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Copier Printers Collide - Survival of the Fittest

1 Dec, 2001 By: Rick Clayton and Bob Parks, of CAP Ventures imageSource

Copier Printers Collide - Survival of the Fittest

manufacturers and dealers are well into a complete conversion from optical to
digital imaging products. Yet, the opportunity for major industry expansion
promised by this technology has not been fully realized. Why? Is there a market
ceiling that cannot be breached? Does the technology deliver on its promise? Are
all potential uses fully defined and exploited? Is distribution keeping pace
with the market? Let’s examine some of these issues, but before we look at
where the industry needs to go, let’s reflect on where it has been.


Of Convergence

parallel universe of copiers and printers really began to converge with the
introduction of the IBM personal computer driven by Mr. Gates’ DOS operating
system. Suddenly, PC’s became usable and practical tools to displace the
typewriter and generate accounting worksheets infinitely faster and without
mathematical errors. A whole new market for printed output emerged overnight.


set the printer and copier industry on a collision course was a combination of
laser imaging on a photoconductor matched with emerging communications
standards. For the first time, mainstream printer developers did not have to
rely on computer manufacturers to market their products. Printers became an
independent product category that could be sold directly to business. 


the core technology was electro-photographic, many copier manufacturers
immediately developed laser driven engines that were sold to a wide range of
OEM’s who added the RIPs, communications protocols and software. However, by
focusing only on engine development, copier companies effectively locked
themselves out of a new and exploding market for branded printers. Whereas, they
could and should have been the market drivers, copier manufacturers were
satisfied with the revenue windfall generated by laser engines. Although this
created no immediate effect, long-term ramifications for the copier industry
were staggering:


It allowed a whole new and extremely competitive imaging industry to develop and
prosper around them without direct participation.

Whereas copier dealers should have been at the leading edge of laser printer
marketing and support, it effectively locked them out of the printer market for

Most copier companies failed to develop the internal technical resources they
would desperately need later to enter the digital multifunction world.


result was that a host of new printer companies led by Hewlett Packard were able
to enter and dominate the printer market just as networks became a practical
reality. Those devices changed the face of communications and imaging forever.
By 1999, more images were being printed than copied.


Multifunction Emerges

many copier manufacturers were involved in laser engine development and sales
from the beginning, why didn’t they leverage their work with optical copiers
and create equally competitive imaging devices that combined laser technology
with copier engines to produce a new category of product that would scan and
print? The answer is that work was going on behind the scenes. 


emerged from the labs were console devices running at around 30 ppm. They
combined scanning with limited printing capability plus fax and were positioned
to replace all three conventional devices in workgroups. Unfortunately, their
functionality created “contention” as users bumped into each other’s jobs
running at the same time. The next step was to move down market with products
targeted to the small and home office. This approach was successful in Japan and
other Asian areas where space is a major consideration but there were serious
pricing and functionality trade offs that limited acceptance in other major
world markets. 


these initial products did do was point out core problems that remain with us
today and seriously limit digital market growth. The initial multifunction
devices were distributed through traditional copier dealers and branches. It was
a logical decision, but since the products included printing functions, the
distribution channels were suddenly thrust into the world of networks, RIPs, and
software. They were totally unprepared, as were manufacturers’ sales and
support divisions.

We did then and do now refer to these products as “digital multifunction imaging devices.” This definition does not
convey an image of what these products are and what they will do to improve
business productivity. It is a definition without general meaning and guaranteed
to confuse rather than communicate. The entire industry from corporate executive
to newest rookie sales representative continues to be plagued by this problem,
yet it defies solution. 


issue may not sound significant, but from day one, lack of definition and
positioning made the process of selling, training and supporting connectivity
much more difficult. Since the products fit copier thinking they were rolled out
as copiers; sold as copiers and purchased as copier upgrades. This point alone
has curtailed “value add” and market growth. If the industry is to evolve
into a printer centric player, that mind set must be reversed.


The Laserjet Model

Hewlett Packard first developed the LaserJet, their success was based on a
combination of three elements:


A well conceived and adapted Canon personal copier engine. This engine precisely
matched the price, reliability, and servicing requirements for a desktop

HP’s ability to develop simple yet sophisticated electronics and
communications, user friendly and functional software, and clear documentation.
HP made it easy to connect, understand, and operate, then continued to build on
that premise with sophisticated network administration software.

The product could be easily marketed by HP’s substantial VAR distribution
channel and sold like any other computer hardware without the burden of on-site


VARs do not sell supplies, HP was able to set up another major channel through
stationers and other distributors that proved to be a goldmine. Hewlett
Packard’s success spawned an entire industry based on engines principally
developed in Japan. The engines required enabling communications, controllers
and software that was developed primarily in the U.S. and Europe by an already
established infrastructure that had developed around the printer industry. 


same formula was applied to manufacturer-branded multifunction devices –
Japanese engines matched with offshore electronics and software. These were OEM
relationships that did not transfer sufficient technology from the offshore
electronics and software providers to the engine manufacturers. The dynamics of
this structure left most manufacturers without the internal infrastructure to
develop their own electronics and software. Because they lacked direct
involvement and thus understanding of how the world market was developing, the
gap progressively widened. It reached critical mass during initial development
of the current generation of digital copiers/printers. 


the problem came into focus, manufacturers moved aggressively to develop
offshore relationships and acquire technology companies. This gave them
proprietary access to the controller, driver, and solution software they needed
to play catch up, but results were uneven and expensive. 


burden to market and support these products was shifted to manufacturers’
operating divisions, then to dealers and branches. Since neither was structured
or trained to handle the onslaught, introduction and rollout of the first
full-blown digital copier/printers was not encouraging. Although tremendous
strides have been made since, the seeds were sown and remain with us today as
one of the most significant barriers to market growth.



