As we wind down the year, I think it is safe to say that 2011 was an interesting one for the print industry. Between the impact of currency, natural disasters, recessions, and civil unrest, it was hard at times to not view the market as snakebit, but in my opinion all of those hopefully short-term events took second stage to some very interesting technology and channel trends. And the opportunities provided by these transitions suggest that 2012 will be a fun one.
With that, and in honor of the SportsCenter Top Ten List, which reminds us each night that it doesn’t matter if you win or lose, it’s how you look in the highlights, I give you the top ten printing themes, trends, and events of 2011.
10# Inkjet Technology
Yes Inkjet Technology. While some readers with a strict office focus may be surprised to see inkjet technology crack the top ten, it had a major impact on the 2011 printing market from a variety of angles and promises to do the same for years to come.
It wasn’t more than a week into 2011 that I stumbled upon my first Memjet printer, quickly snapping photos and jotting down specs before the Chupacabra of the printing industry ran off into the Nevada desert. But this time, the page-wide array freak of nature was here to stay. The debut of Lenovo’s Memjet-based RJ600N at CES was really the first in a procession of partnership announcements and product launches throughout 2011, targeting a variety of uses with a focus on smaller and emerging markets. And although Memjet’s 2011 impact was not as big as the buzz it created, the company and its technology showed plenty of potential for 2012 and beyond, especially as it partners with larger vendors and begins selling into established markets.
2011 also brought the second generation of Xerox’s solid ink-based ColorQube series, providing modest spec changes, but interesting adjustments to its hardware cost and highly-touted CPC structure (in opposite directions). Although the ColorQube series hasn’t changed the game yet, this year brought the first evidence of electro photostatic vendors testing their own hybrid billing capabilities, suggesting that the line’s tiered billing plan certainly captured competitors’ attention.
Inkjet technology continued to have a huge impact on the production market in 2011, as inkjet systems increased in number and brand, while approaching size and pricing levels that made the technology applicable to more mainstream commercial printers. We also saw the printing industry’s household names bring inkjet technology further into their strategy, as Ricoh finally began its integration of InfoPrint, Konica Minolta signed on a Screen Trupress reseller, and Canon’s Oce portfolio expanded to include everything except continuous feed, but its new VPS imagePRESS models at least allowed them to sell into the same Prismasync environments. Last but not least was Xerox’s new waterless ink-based CiPress 500 system, which touts an interesting value proposition based on its ability to print on lower-cost plain paper, and drew a heck of a crowd at Graph Expo.
Meanwhile the “enterprise” inkjet AiO segment continued to shine as a bright spot for inkjet vendors. Although the inkjet players’ definition of “enterprise” is a bit different than my friends’ in the MFP or MPS worlds, these SOHO-class devices were a bright spot for vendors. Enterprise inkjets still make up a relatively small piece of the inkjet pie and face some challenges sneaking their low ink yields and paper capacities past IT managers. However, there is no doubt that the segment offers both steady revenue and profit growth now and in the coming years, making it a potentially disruptive force for low-end color laser technology.
#9 The Yen
Like my 2010 list the nine spot is devoted to the strength of the yen. And like last year, most manufacturers would agree that the yen had as big of an impact on their financial performance as any other event or trend. Although out of mind for many, the strength of the yen has impacted almost all of us including the Japanese manufacturers selling to the West, the US subsidiaries that have to negotiate with Japan, the many Western vendors who source engines from Japan, and the dealers and end-users that pay more because of it. Now more than ever, it’s a global economy.
8# Global Imaging Gets Aggressive
Xerox’s Global Imaging Systems subsidiary has arguably been the most active direct sales organization in recent years, executing a number of high-profile acquisitions throughout the recession, but 2011 brought some moves that made previous years seem quite conservative.
Like previous years, GIS proved to be the most aggressive US sales subsidiary, acquiring six dealers between April and August. However, it was during this acquisition spree that Global began pursuing a new avenue for growth. In early August gap intelligence learned that Xerox had begun transferring a number of its smaller direct accounts to GIS branches in 15 metros in a move that was intended to right-size its direct sales client base, while expanding the footprint of the targeted GIS branches. Xerox has since colored this transition as the first step towards a new reorganized direct sales structure that will allow its direct operations to focus on larger GDO (Global Document Outsourcing) accounts and GIS branches to serve clients on a more intimate local level.
