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Print’s shifting landscape 2010

01 Apr 2010

A Gartner whitepaper published in January this year has forecast some interesting changes in the printing market, which could have long-term and far-reaching effects. According to Digital Printing 2010: Commoditisation Presages Major Market Changes, "industry consolidation driven by fewer pages being printed and increased electronic communications will drive and intensify the trend to strategic partnerships".

As a result revenue from applications and software on multifunction devices is the fastest growing area in the imaging and printing field, "changing the emphasis from traditional click-based charges to results-based charges". Indeed, the paper went on to illustrate how, by 2014, the global print landscape will have contracted dramatically, with the top five vendors increasing their market share from approximately 68% (hardware) to 90%, to become "mega-vendors" (see graph).

"Consolidation in the print industry is resulting in the emergence of a handful of print powerhouses with product and service lines spanning the entire print market from the low-end small office/home office consumer devices through production systems and deep into document processes," according to Gartner.The Big Five, the paper states, are shaping up as the following:

  • Canon:Currently in the process of buying Océ. Has major supplier and distribution agreements with HP.
  • HP:In the process of integrating EDS. Has a long-running relationship with Canon and has a reseller agreement with Toshiba in the US.
  • Konica Minolta:A strong manufacturer with several OEM partners. Has suffered a recent setback as OEM and technology partner Océ is being acquired by Canon.
  • Ricoh:Has a long history of successful acquisitions and integrations, most recently including IKON, Danka/Infotec in Europe, and the acquisition of IBM’s printing systems to form InfoPrint Solutions. Ricoh also has a distribution agreement with Kodak.
  • Xerox:Owns a 25% stake in Fuji Xerox. Recently acquired Global Imaging Systems and has announced its planned acquisition of business process outsourcing firm ACS.

That being said, the Big Five is not set in stone, and there could be changes as new partnerships and acquisitions occur. Gartner suggests that technology providers such as Brother, Epson, Oki and Samsung, whose strengths lie in the A4-printer-centric market, could look to partner with strong A3 players, such as Konica Minolta, Sharp and Toshiba.

As these and other changes take place, and consolidation becomes more pronounced, print technology providers that fail to collaborate with competitors with complementary ranges, or focus on specific niche markets, may not survive. In the face of these potential changes, resellers and customers need to assess their printing needs, and select a technology provider that offers the complete set of products and solutions required to help their organisation or clients print smarter and in the safest, most environmentally-friendly and cost-effective way possible – something resellers should be actively involved in promoting.

Major trends

Looking back, the global printing market has suffered a severe blow. In the second quarter of 2009 the printer, copier and multifunction product (MFP) market for the Asia/Pacific region saw total shipments plunge 15.7% from a year earlier. The uncertainty of global economic recovery was a concern for businesses, who delayed device purchases. IDC’s Analyst Arunachalam Muthiah agrees, but says the trend is anticipated to gradually reverse by 2012 as the economic climate improves.

As hopes lift and the market consolidates, you will need to examine the opportunities carefully in a shrinking market. With this in mind, Muthiah says: "The small business sector is estimated to contribute substantially towards the total printer market and is expected to increase as the New Zealand economy gradually recovers from global economic recession. This scenario is anticipated to provide abundant growth opportunities across the distribution channel." Other business opportunities highlighted by IDC include:

Major vendors vigorously competing through aggressive price promotions; and Price declines and improved technology mean the markets have shifted from single function to multifunction printers, and from mono to colour products.

Gartner agrees, saying: "The black-to-colour transition offers more versatile office colour printing and copying, but if users are given uncontrolled access to the facility, then print costs for the enterprise could rise significantly." The correct use of colour in appropriate materials will boost their impact, improve readability and convey content in a more productive manner, as well as lower overall printing costs. Added to this, the trendtowards multifunction devices has led to a "notable growth" in A3 product purchases, according to IDC’s Muthiah.

Gartner also suggests that new services, such as cloud printing and strategic document outsourcing, are changing how businesses generate and control corporate printing. This, combined with managed print services (MPS) will likely see a major change in how printing is dealt with in businesses. It may partly be in response to the commoditisation of the hardware, and to the increasing complexity of the software installed on the printers.

Gartner warns, however, that: "organisations that think they no longer need to monitor office print devices are woefully mistaken".

It is likely that their costs will climb without the right technology investment and proper oversight. Added to this, the research firm predicts that by 2014, 30% of print technology providers’ total revenue will derive from applications and software on smart MFPs. Smart MFPs will represent the fastest-growing area of spending on office imaging and printing, accelerating the change in the revenue model of the office printing business.

Managed print services

Although MPS are mostly adopted by organisations with more than 500 users, they can benefit small organisations too. MPS have already filtered down from enterprise to mid-sized corporations, and there is still the opportunity to introduce managed print services to all but the smallest organisations.

Indeed, IDC’s Muthiah says: "Managed print services are expected to gain more publicityin the current economic climate. Organisations are implementing MPS to reduce cost, improve operational efficiencies, and overall optimise the usage of their hardware infrastructure. In short, the MPS segment is expected to witness significant growth in the near future."

In fact, Gartner’s projections in the table below suggest that the MPS market segment will experience a 20% CAGR for the Asia/Pacific region between 2008 and 2013.

Managed print services and printing software will become increasingly important in the digitised, less papered world of business, be it large or small organisations. Resellers must consider their options carefully, in line with the shifting printer vendor landscape, and ally themselves well to continue their printing sales into the future.