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For Muratec America, Change at the Top is Just Part of the Plan

15 Apr, 2005 By: Aaron Shea imageSource

For Muratec America, Change at the Top is Just Part of the Plan

Muratec America has named a new CEO—again. The secondary OEM
has made a habit of rotating head honchos as of late. For the third time in the
last six years, Murata Machinery, Ltd., Muratec America’s parent company, has
imported a new chief from Japan to take the helm of the Plano, Texas-based

This month, Yutaka Moriwaki will take the wheel of the
company from outgoing CEO Hideki “Henry” Mori, who is heading back to Japan to
become the director of Murata’s communications equipment division.

Moriwaki—who has been with Murata since 1983 and was
previously the manager of the strategic planning office for the communications
equipment division in Japan—takes over a company that has experienced relatively
good sales growth in Segment 1 products and fax machines over the past few

In addition, Murata’s worldwide annual revenues in its
digital equipment division have been solid at $250 million. But there is a
method behind the company’s madness, points out James D’Emidio, Muratec
America’s vice president of sales and marketing, who has seen a few CEO’s come
through the doors of the company since taking his executive position more than
five years ago.

“Our parent company wants to give a lot of the Japanese more
overseas experience,” he explains. “So we expect to have another president come
in two to three years from now as a learning process, go back to Japan, come up
with strategies, and have a better appreciation of the U.S. market.”

Muratec is working to establish any advantage it can because
it not only competes against fellow secondary OEMs, but the dominant factions in
the industry such as Xerox, Canon and Ricoh as well.

“Our main competition is the primary guys who are always
trying to push the secondary guys out,” D’Emidio says.

D’Emidio, Moriwaki and Mori took some time with imageSource
to discuss the change atop their corporation, company goals, the dealer channel,
and the copier industry.

imageSource (IS): What are your immediate and long-term
goals as new CEO of Muratec?

Yutaka Moriwaki (YM): In the near term, I want to develop a strong
understanding of our dealers, their businesses and the relationships they have
with Muratec. I also want to better understand the American marketplace, how it
differs from Japan and the unique space we have created. Long term, I want to
continue to expand our dealer base and product offerings because both are
important. Doing those things correctly will positively impact our position here
in the U.S. Our business will always change and adapt—hopefully for the better.

IS: Coming from Japan, what is it that you hope to learn,
about and from, the American market?

YM: I hope to learn as much as possible, especially the subtle differences
between markets. I think

one factor is the acceptance of certain technologies and product capabilities.
Where one type of product might be immediately accepted and have good

success in one market, it might take a little longer to grab hold in the other.
That’s a product of many things and having an understanding of that is
beneficial. I’m also looking forward to better understanding American culture
and, with that, having a better understanding of the individual Americans I work
with– both on a personal and professional level. The personal experience here
will be very beneficial.

IS: How does a new CEO change the dynamics of Muratec?

James D'Emidio (JD): Actually, this is a good thing for our parent company.
They want to get more of the Japanese out in the field learning the different
markets. Mr. Moriwaki is coming here as much to learn as he is to manage us. He
is going to come out in the field in the U.S. and learn a lot more about the
market so when he goes back to Japan he’ll have a better appreciation of the
types of products the U.S. needs. It’s like anything else. When you look at the
world from the one market you have grown up in, there are certain assumptions
that all the markets work that way. But the U.S. market, European market, Asian
market, Australian market, they’re all different. They need different products,
different features. For instance, in the Japanese market, they like lots of
buttons on their control panels. In the U.S. market, we like streamlined. These
are the types of basic things they learn as they come into these markets. They
go out and visit dealers and customers and learn about what these people want in
their products currently and in the future.

IS: But you keep turning over CEOs, what do you think it
is going to do for the stability of the company?

JD: Our business model is doing well. Murata knows our model works. They
want to use this model in other markets. Our Segment 1 business over the last
few years has grown 35 percent and our fax business has grown 3 percent in a
market that is declining.

IS: Why does Muratec choose to operate as a secondary OEM
and offer the lower segment machines?

JD: Currently, the market is not looking for another full-line manufacturer.
There is a lot of consolidation that is happening now, and at this point, we are
profitable and growing with the products and segments (up to segment 2 at 28
pages-per-minute) that we know best. We are what we are.

IS: But will there be any plans to move beyond Segment 2

Henry Mori (HM): Upward expansion is always something we’re considering. Our
move into Segment 2 with the MFX-2830 has been a tremendous success. Anything we
do, however, must take into consideration our current niche positioning. At the
same time, we have dealers who tell us that because of the way we do business,
they would sell our products exclusively if we had a complete product line. But
there are many dynamics that go into making the upward expansion decision and we
want to be smart about it.

IS: What are ultimate goals of the company in the next two to five years?

JD: We see ourselves growing and working with dealers, especially in the
scanning solutions. We see scanning as a way for dealers to differentiate
themselves from the HPs and Lexmarks of the world. They need to get into
solutions selling and do a better job of solutions selling. We also expect all
of our products will be replaced with color-enabled business MFPs.

The All-Important Dealer Channel

IS: Discuss the importance of the dealer channel to Muratec and how you
intend to expand it over the next few years.

JD: It’s everything. It’s all we do. Muratec America started in 1985 as a
direct sales channel with 30 offices in the U.S. In the early 1990s we went into
retail, which is where a lot of our growth came from. A few years later, we
abandoned retail completely and put all of our focus into the dealer program
(started in 1987). Now, 100 percent of our sales are from office equipment
dealers. We don’t use IKON or Danka—just independents. We are committed 100
percent to dealers. We want to do everything in our power to protect the dealer.
It’s more important for us to grow the dealer and make sure they are happy than
it is to have a lot of dealers or have our products or supplies in every

YM: Since we sell exclusively to dealers, the channel means everything to us.
We’re grateful for the relationships we have with our dealers. We view them as
customers, not extensions of a direct sales branch. Expansion will likely
continue as it is now— cautiously aggressive. There are certainly markets where
we want a stronger presence. Often that means adding dealers, but other times it
is about expanding our business with existing dealers.