Considering that servicing any size account costs 10 to 12 percent more through a direct organization than through a dealer-style organization (like Global) and that SMBs do not provide the scale to offset these costs, this move makes a lot of sense. Xerox of course did not invent this strategy, as similar economic motivations drove HP EMEA to transfer numerous direct accounts to its partners in preparation for its 2010 QuickPage launch, and will cause it to do the same with its acquired Printelligent accounts. However, Global’s positioning as Xerox’s SMB-focused direct organization provides the vendor with a unique ability to shed less-profitable smaller accounts from its enterprise direct division, while still keeping the business in the family. That said, I’d bet Xerox’s partners and agents would prefer HP’s version.
Global also proved that it is willing to invest in talent in addition to dealerships, as the sales subsidiary landed recently-departed Kyocera Mita America CEO Michael Pietrunti in August, appointing him to the position of senior vice president responsible for acquisitions, corporate service, and marketing. And given Pietrunti’s experience at Kyocera Mita and Sharp, the new GIS executive arrives with a unique knowledge of where some hidden opportunities exist and should be motivated to take advantage of a level of acquisition funding that was not available to him in his previous role.
7# March 11, 2011
In addition to the terrible human impact, the earthquake and tsunami that hit Japan on March 11, 2011 served as arguably the most significant outside influence on the printing market this year. The immediate impact of the earthquake and tsunami were quite visible as manufacturing plants quickly shut down due to structural damage from the earthquake and stayed closed as power, workforce, and infrastructure challenges lingered.
While initial levels of transparency regarding the impact of the disaster varied by manufacturer, nearly all vendors eventually admitted that inventory shortfalls were expected. Before long, dealers began experiencing these shortages first hand and messaging from the manufacturers shifted from maintaining a steady flow of new MFPs to keep pace with demand, to a more pragmatic goal of keeping sufficient inventories of key supplies and maintenance items in stock to ensure support for their current install bases.
Unfortunately, despite impressive efforts to get plants up and running, shortages of key parts kept many manufacturers from producing complete MFPs for some time, impacting inventories of specific product lines for as long as six months. While inventories of more sophisticated MFP systems were most impacted, we also identified significant shortages of laser printers and inkjet MFPs, as many “active” products were listed as backordered by May 2011, and by June 2011 channel inventories were nearly 70 percent lower than levels at the same time in 2010.
Looking back, vendors were able to successfully support their current fleets, and although the financial impact was still severe, by the start of the fourth quarter it appeared everything was back on track. I will leave it at that, and hopefully won’t have to include the impact of the Thailand flooding in my 2012 retrospective.
#6 – It’s a Long Way From the Top
To the delight of early Occupy Wall Street protesters, 2011 proved to be a bad year for the print industry’s leadership, as top US executives from Sharp, Kyocera Mita, and Ricoh vacated their respective offices between June 1 and July 25.
Sharp led-off this trend as Ed McLaughlin stepped-down after nine years as SIIC’s CEO in June. While Sharp made a number of management adjustments in the weeks preceding McLaughlin’s resignation, perhaps in preparation for this move, the vendor became the last to actually fill its executive vacancy, when it named former American Express and Samsung executive, Doug Albregts, to the role in late November.
July brought the departure of Ricoh U.S. President and CEO Jeff Hickling. However, rather than naming a replacement, Ricoh Americas Chairman and CEO Kevin Togashi eliminated the position, assuming control of all U.S. sales and operations. This move both followed and preceded a number of other executive announcements and departures at Ricoh, that initially brought an influx of IKON’s leadership into Ricoh’s executive ranks, but has since evened out.
By late July, Kyocera Mita America President and CEO, Michael Pietrunti resigned to pursue other interests. Kyocera Mita was able fill KMA’s president role with Kyocera Mita veteran Norihiko Ina within three weeks, but by late August Pietrunti emerged in a senior vice president role at Xerox’s Global Imaging Subsidiary, suggesting that this may be the one departure that was voluntary. Or at the very least, Mr. Pietrunti was the most successful at landing on his feet.
#6b – Leo and Tito’s Summer to Forget
Going into the 2011 season, things were looking-up for my favorite baseball team and one of my favorite vendors. The Boston Red Sox tore a few more pages out of its checkbook during the offseason, compiling one its strongest teams in years and emerging as an early title favorite. Meanwhile, HP began the year with significant momentum, under the leadership of a new CEO and touting a new ecosystem strategy, intriguing cloud and tablet roadmaps, and enjoying a big head-start in the MPS and mobile printing arenas.
However, neither Red Sox manager Terry “Tito” Francona nor HP CEO Leo Apotheker would be around to lead their respective teams into 2012. And their exits were not pretty. So unattractive, in fact, that they are best communicated in a timeline.
