- Total US revenue was down 3%
- Has self-financed leases on a few major account deals, but has no plans to open up
its own leasing company
- Has a total of 440 dealers in the U.S.
- Is adding 20-40 new dealers per year, but also losing about half that many per year
- Has 10 factory direct branch operations from 13 acquisitions
- Has temporarily halted acquisitions, until economy improves, but still hopes to have 25 locations total in next few years
- Goal is for branches to account for 45% of sales in U.S.
- 4 of its 10 largest dealers are Global dealers (owned by Xerox)
- While it launched the Frontier series of A4 MFPs last year, it only has sold a total of 7000 units
- Healthcare vertical market is where most A4s are sold, accounting for 14% of units sold
- Only 310 of its 440 dealers are selling the Frontier A4 models
- In 2005, the total number of 31ppm+ A3 units was 479,431, and in 2008 was 563,309
- In 2005, the total number of 31ppm+ A4 units was 21,779, and in 2008 was 116,536
- Now has 135 technology partners for its OSA embedded solutions offering
- Now offering Front Panel, or ability for end user to customize the copier LCD display
- My Sharp Digital Signage, allows end users to run an announcement on the LCD display
- Future models will come standard with OSA, rather than current option for $349
Showing posts with label Sharp. Show all posts
Showing posts with label Sharp. Show all posts
Saturday, October 31, 2009
Thursday, September 10, 2009
MPS: Growth Strategy or Harbinger of a Smaller Pie
My opinion is both, depending on your current position and how well you leverage the MPS opportunity. To understand my feelings I will share my thoughts.
Fewer printers and copiers are being sold year on year. Gartner recently reported that worldwide combined printer, copier and MFP shipments totaled 51.3 million units, a 20.2 percent decline in shipments from the first half of 2008. Office printing devices drove the overall decline in the global print market, with a 24.5 percent decrease in the first half of the year compared to the first half of 2008.
Add to this year on year unit decline the facts that A4 units are replacing A3 units, at a lower average unit selling price and, like all maturing technology, average unit selling price across all segments is declining and you wonder where the growth is. The simple answer is that there is no growth; in fact, the overall market is shrinking.
Keep in perspective that there is nothing new in an MPS sale, which includes toner, parts and service (together “aftermarket”), equipment, and software. Moreover, one of the long-term goals of MPS is to reduce the quantity of devices used by a company. What does this mean? It means that the industry players—those that depend on an already shrinking revenue pool—are going to deliberately accelerate that revenue decline.
So far it sounds like death by a thousand cuts so why would anybody want to jump into MPS? Because for the short term, it is a growth strategy for those that properly deploy a strategy.
Printer Manufacturer Perspective
Every printer manufacturer is touting an MPS strategy. Why would you push a strategy that is going to result in fewer devices sold when you are a manufacturer? Simple, because you expect to take market share from the other printer companies—you intend on gaining share. So in short, the device loss is going to come out of your competitors’ backside.
MPS is clearly an inflection point in how devices, parts, and toner get sold and we’ll get to that shortly. The real question is will a printer manufacturer with low market share—when laser printers have been in the market for over 20 years—suddenly be able to leverage MPS to transform themselves into an industry player or is it simply a drowning man grasping for a thin read? Time will tell….but history usually repeats itself.
Let’s use HP as an example, who by all accounts has a 50%+ market share. I don’t care what industry you are in 50% market share is a dominating position. HP used their technical expertise—manufacturing super reliable printers that easily connected to the network—along with a “razor / razor blade” strategy to earn this dominance. One way to grow market share is to change the definition of the market so you motivate your team to penetrate adjacencies, and HP has accomplished this with their MFD products—directly targeting the copier space as a growth strategy.
But HP, in my opinion, has a bigger issue than pure market share and that issue relates to their razor blade strategy. Low priced, highly reliable, easily connected products provided HP with the ability to distribute through mass market players like CDW and PC Mall, as well as value added resellers (VAR) and dealers. The end user then purchased their HP cartridges through distribution points like their office supply company or HP direct. Sure, rechargers have approximately 30% of the mono market and 7% of the color market, but this seems to have been an acceptable level to HP, who constantly introduced new models; it took the rechargers a year or so to get enough empty cartridges to manufacturer in quantity.