IS: How many dealers are currently selling your products?

JD: We have 450 dealers and about 275 we consider active dealers, meaning
that they buy from us every month.

IS: How does that compare to, let’s say, five years ago?

JD: If you go back to 1997, 27 percent of all our distribution was with IKON
and Danka. Currently, 0 percent is with them. We’ve had to replace all of those
in the last seven years. What IKON and Danka did is they went in and cut
manufacturers. In the case of IKON, if you weren’t Canon, Ricoh or Oce, they had
to drop you. So for the last six years, we’ve tried to win the hearts and minds
of independent dealers across the United States to get them to be partners with

Solutions Sales

IS: Where is Muratec with solutions sales?

JD: We see part of our role in this market is on the network for digital
documents. A lot of our Segment 1 products and our fax products are what we call
onramp devices. A fax machine is no longer seen as a standalone, but as a
scanner and a printer as well. Our Segment 1 products are looked at as scanners,
printers, copiers, and faxes. We’re finding a lot of workgroups want to scan to
the network, scan to file, scan to email, and we’re making this a one touch
solution for a lot of companies. We don’t necessarily bundle document management
software, but we work with companies like Doculex, Docuware, Laser Fiche, and

HM: Our approach is hardware-focused. Our strategy is to offer desktop and
workgroup MFPs with a built-in affinity for the network as digital onramp
solutions that integrate with any document management application. We do not
have any proprietary software solution offerings or partnerships with providers.
That strategy may or may not change, but for now we’re comfortable with it. Our
new Network Gateway Platform machines and overall strategy as a digital onramp
solution via lower-segment MFPs is really where we see our role right now.

IS: Do you stress the importance of selling solutions to
dealers? How important, in your opinion, is the sale of bundled hardware and
software for the future of your dealers?

JD: We’re telling dealers, you can partner with software companies. You go
out pick the software and our hardware will work with that software. We want the
dealers to choose their own solutions because there are 600 different programs
out there. We push the idea that they need to get into solutions, but like I
said, ultimately, the decision of how they are going to get into it is really
going to be up to them. That’s different than the larger manufacturers that come
in and have already picked solutions for their dealers. What we have found,
especially in document management solutions, a lot of those choices are not the
best choices for the dealers. The manufacturers have picked partners that they
think is best for them. What we tell dealers is to educate themselves, know all
the different type of solutions and compare and contrast what is best for them.
We do, however, have a new initiative called DocuStrategies (www.docustrategies.com)
to help educate dealers about the business model changes that they should
consider to successfully sell solutions. What we’ve learned is that most dealers
recognize the need to change; they’re just not sure how to do it. Our goal is to
help them avoid making the expensive mistakes that are easy to make when adding
a solutions component.

HM: It really depends on the dealership. Some seem content with the current
machine/service/supplies model. Perhaps they need to get their noses bloodied by
dealerships that offer the complete package before they take notice and change.
Then again, just because some dealers have been successful with the solutions
approach doesn’t mean it’s going to be a hit industry-wide. It sure looks good
on paper, though.

Color Capability?

IS: Where does Muratec stand on color?

JD: We have a variety of color solutions that are being developed in Japan,
but at this point we have haven’t brought any of those into the market yet. Our
dealers are selling color, but from other manufacturers. You have got to realize
that no one just sells Muratec products. The two areas we see growth for the
office equipment dealer is solutions, primarily document management, and color.
We’re doing a lot with scanning. Color is the next area we are going to be
coming to the market with. We’re just not launching anything in the next six

HM: We have plans in the works now, both original development and joint venture
projects. We recognize the importance of color, but we also know that our
dealers would rather see us enter the space correctly the first time with a
product that fits their needs rather than just getting into color for the sake
of doing it.

Industry Opinions

IS: How do you see the future for the secondary manufacturers?

JD: I think it is good. The bigger manufacturers cannot produce everything
well. There are areas they are strong in and there are areas they are weak in.
In the segments we produce products we do an outstanding job of service and
support. That’s the key. To a lot of other manufacturers, these product lines
are the ones they give the least amount of attention to, the least amount of
support to. So it’s important to the dealer we give strong support. We’re giving
the same support they are getting from a bigger manufacturer on a Segment 5.
We’re giving that on Segment1.

IS: In your opinion, what is the most significant thing
happening in the copier/printer industry today?

JD: I'm not sure if there is only one thing. Certainly, consolidation is
significant, most recently with the Konica Minolta merger. I think we'll only
see more of that trend. Also, manufacturers buying dealerships—Toshiba, for
example—and direct sales approaches by manufacturers is having a big impact.
Additionally, traditional printer and PC manufacturers, such as Dell and HP,
entering the copier/MFP space is something to watch.

IS: What are the emerging technologies that you believe
will have the biggest impact on the industry?

JD: That's hard to say. If you consider increasing the affordability of
color as an emerging technology, than that's one. We also think that the
network-ability of MFPs—the capacity to seamlessly connect and integrate with
the network—will have a big impact. This aspect will become a key component to
the IT department's overall requirements.

IS: What do you believe is the most important thing for
dealers to do to succeed, profit and survive in the business?

JD: Although we see our role from the hardware/digital onramp standpoint, at
some point dealers probably have to incorporate a solutions selling component.
The timing of that is the question. When is the right time for the average
dealer? When will it be too late?

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