Leo and Tito Timeline:
March 9, 2011 – HP reveals plans to install WebOS on every PC it ships, touts the strategic advantage of its ecosystem ambitions, and increases dividend by 50 percent
March 31, 2011 – Red Sox welcomed home from positive Spring Training by a front page headline on the always sensational Boston Herald, touting them as the best Sox squad ever.
April 16, 2011 – Red Sox start 2-10, Dustin Pedroia reminds everyone that it’s a 162 game season.
May 17, 2011- HP cuts full-year forecast on poor PC demand
May 24, 2011 – HP acquires Printelligent, setting stage for major channel MPS overhaul
May 31, 2011 – Red Sox surge throughout May, climb to 35-25
July 1, 2011 – HP launches TouchPad, with significant fanfare
July 31, 2011 – Red Sox go 20-6 for July, everyone is happy.
August 1, 2011 - The TouchPad expands to 11th retailer, giving HP a second place 12 percent Tablet shelf share.
August 18, 2011 – HP reveals plans to acquire Autonomy for $10.3 billion, discontinue all WebOS products (including tablets), and evaluate sale or spin-off PC unit, PSG.
August 31, 2011 – Pitchers Josh Beckett, Jon Lester, and John Lackey eat chicken – Lackey double-checks his contract for a weight clause
September 22, 2011 – HP fires Leo and names Meg Whitman as CEO.
September 28, 2011 – Red Sox lose 18 of final 24 games to miss playoffs by one game
September 30, 2011 - Tito Francona resigns under pressure from management. Bostonians tell each other “wait till next year”, watch the Francona smear campaign in disgust, and thank god for the Patriots.
The good news for HP is Meg Whitman quickly did her best to reverse everything she could and appears to have brought the company back on course. And although both teams are back to “waiting till next year,” HP and Red Sox fans alike are not overly optimistic to think that next year could be worth the wait. Both teams have a solid fan base, a strong lineup, plenty of talent, and no shortage of money – all of which are vital in succeeding in both business and baseball.
In other good news, this is the last of 2011’s top ten that could be viewed as a negative event.
# 5 – A4 Push Continues
A4 MFPs maintained their momentum in 2011, as key market trends continued to play in the segment’s favor and remaining traditional A3 players finally brought their own “copier brand” enterprise A4s to market.
This trend began with a trickle of relatively unambitious copier brand A4 desktops starting roughly ten years ago, followed-by Sharp’s Frontier experiment in 2008 and 2009, but 2011 finally brought the first truly enterprise-class A4s from Ricoh, Canon, Konica Minolta (in Europe), and Fuji Xerox (in Asia). And although US versions of the new Konica Minolta and Fuji Xerox (via Xerox) models have yet to materialize and more enterprise A4s from traditional A3 vendors are surely on the way, the last eighteen months still brought a 35 percent increase in active “copier brand” A4 MFPs while the same vendors’ active A3 lines consolidated by 3.5 percent.
There is no doubt that each of these trends will continue, given the roles of MPS and emerging markets on most vendors’ priority lists and in light of ongoing page volume trends. This shift is very exciting (at least to me), and should be seen with significant anticipation among vendors and dealers looking to gain share as the transition creates new opportunities.
However, questions still remain regarding how these “copier” vendors plan to use their growing A4 portfolios. Ironically, the primary goal for many of these highly-anticipated A4 models is to protect the vendors’ A3 install bases, despite the many factors that prompted them to expand within the A4 segments in the first place. Given the traditional “copier” players current install bases and channel structures, it is hard not to blame them for using these highly-anticipated models for more tactical purposes, but there is little doubt that the market will be far kinder to vendors that embrace a more organic A4 strategy going forward. Meanwhile, the traditional “printer” players that have been cleaning-up by providing dealers with A4 supplements to their A3-centric lines had better begin preparing for far more well-rounded competition from their copier-player adversaries.
#4 The Wild West of Cloud & Mobile
Prompted by the emergence of tablets and the growing mainstream relevance of cloud computing, OEMs and third party vendors rushed cloud and mobile printing solutions to the market in 2011 to ensure connectivity with the new frontiers of the network. While 2011 will surely be viewed as the early days of cloud and mobile printing, the technologies have come a long way since last year, when cloud and mobile were also the #4 theme on gap’s list, but the number and capabilities of available solutions were far less impressive.