Two sea changes are occurring today. First, and the point of this article, copier dealers, VARs, and other players are selling MPS agreements. Just four years ago HP, as well as the other printer manufacturers, but HP is the 800 pound gorilla, only had to deal with cartridge resellers and some private label products in super stores. Selling HP or compatible (remanufactured) cartridges was not a focus for the vast majority of copier dealers and the MPS VAR did not exist. Today, hundreds—rapidly headed toward thousands—of MPS providers are selling contracts that primarily use remanufactured cartridges in their contracts. Second, end users are holding onto their printers for a longer period of time so remanufactured cartridges are available for most products.
HP has a strong drive for market share; they are aggressive and smart and that is why they are so dominant. The other printer vendors sense there is an opportunity with the sea change of MPS. We will see if other printer manufacturers are able to take advantage of this inflection point or if HP will respond and retain their dominance.
Copier Manufacturer Perspective
No difference here—all copier manufacturers are pushing MPS. I think they have more to gain than the print manufacturer in that they have the opportunity to capture highly profitable new services revenue. So while HP is defending their turf—and the likes of Lexmark, Muratec, OKI, and Samsung are trying to take that market share—the copier manufacturer, through either their direct branch or dealer channel, can gain profitable aftermarket revenue. And they need it because year on year equipment placements are dropping rapidly!
So here is the short term gain: HP’s and the likes of CDW’s loss is the MPS delivering company’s gain. There are other winners too, like cartridge remanufacturers and distributors who supply MPS companies. We’ll cover the deliverable growth aspect in the next section but copier companies believe that they can replace that fleet of HP, Lexmark and other brand printers over the long term with their own products, while developing profitable service revenue over the short term.
I don’t think you are going to see any magic occur with this strategy: Copier manufacturers with low market share aren’t going to displace the top tier players with an MPS strategy. The channel is fairly set at this late stage of maturity so all the manufacturers can do is execute well through their branches and provide the consulting and training their dealer channel will need. They also need to provide them with a solid A4 product line of MFDs and printers.
The provider—MPS companies
Here is where the tremendous growth is near and medium term; the actual company that is on the street selling and delivering on MPS. The growth is coming out of other channels—it is not industry growth. Let’s just take an example:
ABC Imaging, a Sharp, Konica Minolta (KMBS), and HP dealer convinces Smith and Fried, a law firm, to place their 160 HP printers on an MPS agreement. Previously, Smith and Fried bought their printers from CDW with care packs and bought their cartridges and maintenance kits through Staples with their office supplies. ABC gets a contract for $15,000 to supply and service the 160 printers. So far Staples has lost the toner and maintenance kit business. ABC is going to use compatible cartridges so HP also lost some business with cartridges immediately and care packs over the near term. Time will tell if the printers are replaced with HP, Konica Minolta, or Sharp; the dealer will probably select the best product for the application. At that point CDW will have lost the business, and possibly additional HP loss.
Let’s assume Smith and Fried was spending $15,000 per month through Staples before they signed the agreement with ABC. MPS “grew” by $15,000 but other players lost the same $15,000. As ABC optimizes the fleet the revenue will continue to be reduced; there will be less capital expenditure on devices. As more players enter MPS the high early adapter margins available today will fall, as will revenue.
There could be others that gain revenue. KMBS offers revenue credit toward quota and rebates if their dealers buy their compatible cartridges through KMBS. If the dealer decides to take advantage of this program KMBS is able to recognize revenue and a small GP on the cartridges they buy at a lower price from a remanufacturing company (KMBS is simply an example…..other copier manufacturers have similar programs). KMBS also gains market intelligence. The OEMs’ direct organization also have the opportunity to grow revenue with an MPS strategy since servicing and supplying competitors’ printers is all net new business for the directs, at a loss to others.
The only absolute growth in MPS is at the provider level. Four years ago I used to tell audiences to get into MPS now because in two years everybody will be doing it. Well, it is four years later and I gave up saying that…..I guess I was more enthusiastic than the average dealer or reseller. What I would tell you is that if you get into MPS today—really get into it with a business plan and focus—you are still an early adapter. The revenue and profit opportunities are great. But in the long term we will all be fighting over a smaller pie so don’t hesitate…..get your outsized slice today!
Strategy Development is a consulting and training firm that can help you get more than your share of the MPS space. Whether you are a manufacturer, distributor, or reseller we’ll help you achieve success (http://www.strategydevelopment.org)
Add yourself as a follower to this blog and join the Linked In Group, “Print Management”
Fewer printers and copiers are being sold year on year. Gartner recently reported that worldwide combined printer, copier and MFP shipments totaled 51.3 million units, a 20.2 percent decline in shipments from the first half of 2008. Office printing devices drove the overall decline in the global print market, with a 24.5 percent decrease in the first half of the year compared to the first half of 2008.
