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Taking Aim at THE FUTURE: An Interview with Canon U.S.A. Senior VP Tod Pike

13 Nov, 2005 By: Aaron Shea imageSource

Taking Aim at THE FUTURE: An Interview with Canon U.S.A. Senior VP Tod Pike

the future of the document imaging industry; it’s an endeavor that Canon has
partaken in for decades. Whether it’s venturing into multifunctional copiers or
color, the technology goliath has settled in among the elite of the industry.

In September, the company unveiled its latest brand innovation—imagePRESS—at
Canon Expo 2005 in New York City. The digital color printing technology, which
can produce 70 pages per minute, was designed to expand Canon's presence in the
production color market. The monolith of a machine will be released in a more
compact, low-volume version as well.

“We’re hopeful that this effort is going to expand our business into new
environments and applications we haven’t been able to compete for in the past,”
said Tod Pike, senior vice president and general manager of sales, marketing and
administration for the Imaging Systems Group at Canon U.S.A.

As Canon looks to expand its reach into other avenues of the document technology
industry, it also intends to continue to invest in one of its most powerful
areas—copiers. According to the analysis group Gartner, Canon held a 32.5
percent market share in monochrome copiers and a 29.5 percent market share in
color copiers in 2004.

So to get a grasp of where the copier industry is currently and where it is
heading, it seemed only natural to turn to one of Canon U.S.A.’s top
executives—Mr. Pike.

An industry veteran, Pike, a graduate of Bucknell University, spent 16 years
with Xerox before becoming the vice president and eventual president of MCS
Business Solutions (now Canon Business Solutions NE, Inc.). In the mid-90s, he
headed up the Imaging Systems Group for Canon Canada, and then took his current
position with Canon U.S.A. in 1999.

Pike took some time to share his insight on the dealer channel and Canon with

imageSource: How important is the dealer channel to Canon?

Tod Pike: I view the channel as being arm-in-arm with our technological
advantages as being the reasons we’ve been so successful. I think the channel is
very important. We have very good balance. It’s about a 70-30 indirect versus
direct balance of distribution of our products to the marketplace.

We are not really looking to drive a change to that balance. I think we’re very
fortunate with the strategies we have put in place and with the partners we
have. We’re looking to build on that success.

IS: What do you believe are the most important issues for dealers to
understand to succeed in this business?

TP: The conversion to color, document management and the need to
streamline and reduce costs are important. Devise strategies that are
customer-focused to exploit those trends to your client base. I think it is also
very important having the right people and partners to make sure you’re well

IS: Do you see a point down the road where the independent copier dealer
will begin to look more like a VAR (Value Added Reseller)?

TP: We have been saying for some time that many of our independent
dealers behave and deliver to their customer base more like a VAR than a copier
dealer already. It’s been wonderful to see. We’ve been coaching and talking to
our dealers for some time about the investments that need to be made, and it’s
been so wonderful to see so many making the appropriate investments.

Really when you look at the definition of a VAR, you ask, does our dealership
add value? It should. With the hiring of the right people and with the right
leadership from the top, I think we have already transitioned to the point and
time where copier dealers are really acting more and more like VARs. I think
they are the ones that are going to be successful in the future. Others need to
get on board quickly.

IS: Going beyond the corporate line of top quality machines, what is it
that draws people to Canon products?

TP: You know I don’t think it is a corporate line to say that our history
of innovation and our history of quality products has led us to where we are
today. But I would add that we could not have accomplished what we have, nor
could we build on what we accomplished, without great distribution partners.

Clearly we do have a history, even going back to the analog days, of bringing
products to market that have great image quality and great engine reliability.
When the marketplace transitioned over to more digital products, our products
were easy to connect to the network, they were easy to use, and there was a
common user interface.