In the last year, the cloud and mobile printing market went from a handful of offerings from HP, Xerox, and Ricoh, who were met halfway by industry outsiders like Google and Apple, as well as third parties such as EFI and Cortado. After a busy 2011, mobile print offerings are available from nearly every vendor and a growing number of cloud printing and scanning solutions have emerged across product lines and pipelines.
Now what this trend needs is one of the quickest standardizations in history, as the idea of several dozen proprietary solutions gaining acceptance in today’s mixed-fleet, mobile, and interconnected environments will not work. One possible step towards this standardization may have occurred in October, when HP took a page out of its 1984 playbook and allowed Toshiba to add ePrint to its MPS offering. Twenty-seven years after HP’s Printer Command Language (PCL) became the desktop printing standard, paving the way for network printing as we know it, ePrint (aka ePCL) could be headed the same direction. However, it is extremely doubtful that competing vendors are willing to hand that to HP just yet, suggesting that standardization could be driven through the current loosely assembled cloud printing alliances or even a widely-partnered third party such as EFI. Either way, before standardization happens, 2012 is sure to bring its share of new mobile and cloud printing developments, let’s just hope that the actual act of cloud and mobile printing grows at a similar rate.
4# – Tablets
The impact of tablets will of course go way beyond the above mentioned race to build the best mobile and cloud printing solutions. In just 18 months tablets have changed the way many consumers and workers view and communicate information, and will certainly change their preferences regarding how and what they print. The same can be said for marketers and publishers, who now have yet another alternative and often lower cost means of electronically reaching customers.
Who knows, it could be a fad…
While convenience and value were already keys to the office and commercial print value proposition, these two factors will play an even greater role going forward as tablets continue to penetrate the home and office.
Despite device consolidation and centralization’s role as a cornerstone MFP and MPS sales strategy, tablets could very likely drive a device decentralization trend, as the idea of a tablet-equipped worker hiking across the office to wait in line for their job at the centralized copier seems highly unlikely. And if that print-out is intended for mere convenience purposes, it might not even happen in the first place.
On the production printing side, mobility has initially hit offset printing the hardest, but production vendors and print service providers are placing a similar focus on convenience and value, ranging from how jobs are ordered and produced, how they can be personalized, and how they can link their output back to the mobile device, ensuring that the printed page plays a key role in the digital ecosystem.
As part of my obligation to the industry, I have to note that the increased penetration of tablets will create billions of new pages of printable data, now the industry just has to fulfill its obligation to ensure that these prints can be made as conveniently and with as much value as possible.
# 2 – Channel MPS
Channel MPS was a major trend throughout the year, as vendors hustled to assemble and launch new programs with the intentions of guiding their partners’ transformation into MPS providers and further strengthening their channel relationships. Needless to say, Channel MPS has been a learning experience for many vendors, some of which have struggled trying to find the right balance between their resellers’ needs and their own. And although it’s likely that many vendors will finds plenty of ways to improve on their 2011 channel MPS offerings, the year certainly brought a number honest attempts to find that balance. While a number of vendors launched or expanded their channel MPS offerings this year, including notable moves from Canon and Muratec, the most aggressive channel MPS initiatives came from HP, Xerox, and Ricoh.
Xerox bookended its well-received PagePack 3.0 offering with the introduction of its eConcierge and XPPS programs to US dealers. While not exactly MPS, eConcierge provides resellers with a co-branded e-commerce portal, through which their clients can order genuine supplies for all Xerox and non-Xerox devices and receive free service for Xerox models with continued consumable orders. Perhaps more importantly, eConcierge introduces partners to more consultative print service practices, in hopes of bringing its less sophisticated resellers up the value chain. Xerox also began the US introduction of its mid-market focused XPPS program, filling-out the high-end of its US channel MPS offering. First launched in Europe last year, XPPS is essentially a suite of tools that are largely based on components of Xerox’s own direct MPS offering combined with recent acquisition Newfield IT’s Asset DB program, encompassing nearly every component of an mid-market MPS engagement including sales and leasing, discovery and monitoring, assessment and optimization, service, etc. With the two new offerings, Xerox’s often referred-to “MPS Continuum” claim now has far more clout on the channel-side than before and at the very least, should help to recruit new resellers, grow the capabilities of existing resellers, and fortify the vendor’s channel sales ecosystem.