Add to this year on year unit decline the facts that A4 units are replacing A3 units, at a lower average unit selling price and, like all maturing technology, average unit selling price across all segments is declining and you wonder where the growth is. The simple answer is that there is no growth; in fact, the overall market is shrinking.
Keep in perspective that there is nothing new in an MPS sale, which includes toner, parts and service (together “aftermarket”), equipment, and software. Moreover, one of the long-term goals of MPS is to reduce the quantity of devices used by a company. What does this mean? It means that the industry players—those that depend on an already shrinking revenue pool—are going to deliberately accelerate that revenue decline.
So far it sounds like death by a thousand cuts so why would anybody want to jump into MPS? Because for the short term, it is a growth strategy for those that properly deploy a strategy.
Printer Manufacturer Perspective
Every printer manufacturer is touting an MPS strategy. Why would you push a strategy that is going to result in fewer devices sold when you are a manufacturer? Simple, because you expect to take market share from the other printer companies—you intend on gaining share. So in short, the device loss is going to come out of your competitors’ backside.
MPS is clearly an inflection point in how devices, parts, and toner get sold and we’ll get to that shortly. The real question is will a printer manufacturer with low market share—when laser printers have been in the market for over 20 years—suddenly be able to leverage MPS to transform themselves into an industry player or is it simply a drowning man grasping for a thin read? Time will tell….but history usually repeats itself.
Let’s use HP as an example, who by all accounts has a 50%+ market share. I don’t care what industry you are in 50% market share is a dominating position. HP used their technical expertise—manufacturing super reliable printers that easily connected to the network—along with a “razor / razor blade” strategy to earn this dominance. One way to grow market share is to change the definition of the market so you motivate your team to penetrate adjacencies, and HP has accomplished this with their MFD products—directly targeting the copier space as a growth strategy.
But HP, in my opinion, has a bigger issue than pure market share and that issue relates to their razor blade strategy. Low priced, highly reliable, easily connected products provided HP with the ability to distribute through mass market players like CDW and PC Mall, as well as value added resellers (VAR) and dealers. The end user then purchased their HP cartridges through distribution points like their office supply company or HP direct. Sure, rechargers have approximately 30% of the mono market and 7% of the color market, but this seems to have been an acceptable level to HP, who constantly introduced new models; it took the rechargers a year or so to get enough empty cartridges to manufacturer in quantity.
Two sea changes are occurring today. First, and the point of this article, copier dealers, VARs, and other players are selling MPS agreements. Just four years ago HP, as well as the other printer manufacturers, but HP is the 800 pound gorilla, only had to deal with cartridge resellers and some private label products in super stores. Selling HP or compatible (remanufactured) cartridges was not a focus for the vast majority of copier dealers and the MPS VAR did not exist. Today, hundreds—rapidly headed toward thousands—of MPS providers are selling contracts that primarily use remanufactured cartridges in their contracts. Second, end users are holding onto their printers for a longer period of time so remanufactured cartridges are available for most products.
HP has a strong drive for market share; they are aggressive and smart and that is why they are so dominant. The other printer vendors sense there is an opportunity with the sea change of MPS. We will see if other printer manufacturers are able to take advantage of this inflection point or if HP will respond and retain their dominance.
Copier Manufacturer Perspective
No difference here—all copier manufacturers are pushing MPS. I think they have more to gain than the print manufacturer in that they have the opportunity to capture highly profitable new services revenue. So while HP is defending their turf—and the likes of Lexmark, Muratec, OKI, and Samsung are trying to take that market share—the copier manufacturer, through either their direct branch or dealer channel, can gain profitable aftermarket revenue. And they need it because year on year equipment placements are dropping rapidly!
So here is the short term gain: HP’s and the likes of CDW’s loss is the MPS delivering company’s gain. There are other winners too, like cartridge remanufacturers and distributors who supply MPS companies. We’ll cover the deliverable growth aspect in the next section but copier companies believe that they can replace that fleet of HP, Lexmark and other brand printers over the long term with their own products, while developing profitable service revenue over the short term.
I don’t think you are going to see any magic occur with this strategy: Copier manufacturers with low market share aren’t going to displace the top tier players with an MPS strategy. The channel is fairly set at this late stage of maturity so all the manufacturers can do is execute well through their branches and provide the consulting and training their dealer channel will need. They also need to provide them with a solid A4 product line of MFDs and printers.