now the copier industry has generally viewed the world from a combination of
available hardware technology, peer competition, market segment gaps and return
on investment. That perspective must be completely reversed. It is no longer
feasible to view the market from hardware products out to applications. Instead,
manufacturers need to look at it from the perspective of what network,
communications, and software developers are doing and where they are going with
their technology. Once that is understood, they can identify the trends and
opportunities that will evolve for imaging, and match those opportunities to
planning and distribution strategies. 


example, how will the tremendous focus on wireless communications development
drive software productivity applications that will, in turn, drive imaging
output? These applications alone could determine the direction of product
development; and that’s only one among hundreds.


meet that demand will require the industry to look at the market from the
perspective of the computer/network/communications/software industry, then
design imaging devices to capture the output driven by these trends.


development, marketing and distribution strategies need not reverse direction to
take advantage of this shift. They can evolve over time as long as objectives
are defined and clearly understood at all levels of the organization. Once
defined, however, the means to achieve them should trigger a major review of
operations that will focus on current strengths, weakness, and result in an
action plan with accountability at all levels.


With The Distribution Solution

varying degrees, contracted services and/or subsidiary efforts to develop
enabling electronics, communications and software for copier centric digital
products are still way behind the curve. The industry is still paying a price
for their lack of early investment in the infrastructure needed to understand
and drive this entirely new market. That problem has plagued product
development, marketing, and support from day one and promises to continue for
some time to come. 


of digital multifunction devices through direct sales branches and dealers is
clearly the best way to get ahead of the curve. These organizations are
established and successful in their markets, know how to sell to business and
can support the full range of copiers.


subsidiaries can influence product direction, development, and pricing, but they
cannot control it. They can also control sales within their markets. Many
distribution issues are common to aggregated dealers, independent dealers, and
direct sales branches. They are structured and driven by much the same history
and perceptions ― optical copiers. The primary difference between the two
is the way in which they are managed; branches by decree, dealers by indirect
influence. Since dealers represent the biggest slice of the pie, they offer the
greatest opportunity for growth. Moreover, most of the work done with dealers
will directly translate to branch operations. Although aggregated dealers are
organized on a different model than independents, most of the issues at their
branch level are the same.


optical copier unit sales backed by excellent service and support remains the
dealer’s greatest strength. They are adept at “moving boxes” in a 30-day
window and in competitive environments. Their sales organizations are a
freewheeling group driven to prospect, demonstrate, and close within those 30
days. Multifunction copier/printers were intended to tap this strength and
extend it into the world of connected network printers. However, to do that
effectively it would involve a complete change to their basic culture, business
structure, and marketing approach. 


Away From Moving Boxes

copier function in current products offer more functionality than ever before
for the price. Where the equation breaks down is in functionality versus cost
for connectivity. It is generally perceived as overly complex and too expensive
― not a good value. If connected, functionality is refined to match or
only slightly exceed comparable printers at comparable price, then the total
package suddenly becomes simpler to understand and much more attractive.
Obviously these refinements cannot be cut overnight, but if actual user needs
are researched relative to function, ease of use, speed, finishing and cost,
then that input can be converted to a set of design parameters for the next
generation of the current products. However, this is not a question of
technology but a question of matching functions and price to actual user needs
for each product.


a “productivity solution" driven market, the perspective remains “move
boxes, move more of them and do it every thirty days.” After three to four
years of providing incentives, training and cajoling, there has been virtually
no change to that perspective. The reason is that it comes from the top ―
from manufacturers, dealer owners, and sales managers. 


problem stems from history and precedent, but it is deeper than that. Although
the industry is trying to move forward, the companies that are involved are
structured on the 30-day cycle all the way from bank relations through planning,
P/L, billing, payroll, collections, sales quotas, commissions and expenses.
Within that structure, how do you overlay 60, 90, and 120+ day sales cycles? If
dealer sales reps are compensated on draw plus commission plus bonuses, can they
be expected to wait 90 days for payment? Of course they can’t.


problem may never be completely solved, but there are approaches that could help
shorten the sales cycle. For example, manufacturers could take responsibility
and make the investment in pre-selling their systems to the end user. The first
step is positioning their products as solution
. These packages could be defined as solutions for specific
productivity problems by department size or function and include software
solutions for workgroup applications. This approach would simplify the entire
sales process, making it easier for the sales rep to qualify and explain and
certainly easier for the prospect to understand, budget and approve. The second
phase would require a major P/R, media and local marketing effort to create
awareness for, and pre-sell the solution package concept. The third phase would
involve an intensive campaign to teach every sales rep in every market how to
sell systems and solution packages.


key to this or any other approach is for manufacturers to take responsibility
for their distribution channels, simplify their products and the selling
process, and provide sales reps with the skills they need to compress the sales


On Manufacturers

distribution is the key to success for current products, manufacturers should
take more direct responsibility for dealer progress. In a parity market, dealers
have more options than they need or want, but are also vulnerable. Any effort
will be rewarded but there are general areas where a small investment could
significantly help. For example, manufacturers can:


Provide more management-to-management consultation.

Increase regional management seminars and training.

Improve the quality and quantity of field sales support staff.

Place more training emphasis on systems selling and “value add.”

Create an environment at all levels that will pull dealers closer to the
company. In short, create a partnership environment.


The Right Path

general terms, the copier industry is headed in the right direction.
Manufacturers have taken on a tremendous challenge to directly compete with the
entrenched printer industry. This is the correct strategy to sustain long-term
growth. It’s a different market with different requirements that will require
broader thinking to penetrate. The challenges are great, but the potential
rewards greater.

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