2011 also brought the launch of Ricoh’s chaMPS program, significantly expanding its channel MPS offering. The chaMPS program is based around the same core change management and continuous improvement themes that Ricoh introduced through its direct MDS program two years ago and provides its already-established methodologies, resources, and services through a variety of free and fee-based a la carte options. While Ricoh is certainly not the first vendor to offer its dealers a turnkey MPS/MDS program, chaMPS is arguably among the most complete in terms of the scope of features provided. However, it also appears to carry the most up-front cost requirements, which certainly raised some alarm among the dealers, and the variety of components appears to have created a new challenge, as dealers initially struggled to ascertain which chaMPS components were essential and which were “nice to haves.” That said, in the spirit of Ricoh’s continuous improvement MPS philosophy, the vendor will surely continue to refine its channel MPS initiative as we move into 2012.
HP’s channel MPS moves were largely internal in 2011, but should have a significant impact on how the vendor supports its partners going forward. Kick-started by its acquisition of Printelligent in May, HP’s Laserjet Enterprise Services (LES) division has undergone quite a transformation, combining Printelligent’s personnel, toolsets, and processes with its own to create the new HP Partner Print Services unit. And while the new unit did not make its first impact on the channel until November when HP introduced its first Partner Print Services offering to resellers, more programs with a mix of Printelligent, LES, and HP Managed Enterprise Solutions (Enterprise Direct) DNA is surely forthcoming.
# 1 – Transition to Services
Once again honored with the top spot in gap intelligence’s annual printing industry review is the transition to services that is taking place across the industry. Considering that we celebrated IBM’s 100th year in existence in 2011, marked by more than a few noteworthy services transformations, it would be inaccurate for me to call this a new trend, but the changes in 2011 were certainly unique and very telling of where we are headed.
With the benefits of previous service expansions by IBM well-proven, and the results of similar moves from HP and Xerox growing increasingly clear, 2011 brought an influx of non-printing services activity from vendors across the market, resulting more than a few reorganizations, acquisitions, and rebranding initiatives. Heck, even the self-proclaimed MPS “thought leaders” began building-up their enterprise services and solutions credentials. And why wouldn’t they? Services present significant opportunities for vendors to grow their business and creates a bridge to what they hope is where the future will be.
Canon and Konica Minolta’s US subsidiaries executed two of the most interesting services expansions of 2011, proving each with a new path beyond printing and imaging and the prospect of an even more interesting level of independence.
Konica Minolta started the year with its January acquisition of managed IT services provider All Covered, adding the 22-location SMB-focused provider to its largely SMB-focused direct and indirect printing sales and service force. Within its first year as a Konica Minolta subsidiary, All Covered expanded to five additional markets through acquisitions, which is even more notable when contrasted with the vendor’s single US dealer acquisition. While Konica Minolta has provided few details on cross-selling activity between its IT and print client bases, the vendor originally revealed that it plans to follow a playbook that is very similar to how it operated the Hughes Callahan integration. The company reports that it was able to successfully migrate about 80-percent of Hughes Callahan’s IT services clients to Konica Minolta-brand output solutions. Therefore, the believed plan going forward is to introduce the All Covered team to Konica Minolta customers and vice versa. Meanwhile, Konica Minolta indicated that it would provide All Covered’s IT services through its authorized dealers, allowing these partners to expand their offering to their clients.
Canon USA took a different route in its services transition, opening the largely mid-market and enterprise-focused Canon Information & Imaging Solutions (CIIS) subsidiary without the aid of any acquisitions, while maintaining a connection to its imaging heritage. The primary focus of CIIS is to accelerate the growth of Canon’s service and solutions, first through expanding its document solutions business into IT services, followed by the commercialization of Canon’s cloud, medical imaging, display, and “new” technologies. And although Canon made this ambitious move without acquiring an existing provider, the vendor is certainly not going it alone, as much of its cloud infrastructure is based on technology from its long-time partner Fujitsu and two of its early offerings come as a result from its partnerships with SalesForce and Oracle. Although Canon surely has cross-selling in mind, and will see an immediate print benefit from the Salesforce offering, the vendor is still evaluating how the printed page fits into its CIIS roadmap and appears quite pragmatic regarding how it will be sold, careful not to jeopardize the success of CIIS in the name of selling more MFPs.
Unlike the services transitions that have taken place in recent years, which were made by US-based companies with far less of a reliance on manufacturing, these expansions could bring a significant change in the way Canon USA and KMBS USA do business. While both will continue to operate within the confines of their greater worldwide organizations and still source both printing and other technologies from Japan, they will become inherently more financially and operationally independent as we head into 2012. It is also likely that other vendors will follow a similar path next year, possibly changing way the print industry does business.