The provider—MPS companies
Here is where the tremendous growth is near and medium term; the actual company that is on the street selling and delivering on MPS. The growth is coming out of other channels—it is not industry growth. Let’s just take an example:
ABC Imaging, a Sharp, Konica Minolta (KMBS), and HP dealer convinces Smith and Fried, a law firm, to place their 160 HP printers on an MPS agreement. Previously, Smith and Fried bought their printers from CDW with care packs and bought their cartridges and maintenance kits through Staples with their office supplies. ABC gets a contract for $15,000 to supply and service the 160 printers. So far Staples has lost the toner and maintenance kit business. ABC is going to use compatible cartridges so HP also lost some business with cartridges immediately and care packs over the near term. Time will tell if the printers are replaced with HP, Konica Minolta, or Sharp; the dealer will probably select the best product for the application. At that point CDW will have lost the business, and possibly additional HP loss.
Let’s assume Smith and Fried was spending $15,000 per month through Staples before they signed the agreement with ABC. MPS “grew” by $15,000 but other players lost the same $15,000. As ABC optimizes the fleet the revenue will continue to be reduced; there will be less capital expenditure on devices. As more players enter MPS the high early adapter margins available today will fall, as will revenue.
There could be others that gain revenue. KMBS offers revenue credit toward quota and rebates if their dealers buy their compatible cartridges through KMBS. If the dealer decides to take advantage of this program KMBS is able to recognize revenue and a small GP on the cartridges they buy at a lower price from a remanufacturing company (KMBS is simply an example…..other copier manufacturers have similar programs). KMBS also gains market intelligence. The OEMs’ direct organization also have the opportunity to grow revenue with an MPS strategy since servicing and supplying competitors’ printers is all net new business for the directs, at a loss to others.
The only absolute growth in MPS is at the provider level. Four years ago I used to tell audiences to get into MPS now because in two years everybody will be doing it. Well, it is four years later and I gave up saying that…..I guess I was more enthusiastic than the average dealer or reseller. What I would tell you is that if you get into MPS today—really get into it with a business plan and focus—you are still an early adapter. The revenue and profit opportunities are great. But in the long term we will all be fighting over a smaller pie so don’t hesitate…..get your outsized slice today!
Strategy Development is a consulting and training firm that can help you get more than your share of the MPS space. Whether you are a manufacturer, distributor, or reseller we’ll help you achieve success (http://www.strategydevelopment.org)
Add yourself as a follower to this blog and join the Linked In Group, “Print Management”
Sunday, June 21, 2009
Still Wondering if A4 Will Impact the Industry?
Sharp(R) Frontier Series Powers Company Into the Color MFP Segment 3'S Top Position in Leading Market Research Firm's US Quarterly Hardcopy Peripheral Tracker
First Quarter Shipment Results Show Sharp's Dramatic Market Foray Has Resulted in Increased Market Share as Well as Higher Overall Market Sale
-- 06/05/09 -- Sharp Imaging and Information Company of America (SIICA), a division of Sharp Electronics Corporation, today announced that they have finished with the highest overall United States market share for 31-44ppm* color MFPs** in Q1 2009. This data was made available by IDC, a premier global provider of market intelligence, and shows a dramatic increase in unit sales by Sharp over last year; particularly in the A4 subcategory of the same speed range, where SIICA was able to capture major market gains in less than two quarters.
Sharp's strong performance in the category was bolstered by the introduction of the company's award-winning Frontier Series A4 MFPs. According to the report, in just less than two full quarters, Sharp was able to move from having no presence in the color A4 31-44ppm color MFP segment, to a 40% share. This explosive growth, coupled with continued strong sales in the A3 sales, helped Sharp gain the largest percentage of overall 31-44ppm color MFP* sales for Q1 2009. In fact, the entry of the new Frontier Series helped to nearly double the total number of A4 31-44ppm color MFP units sold by all manufacturers between Q1 2008 and Q1 2009.
"Despite a challenging economic climate, Sharp continues to innovate and introduce new products that revolutionize the way companies work," said Ed McLaughlin, president, Sharp Imaging and Information Company of America. "This innovation can not be overlooked, and companies are finding products such as our Frontier Series help them work more efficiently and economically. In addition, dealers have found that the A4 Frontier line is fitting in nicely into their customers' workgroups without taking away from A3 sales. It speaks volumes about how smart our dealers are and the need for truly innovative new products as we continue to move forward."
Sharp introduced the MX-C311, MX-C401, DX-C311 and DX-C401 models as part of the Frontier Series MFPs in Q4 2008 and the DX-C310 and DX-C400 in Q1 of 2009. These units feature digital color copier, network printer and scanner capabilities in a single MFP, and a unique design that makes them aesthetically pleasing when placed directly in the workgroup. Sharp's newest A3 devices include the MX-4100N, MX-4101N, and MX-5001N, which were introduced in Q1 2009.