We provided finishing from the desktop. We were really out front in scanning and
document distribution. All of those innovations and the quality of our products
have led to a great population of machines in the field. With that comes brand
recognition and confidence on the purchasing side of things and within the IT

I think today’s customer is really requiring things of us that are a lot
different than a number of years ago. I think what you saw at Canon Expo—our
investment in technology—as well as the offerings our dealers bring to their
customers, we’re in a very good position to lead the way.

IS: You recently introduced your latest product, imagePRESS, at Canon
Expo in New York City; how important is this latest innovation to the company’s
future? Is it another way to strengthen Canon in the color market?

TP: It’s really big. imagePRESS is not so much a product as it is a
brand, an umbrella for a new series of products. Like we’ve used imageRUNNER and
imageCLASS, we are going to launch a series of products under the imagePRESS
brand that’s focused on commercial printing and the graphics industry.

We would like to exploit the conversion of offset technology (the typical method
used to print magazines, brochures, etc.) to electrophotography (a technology
used in MFPs) with our imagePRESS brand. That is clearly a market that we’re
focused on and we understand our competitors are focused there as well.

It will strengthen our color base, but we’re hopeful that this effort is going
to expand our business into new environments and applications we haven’t been
able to compete for in the past. You’re going to see a number of products under
this brand while focusing on expanding the reaches of what Canon technology can
do. It’s big.

IS: When will these new products be released?

TP: We showed the products as technology previews (at Canon Expo) with an
expectation they will be released in the second half of 2006.

IS: With more and more competition focusing on color, how do you intend
to keep up the strong pace you have in that particular market?

TP: It needs to be our focus as well. Fortunately, with products like the
imageRUNNER C3220 we’ve been able to lead the market. We have a little bit
different strategy than our competitors.

We have a very aggressive two prong strategy with four-drum technology focused
on heavy color application areas and with one-drum technology focused on
occasional color. That’s been helpful for us not only to replace color laser
printers, but also to start to integrate occasional color to what had been a
very strong field population of black and white devices.

I think if you looked at the Canon Expo show floor, the answer to how we stay
ahead is new products. I think any manufacturer needs to bring new products to
market. With what we previewed down on the show floor, I think it is safe to say
that 2006 and 2007 will be very exciting years—exciting for Canon, exciting for
color, and exciting for our dealers.

IS: Is the goal to eventually phase out black and white machines?

TP: No. We don’t really see that as something we expect in the next
number of years. We will continue to invest in the black and white product line.
We’ll continue to put a lot of focus on color, but we will also continue to look
at the black and white market. The U.S. consumer is going to continue to have a
need for a cost-effective way to print in the black and white world. So, we’re
not walking away from that monochrome business at all. We expect to invest in

IS: So, from an expense standpoint, customers may stay away from color?

TP: Some customers, yes. There will be a tipping point somewhere. More
and more products will go towards color, but in the midterm we are planning to
continue to have a robust black and white MFP in the marketplace.

IS: Who do you view as your main competitor, or do you feel Canon has no

TP: We’re going to have competitors. If you look forward in the industry,
you might predict that there will be some consolidation among our competitors.
We make a big investment in research and development, and we’re going to
continue to make a big investment. I don’t think everyone in the industry can
make such an investment like us. As a result, as the needs of a customer become
more complex, I think there is room for some consolidation.

We look at the likes of Ricoh and Xerox as major competitors. We do have a keen
eye looking at the printer manufacturers moving into the MFP space as a
competitive threat—Dell, Samsung and others. Obviously, HP is already moving up
the market with quite a bit of success.

IS: Consistently being among the upper echelon of the industry, how much
pressure does that place on someone you and other executives at Canon to remain
in that position?

TP: You bet it puts a lot of pressure on us. We like to think that we’re
an industry leader, but we like to work and behave like we’re an underdog. We’re
always looking at the competition. We’re always striving to stay ahead.

I’m a believer that there should be a healthy paranoia about what your
competition is doing and I think we have that. You better believe none of us in
Canon have any interest whatsoever in losing the share advantage.

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