MPS Reduces the Market for Supplies in the U.S. & Western Europe4 Feb, 2011 By: John Shane & Cathy Martin, InfoTrends imageSource
MPS Reduces the Market for Supplies in the U.S. & Western Europe
Managed Print Services (MPS) are becoming increasingly
popular among companies of all sizes as a way to better manage print and save
money. InfoTrends, a leading market research and consulting company, predicts
that MPS will reduce the consumption of marking supplies by approximately 10%
and decrease the consumption of paper by a comparable amount in the U.S. and
Western European office environments by 2014.
This information is compared to a baseline forecast that
postulates if MPS had never been invented. Overall, InfoTrends forecasts that
MPS reduces the market for supplies in the office environment by $2.6 billion in
the United States and €1.56 billion in Western Europe in 2014. (see figure 1 &
2 in print and or digital issue)
Reduction in Print Volume – A Major Driver
MPS causes a significant reduction in print volume and, therefore, a
decrease in consumption of supplies within a MPS environment. On average, MPS
allows user organizations to reduce their print volumes in percentages in the
mid-teens, depending on region, company size, and how long the company has been
engaged in MPS.
Combined with other cost reduction efforts, including
shifting print volume to higher class, lower cost per page devices; restrictions
on color; and use of non-OEM supplies, MPS engagements are able to reduce
marking supplies consumption by percentages in the upper twenties to lower
thirties depending on region, company size, and year of MPS engagement.
Marking Supplies Savings
The majority of savings on marking supplies are accomplished by overall print
volume reductions and shifting pages to lower cost per page devices. Use of
third-party supplies, although significant, does not appear to be greatly
increased when compared to the prevailing use of third-party supplies in the
general market. Overall, the increased use of third-party supplies only
contributes 1-2% to overall savings in the consumption of marking supplies. The
majority of the savings come from print volume reductions and page shifting to
lower cost-per-click (CPC) devices. The remaining savings come from other
efforts, including the increased use of high-yield toners, price reductions, and
The prevailing industry assumption about MPS is that MPS providers use
third-party toners and inks to save supply cost. We found this to be true, but
it also appears that the level of use for third-party supplies in a MPS
environment is not as great as we have thought.
For the U.S. and Western Europe, InfoTrends’ existing
estimates on the use of third-party supplies in the overall market are that in
terms of value, about 20%-25% of monochrome toners and supplies are third-party.
For color, third-party is only about 5%. The share that is third-party is larger
for printer than for copier, but the usage is in a similar range.
We asked MPS providers to estimate the share of toner that
they provide that is third-party. The share reported by MPS Providers for
aftermarket supplies on monochrome devices is actually surprisingly low; it is
below the overall average for office devices for those types. The share MPS
providers report for color is also far higher than what we would expect based on
our understanding of the currently low prevailing availability of reliable
quality toners for color supplies. We do not believe that third-party share can
be that high for color devices. Unfortunately, it appears that respondents have
a very difficult time distinguishing third-party share on color devices from
black & white.
We did not ask users to provide actual shares for
third-party supplies under the assumption that they would not be able to answer
the question as well as the providers could. We did, however, ask users if the
use of third-party supplies increased, decreased, or stayed the same. Most users
believe that use of third-party supplies stayed the same, but twice as many of
the remaining respondents suggest that it increased versus decreased. Results
from the users and providers suggest a modest shift to third-party supplies
under MPS engagements. (see figure 3 in print and or digital issue)
Paper consumption is also impacted by the reduction in print volume and the
shifting of pages between devices. Paper consumption under a MPS engagement will
be reduced by 18% to 24%, depending on region, company size, and the year of the
forecast. The majority of this reduction comes from overall print volume
reductions followed by the shifting of print volume to higher class devices and
from colour to monochrome devices. Print volume reductions and shifting pages
account for 98% of the paper savings.
Paper is more often not included in the MPS contract, but
about 13% of paper used in a MPS environment is delivered as part of the offered
managed print services. There is a great opportunity to increase paper
participation in MPS by working with paper merchants as partners.
It is imperative that those in the supplies industry educate themselves on how
to deal with the effects of MPS to take advantage of new opportunities and
Equipment OEMs: Make sure that your equipment is the
easy choice for including in managed print services. Expect that print
volume will be reduced in a MPS environment. Reduced print volume will also
mean reduced need for devices. The biggest risk to a vendor’s supplies
business will be that hardware goes away.
Supplies OEMs: MPS Providers want smart supplies even
more than high-yield substrates. About 73% of the providers agreed that it
was more important for the supplies to accurately predict when they will
need a replacement than for the supplies to have very high page yields.
Third-Party Suppliers: Do not assume you are the easy
choice for MPS providers. MPS providers show significant concern about the
reliability and quality of some aftermarket supplies, particularly colour
copiers. These providers need to know that the third-party supplier will not
increase service interventions or decrease quality. Approach MPS providers
with evidence of reliability and quality.
Paper Vendors: Use paper merchants to overcome barriers
to delivering paper in a MPS engagement. MPS providers report the following
barriers to including paper in managed print services: too much variety, too
expensive to deliver, no added value, and variable prices. Merchants in
partnerships with the MPS provider should be able to reduce these barriers.
Further detail on these and other insights related to
managed print services can be found in InfoTrends’ reports Managed Print
Services Impact on Supplies – United States and Managed Print Services Impact on
Supplies – Western Europe. Detailed information found at
John Shane is a leading industry expert on marketing
materials such as toner, inkjet ink & cartridges. As an InfoTrends’ Director for
the Communication Supplies Consulting Service, he’s responsible for all
forecasts, research reports, consulting & client care on those topics. Cathy
Martin is a contributor of deliverables for the company & covers a wide range of
topics including new products, trends & distribution channels. InfoTrends is a
leading worldwide market research & strategic consulting firm for the digital
imaging & document solutions industry.
MPS Opportunities in Asia
Separate from the U.S. and Western Europe regions, the Asia-Pacific region
represents what is arguably one of the most interesting markets for competing in
the office equipment space. Because most office equipment devices and supplies
(including aftermarket supplies) are manufactured in this region, each country
has its own idiosyncrasies that can affect the outcome of a MPS strategy.
According to InfoTrends, China, India, and Australia show
the most potential for MPS in the Asia-Pacific Region. However, the study
cautions that MPS strategies should be adjusted from region to region to address
the idiosyncrasies of each country. The same MPS value proposition used in the
United States and Western Europe may not be relevant in Asia-Pacific. (SEE
FIGURE 4 in print and or digital issue)
[FIG 4 in print and or digital issue] Source: InfoTrends
Asia Pacific – The Managed Print Services Opportunity, 2010
China and India, for example, are emerging markets that are
still ramping up their IT and office infrastructure. Because of this expansion,
the basic premises for MPS (such as optimization, right sizing, or cost savings
around a company’s print and copy environments) are not occurring here. In these
markets the positioning of MPS should be based on the premise of continuous
management of a customer’s print and copy environments and not cost savings. In
Australia, however, the market is mature and therefore more closely resembles
the U.S. and Western European markets in terms of growth potential for a
traditional MPS program focused on cost savings and optimization.
Managed Print Services in the Asia-Pacific Market are quite
unusual compared to the rest of the world. Before entering into any of these
markets you will need a solid understanding of the socio-economic factors
shaping the regions development in order to be successful.