Everything Old Is Old Again4 Jun, 2001 By: Brian Bissett imageSource
Everything Old Is Old Again
I’m a lexophile. That’s a person who loves words. I’m apparently not the only one in the copier business. How else can you explain the words copier vendors have developed to describe what you or I might otherwise call “used” equipment! There’s remanufactured, refurbished and the Orwellian “factory produced new model.” About the only term not in use is that sobriquet (now there’s a word!) from the used car business — “previously owned.” Unfortunately, denizens of the used copier market are going to need to add a few more words to their vocabulary very soon – like rejection, reversal and collapse.
The crux of the problem is that the incentives, which in the past caused most copier vendors to sell used equipment, and some customers to purchase used copiers, have dramatically and irreversibly changed. The used copier market developed amidst mature, standalone, analog technology. It was a time when there was little difference among products from year to year.
That’s no longer the case in today’s more vibrant digital multifunction marketplace. Between 40% and 70% of monochrome digital copiers are now purchased as copier/printers, although the number actually being used for two or more imaging tasks is probably half as great. This means from one-fifth to well over two-thirds of today’s copier customers would have a tough time being convinced that buying a used analog model, at any price, is the way to go.
What about used digital machines, you ask? There certainly will be a growing crop of these coming off lease, but who today would want to purchase an old Sharp AR-5132, a Ricoh Aficio 401 or a Xerox Document Centre System 35? These first-generation digital boxes pale in comparison with today’s models as copiers and even more so as connected devices. The difference between machines today and those three years from now won’t shrink very much either.
The Changing Customer
There’s also the issue of the changing customer. IT departments are increasingly involved in the purchase of connected copiers. These folks don’t buy used printers; so it’s highly suspect that all of a sudden they would look longingly at used, outdated copier/printers.
What about customers who don’t want or need multifunctionality? All they want is decent copying at a below-market price. While a used analog copier may still suffice, these analog machines are notably inferior copiers in comparison with newer digital boxes. Comparing a 2001 model year digital machine to a circa 1997 analog copier is very different than comparing a pair of new and used analog models from the middle of the last decade.
Of course, almost anything can be sold if the price is low enough. Typically, various types of used analog copiers have sold at a 50-80% discount versus similar new analog models from the same vendor. However, many of today’s new digital machines — in addition to being better copiers — are also less expensive to purchase and own than their earlier analog counterparts. Consider a product like Canon’s new 50-ppm imageRUNNER 5000. It’s a far better copier — putting aside low-cost, high-quality network print and scan options — than its analog predecessor. Yet, it sells for 10% less. Many bargain-hunting customers may find that one of today’s state-of-the-art digital models will set them back a lot less than they expected. As they say in the leasing business … “Just a few dollars a month.”
Outdated Machine Outlook
The corollary is that for copier vendors or third-party outlets to make used equipment attractive means selling those outdated machines at ever lower prices. From the seller’s perspective, those low prices don’t make the used copier business nearly so attractive. Carefully remanufacturing a copier is not an inexpensive proposition. It entails tearing down and rebuilding the entire machine. Xerox and Canon have entire facilities that do just this. That may have been fine when the spread between the purchase and sale price on a used machine was great, but not so fine when the price for that used box takes a nose-dive in order to undercut new digital technology.
Moreover, with copying increasingly being displaced by printing, selling a used machine that only competes for diminishing copy clicks, and has no opportunity to gain printing clicks, is not a terribly compelling business strategy for toner-hungry manufacturers.
Furthermore, muddying the waters is the whole issue of leasing. With new copiers already having questionable resale value, there is no chance of netting any value when a used copier comes back off lease. That means the entire price of the used copier has to be reflected in those monthly lease payments.
As if all of this weren’t enough, current troubles and uncertainty in the copier business are disproportionately hitting some of the biggest purveyors of used machines. Both Xerox and Pitney Bowes fit the bill. There’s also the recent bankruptcy of Officeland. All in all, tomorrow’s used copier business might even make the used car business look top drawer.