys will include web printing.

Asked where the future lay in either inkjet or laser, he said resellers should cover both.

“Resellers should not be backing one tech or other but rather the markets they are addressing. For instance for an SMB, H-P has laser and inkjet,” Duggan said.

Stephen Bell, marketing manager, Lexmark, said while printers are seen by many as simply as devices spitting out paper, it is what is on the paper that is important.

“More and more information is being produced every day and while the percentage printed is lower it has a higher reading weight,” he said. “The growth of printing is still significant across all categories.

“There is still growth driven by proliferation of information and the question for the future is how do we continue to show value and savings and maybe those two things are the same.

“We have to align printers and MFPs in a strategic business for security and compliance paper is essential and contributing to a future where how we articulate more and value add value can deliver savings.

Bell said that between 50 and 80 per cent of the effect on the environment imposed by businesses is through inefficient use of paper.

“While we look to print less, we realise paper is still critically important. People can better interpret the information. While one in six pages is thrown in the bin before they’ve laid eyes on it, it shows up inefficient practices and our partners’ business is often done without factoring this figure into their decision-making processes,” he said.

Bell said the key for the industry is to move forward into managed services. He said the system provides a relationship between the reseller and the customer over four or five years.

“Number one, managed services elevates the relationship with customers,” he said. “This is a smarter solution rather than just providing the hardware price as you are advising customers.”