It’s been a long month as this is my fourth and last dealer show of the year. And what a show! Konica Minolta has been busy to say the least and their efforts have not gone unrewarded.
After a nice welcome event the first night, it was down to business Monday morning with the keynote, which of course opened with Executive of the Year (according to our friends at The Cannata Report) Rick Taylor, President and COO of KMBS, starting things off. Rick’s presentations have always been some of the most enjoyable and he did not disappoint.
Rick got right down to it, providing a crowd of about 325 dealers with a business update. Here are some highlights from the last year:
• Total revenue is up 6%
• Unit sales are up 9%
• Software solutions revenue is up 44%
• IT Services are up 59%
• Dealer vs. branch revenue is now 52% vs. 48%
• Page volume is up (yeah, that was a surprise to me too)
While Konica Minolta develops products and services in many areas, business technology accounts for 75% of their revenue.
Next, President and CEO of Konica Minolta, Inc. Masatoshi Matsuzaki took the stage to continue the story. Mr. Matsuzaki went on to discuss how “Konica Minolta has one of the largest and most loyal dealer networks in the world.” He mentioned some areas Konica Minolta is focused on, including security and SAS. According to Mr. Matsuzaki, “SAS is another area headed for continued growth.”
Rick then came back up to tell us more about Konica Minolta and where they are going. This year will be 10 years since Konica and Minolta came together to create one of the leaders in our industry. He told listeners that Konica Minolta needs to continue to evolve into an information management company. He noted that it’s about identifying opportunities, as he referenced data showing the global economy will grow 40% by 2020, which he acknowledged is “an awesome opportunity for all of us.” He then said, “We are going to stay committed to the core business,” and “everything we do for the foreseeable future is going to drive print.”
He did go on to say, “I don’t want to bum anyone out, but there is going to be less print.” Konica Minolta, like other companies (Toshiba marketing display technology, Ricoh and their white boards, etc.), needs to find new opportunities for down the road. He then announced that Konica Minolta is going to become the first vendor in our channel to offer commercial 3D printing.
Other items of interest from the keynote included:
- Konica Minolta Inc. is opening three business innovation centers (Japan, US and England)
- Increased headcount coming in both IT and dealer organizations
- Online executive management curriculum will be offered to dealers through Bluepoint Leadership and Development
- KM is combining multiple support centers for a new customer interaction center that will create a “world-class” customer experience
Rick mentioned that dealer trust is a big issue that manufacturers still need to address so he announced that Konica Minolta will work with Business Technology Association (BTA) council Bob Goldberg to review all KM dealer agreements to make sure they’re fair for both parties. He called this the “Just In Case Rick Taylor Gets Hit by a Bus” program and he wants to make sure dealers understand KM’s commitment to them so they can increase their confidence in KM as a partner, not simply a technology vendor.
It was then Senior VP Kevin Kern’s turn to take the stage with product updates. As Konica was woefully behind schedule at this point due to the length of the presentations (not a bad thing, just not enough time allocated), he blew through his slides so fast my head was spinning.
Kevin began with discussion around Konica Minolta’s EnvisionIT initiative, which is their highly focused vertical market approach to the industry. EnvisionIT began with one vertical market, healthcare, which we initially helped them develop. They now have seven –
Finance
- Legal
- Education
- Healthcare
- Manufacturing
- Government
- Production Print
The vertical markets are approached with solutions – some theirs, some through partners that address issues like workflow, mobility, customer profitability, new revenue solutions and more.
Kevin discussed their cloud services and their 1,200 cloud servers already in operation. He also talked about new products such as the newer e-Series panel displays, common accessories across models, new options designed to increase hardware margins and a new KM developed A4 platform that will finally put KM user interfaces on this class of product – a definite shortcoming of their current A4 lineup.
Production products were already previewed at PRINT13 such as high-speed inkjet for transpromo printing, improved light production products with extended service intervals, the new bizhub PRESS C1100 color series at 85/100 PPM, more paper handling capability and more.
Another area covered was the continually expanding bizhub Marketplace, KM’s version of an App store where customers can find useful solutions and apps to place on their bizhub control panels.
After lunch, Senior Vice President Sam Errigo discussed KM’s solutions in more detail. He spent a great deal of time on EnvisionIT, KM’s cloud services offerings, new solutions partnerships, connectors to new solutions and more depth on the vertical approach.
Following Sam was Executive VP of Dealer Sales, Alan Nielsen. Alan talked about how KM has right sized the dealer channel, cancelling or not renewing 184 dealers over the last five years, bringing the current total to 334. While this is a much lower number than other significant manufacturers, Alan talked about how the dealers they have now are very focused on the KM products and how they’re actually selling a lot more product through fewer dealers. According to Alan, “this is by far the best performance in our industry.” Their margins are also really good too from what I’m told.
Later, I finally hit the product fair. This was without a doubt the nicest showroom floor I’ve seen to date and they obviously paid handsomely for the layout. It was a definite wow and whoever was in charge of pulling this together should be very proud because it looked fantastic. Like last year, the floor was vertically focused with emphasis on mobile, production and new products that were spread throughout.
So here’s my takeaway from the show. All Covered, the IT company KM acquired about three years ago is gaining traction. KM says 20-25% of dealers are now participating in this program. In case you’re not familiar with it, All Covered provides IT services, including helpdesk to branches and dealers and essentially allows their dealers to sell IT services to customers with very little investment on their end. We spoke to Tom Minor, President of M&M Sales Company in Iowa who told us that he’s had great success in this program and anticipates 10-20% YOY growth.
Nick Pegley, VP Marketing for All Covered told us that they now account for 10% of KMBS US’s headcount. They’re also starting a similar program in Europe, although there isn’t an All Covered type of company to buy, at least not yet. Rather, they’re buying individual IT companies and they currently have four over there.
KM has made 13 acquisitions under All Covered in the last three years. They are in 60 locations in 25+ cities, they run two cloud data centers, have 500 engineers, and revenue last year was $150 million, up from $30 million when they were acquired three years ago.
KM is finally filling in the A4 product line with their own products and the integration with the rest of the KM line should make dealers pretty happy.
Cloud services, both through All Covered in terms of networking, servers and off-site back-up, as well as cloud services integrated into solutions, are a huge area of opportunity.
While I’m not convinced commercial 3D printing will succeed in our channel, the fact is, dealers do have a support mechanism for these products in that they require service, they offer a strong annuity stream and a nice pop for the hardware sale. We’ll see how this rolls out but it should be exciting to watch.
My only complaint from the show was that it was so busy that once they got behind in the general session, they never seemed able to catch up. However, the bottom line is, the only reason they were in that position was they had so much to talk about and that’s a good thing.
