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PRINT.IT
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ANALYSIS
The print industry, like many
industries, is on the brink of
significant change. Market
disruption, characterised by
intense competition, more
demanding customers and a
constantly shifting technological
landscape, is threatening the
legacy hardware-driven business.
As the print industry struggles with
declining print volumes, hardware
commoditisation, lower margins
and sustaining growth, vendors
are increasingly re-examining the
structure of their businesses and
looking for ways to deliver better
financial performance.
Consequently, the industry is
poised for a wave of acquisitions
and restructuring as vendors look to
adapt to new market demands and
shed assets that no longer meet
strategic needs. Lexmark and Xerox
are the latest to declare that they are
exploring strategic options. While,
typically, hardware companies have
relied on earnings growth to deliver
shareholder value, shrinking legacy
hardware markets have impacted
revenue, leading to acquisitions in
the software and services space.
Lexmark’s bid to expand its
enterprise software presence began
with its acquisition of Perceptive
Software in 2010. It has since made
13 software-related acquisitions, the
most recent being Kofax for $1Bn.
Meanwhile Xerox acquired ACS in
2010 to build its business process
outsourcing service capabilities.
This has paid off for Xerox, with
services now accounting for 57% of
its revenue.
Speculation is rife as to whether
Lexmark’s hardware business will be
acquired and if and when Xerox will
split into two separate technology
and services businesses – in a
similar way to HP’s split into HP Inc.
and Hewlett Packard Enterprise.
Whatever the outcome, the
market is undoubtedly set for
consolidation. All vendors are
navigating the same path and
trying to understand where the new
markets lie – the cloud, mobile,
big data and the Internet of Things.
Some vendors, such as HP and
Ricoh, are working to commercialise
their 3D printing technology – but
this is still a relatively nascent
market.
The shifting business landscape
may be daunting, but there are
some key opportunities for print
manufacturers to maintain, or even
enhance, their competitive positions:
n
Adapting to the ‘as-a-service
economy’.
The consumer preference
for services over products and
subscriptions over purchases is
permeating into the business market.
This is driven by increasing customer
demand for flexibility that will allow
them to take advantage of new
technologies. With an as-a-service
model, customers are not burdened
by significant upgrade costs and can
more accurately estimate the on-
going cost of access to technology.
Managed Print Services (MPS) is
already an established service model
in the market, offering a lucrative
recurring services revenue model,
along with increased customer
retention long after the printer
hardware sale. While the MPS
market is relatively mature in the
enterprise space, there are further
opportunities to tap into the largely
under-penetrated SMB market. For
the channel, digital services around
printer device diagnostics and
predictive/preventative maintenance
have significant untapped potential.
MPS vendors should drive further
innovation in their engagements
around cloud delivery, security and
mobility. These are key enablers, not
only for the as-a-service economy but
also for digital transformation.
n
Driving the digital transformation
journey.
Despite talk of its demise,
paper remains a key element of the
connected and collaborative office
workplace and still plays a critical
role in the business processes of
many organisations. However, paper
bottlenecks can hinder business
productivity and efficiency. Print
vendors are uniquely positioned
to connect the paper and digital
worlds and are developing stronger
expertise in workflow solutions
and services. In many cases,
leveraging investments in Smart
MFPs, which have evolved to
become sophisticated document
processing platforms, gives vendors
an opportunity to maximise the value
of their hardware offerings. Vendors
need to change legacy perceptions
of their brand and be accepted as
‘a trusted partner’ in the enterprise
digitisation journey. Business
process optimisation and workflow
capabilities will become a key point
of differentiation for vendors in
the industry, requiring a balanced
hardware, software and services
portfolio.
n
Exploiting the Internet of Things
(IoT).
All printers are things and
the connected Smart MFP is part
of the IoT landscape. Vendors can
exploit the enormous generation
of data to monitor actual customer
product and service usage. This
data enables manufacturers to
deliver better service performance
through predictive data analytics
(think proactive service and supplies
replenishment) and, by collecting
information about customer usage
of products or services, vendors
Louella Fernandes looks at what printer
vendors are doing to ensure their long-term
survival in a period of disruption.
Digital Disruption:
Opportunities for the
Print Industry
LouellaFernandes,
Associate Director, Print Services
and Solutions, Quocirca.
Continued...