With Frontier, Sharp has successfully leveraged the Sharp OSA® development platform to change the MFP from a print/copy device into an IT document management system. Sharp A3 and A4 MFPs feature Sharp OSA technology, making them truly customizable; a brilliant 8.5" touchscreen panel for easy operation; and Sharp's award-winning security suite, which provides a multi-tiered system that protects data at every step of the document cycle. Sharp A3 MFPs also feature a retractable keyboard as a standard feature -- something not found on any other A3 MFP.
McLaughlin continued to say, "Sharp remains dedicated to producing a wide range of high quality MFPs that are changing the competitive landscape and giving our dealers the most comprehensive product line available."
For information about the complete line of Sharp MFP products, contact Sharp Electronics Corporation, Sharp Plaza, Mahwah, N.J. 07495-1163, or call 1-800-BE-SHARP. For online product information, visit Sharp's Web site at sharpusa.com.
*Based on letter speeds for Segment 3
**Source: IDC US Quarterly Hardcopy Peripheral Tracker, Q1 2009 for Laser Multifunction (print and at least one other function) and Single-Function Printers shipments.
First Quarter Shipment Results Show Sharp's Dramatic Market Foray Has Resulted in Increased Market Share as Well as Higher Overall Market Sale
-- 06/05/09 -- Sharp Imaging and Information Company of America (SIICA), a division of Sharp Electronics Corporation, today announced that they have finished with the highest overall United States market share for 31-44ppm* color MFPs** in Q1 2009. This data was made available by IDC, a premier global provider of market intelligence, and shows a dramatic increase in unit sales by Sharp over last year; particularly in the A4 subcategory of the same speed range, where SIICA was able to capture major market gains in less than two quarters.
Sharp's strong performance in the category was bolstered by the introduction of the company's award-winning Frontier Series A4 MFPs. According to the report, in just less than two full quarters, Sharp was able to move from having no presence in the color A4 31-44ppm color MFP segment, to a 40% share. This explosive growth, coupled with continued strong sales in the A3 sales, helped Sharp gain the largest percentage of overall 31-44ppm color MFP* sales for Q1 2009. In fact, the entry of the new Frontier Series helped to nearly double the total number of A4 31-44ppm color MFP units sold by all manufacturers between Q1 2008 and Q1 2009.
"Despite a challenging economic climate, Sharp continues to innovate and introduce new products that revolutionize the way companies work," said Ed McLaughlin, president, Sharp Imaging and Information Company of America. "This innovation can not be overlooked, and companies are finding products such as our Frontier Series help them work more efficiently and economically. In addition, dealers have found that the A4 Frontier line is fitting in nicely into their customers' workgroups without taking away from A3 sales. It speaks volumes about how smart our dealers are and the need for truly innovative new products as we continue to move forward."
Sharp introduced the MX-C311, MX-C401, DX-C311 and DX-C401 models as part of the Frontier Series MFPs in Q4 2008 and the DX-C310 and DX-C400 in Q1 of 2009. These units feature digital color copier, network printer and scanner capabilities in a single MFP, and a unique design that makes them aesthetically pleasing when placed directly in the workgroup. Sharp's newest A3 devices include the MX-4100N, MX-4101N, and MX-5001N, which were introduced in Q1 2009.
With Frontier, Sharp has successfully leveraged the Sharp OSA® development platform to change the MFP from a print/copy device into an IT document management system. Sharp A3 and A4 MFPs feature Sharp OSA technology, making them truly customizable; a brilliant 8.5" touchscreen panel for easy operation; and Sharp's award-winning security suite, which provides a multi-tiered system that protects data at every step of the document cycle. Sharp A3 MFPs also feature a retractable keyboard as a standard feature -- something not found on any other A3 MFP.
McLaughlin continued to say, "Sharp remains dedicated to producing a wide range of high quality MFPs that are changing the competitive landscape and giving our dealers the most comprehensive product line available."
For information about the complete line of Sharp MFP products, contact Sharp Electronics Corporation, Sharp Plaza, Mahwah, N.J. 07495-1163, or call 1-800-BE-SHARP. For online product information, visit Sharp's Web site at sharpusa.com.
*Based on letter speeds for Segment 3
**Source: IDC US Quarterly Hardcopy Peripheral Tracker, Q1 2009 for Laser Multifunction (print and at least one other function) and Single-Function Printers shipments.
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