It’s that inevitable time of year again, when we review the events of the previous year and look ahead to the next one. The imaging industry was clearly a mixed bag in 2012. It almost felt as if the industry collectively held its breath as signs of a major industry shift (declining page volume, reduced unit shipments, and increased margin pressure) continued to negatively impact industry financials. In fact, industry revenue fell by approximately 4 percent from 2011.
Members of the vendor community appear to be taking one of three basic approaches to this change: by shifting to a managed print services (MPS) model with a significant focus on advanced MPS (Xerox, Lexmark, and Ricoh), shifting to a broader managed services or technology services approach (Konica Minolta, OKI Data, and HP), or offering more of the same basic MPS and competing primarily on technology.
In fact, the separation between vendors that are offering basic MPS and those offering advanced MPS is so significant that this year Photizo Group is breaking its MPS market forecast into two sections—a basic and an advanced MPS market size and forecast. The gulf between the haves and have-nots is increasing, but what will this mean for 2013? (More on this later).
In the product space, Memjet gained significant traction this year as mainstream OEMs began adopting its technology. HP gave early indications of its next product thrust with new page-wide-array technology announcements for office environments (this is the same technology used in HP’s defunct Edgeline series and very successful Inkjet Web Press products). Lexmark’s acquisition spree of software companies slowed down as it focused on integrating its five recently acquired businesses into its core business—or at least figuring out how to offer a unified sales approach. Software companies focused on developing mobile print platforms, while the high-end market continued to shift its focus into integrated workflows.
In terms of geographies, political transitions in China and the global economic slowdown are reducing the growth rate in China, a market that many OEMs were looking to for growth. Brazil continued to exhibit strong performance across many fronts. North America effectively stalled, while Europe was impacted heavily by the economic climate for traditional sales, although MPS sales at the enterprise level remained strong. The figure below shows the expected growth trend for MPS by geography for the next several years.
In many ways, the channel scene was most chaotic. In North America, being a dealer, an IT VAR, or an MPS provider is no longer a unique identifier. Copier dealers are offering managed services. IT VARs are offering MPS. Channel dealers are no longer asking themselves what kind of providers they are, but rather what they can provide. It’s all about capabilities, and evolving capabilities faster than your competitors.
MPS in Europe is poised for dramatic growth in the channel. We were surprised this year when our European MPS conference turned out to be larger than the global conference in North America. Pockets of MPS in Brazil, India, and South Africa are beginning to accelerate the rate of change in these countries. While the channel evolves, OEMs are struggling to find the right channel partners and the right strategies to engage these channel partners as the balance of power shifts to the channel.
What does 2013 hold? We think 2013 is going to be the beginning of the next major churn in the imaging market. The following are a few of the major expectations:
Offering MPS has ceased to be a differentiator. In 2013, the gulf will widen between vendors who offer basic MPS and those who offer advanced MPS. Customers are increasingly going to favor vendors who can truly deliver advanced MPS, consistently, on a global basis.
The European channel will rapidly catch up with North America in terms of MPS adoption. The question is, who will be the preferred OEM partner?
Page-wide-array ink jet from HP finally will drive ink jet velocity in business—maybe.
Several competitors will be forced to consolidate as they face the reality of not having critical mass to compete globally or even nationally.
Page volume and unit volume will continue to decline. Customers increasingly will shift their focus to how vendors can make more of their processes digital versus paper-based. The figure below shows the rate of decline in just one year.
These trends indicate that 2013 will be the year of the storm—maybe not the perfect storm, but there certainly will be challenging waters. For those who have charted a clear new path to navigate the storm, it could be a year of fast sailing and separating from the competition. For those who are following the same course, it will be a year of rough sailing.
