An old curse says, “May you live in interesting times.” The idea being that boring times were times of security and peace and interesting times more associated with trouble and danger. In our industry, I am concerned that interesting times lie in our near future.
Portents of the Coming Change
I have had the opportunity to visit both GraphExpo and the BTA meeting in Asheville recently, and I walked away amazed at the things I saw and heard. At GraphExpo, it seemed that several of the manufacturers devoted more booth space to devices outside of the traditional production print environment. There was also a significant shift toward inkjet devices both in the high-end industrial printing environment as well as toward specialty devices like wide format.
At the BTA meeting one recurrent topic was Managed Network Services (MNS). Both during the dealer roundtable discussion and during presentations this subject was addressed as an important opportunity to diversify the revenue stream for dealers and as a way to secure the dealer client relationship. Also at the event, Epson was showing off their WorkForce Pro series inkjet devices.
Cause for Concern
This leads to my concern for the future. With print heads that print the width of the page, and the changes in ink quality, we face the possible end of the toner-based machines in the near future. The major copier manufacturers are bringing this technology from the top down, and the traditional printer manufacturers are bringing it from the bottom up.
The page costs on some of the devices from Epson and HP on the low end are comparable to or cheaper than that of toner based systems. Both HP and Epson are reporting page costs under .01 for b/w and as low as .028 for color. These devices have duty cycles and throughput speeds comparable to MFPs, lacking only the finishing options.
Low TCO and Rich Feature Set
When computing the total cost of ownership (TCO), there is no comparison to the traditional MFP. These new devices are A3 capable and priced less than most manufacturers’ A4 devices. For example, Epson’s Workforce 4640 is an A3 device with reported page cost of .009 black and white and .024 color. Couple that with a $1,199 list price and it becomes a formidable competitor.
The new devices that are coming are very feature-rich, comparable to most of the more traditional products. HP and Epson both feature dual sided scanning through the ADF and support paper up to 13 X 19. These units include most if not all of the scanning capability found in traditional MFPs.
Most of the new devices also have a significant paper capacity. For example, the HP Pagewide comes standard with a 500-sheet tray plus the bypass. You can add anywhere from one to three additional trays. This paper capacity rivals most traditional A3 devices today.
On HP’s website, they are now previewing a finisher that has hole punching and stapling. They are also previewing new paper decks with capacity up to 4000 sheets of A4 paper. One other interesting item on their website is the concept of device as a service. The concept being that the client pays a per-seat license that can cover all of the devices the employee needs, including printing. They are definitely coming after the dealer’s business.
Impact on Our Industry
The reason these changes matter to our industry is its impact on our financial model. According to the standard model used, almost all of the profit for a dealer comes from its service department. We rely on machines that need routine preventative maintenance like replacing drums, developers and fusers. With none of these components used in inkjet technology, what happens to service revenue?
I spoke to a service manager recently who had just sold one of the HP Pagewide printers, and he told me the client declined a service agreement. The client stated that based on her usage of the device, it would not need any maintenance in the next three years. That perception may be typical of many customers in the future.
From HP the end user can purchase a three-year next-day exchange program for $349. If the unit breaks and can’t be resolved over the phone, HP will ship the client a replacement unit. How can we compete with that type of program and still make a profit?
Now Is the Time to Plan
While our current model still has some life left in it, we need to plan for the coming changes. We have a short period before the inkjet products completely replace our current products. They still lack the finishing components to completely replace our MFPs in the enterprise but I am sure those are on the drawing board.
As dealers, it is important to look at how you can increase your value to your client base. If possible, find new products and services that fit in your department’s skill set and try to widen and deepen your penetration of your current and future customers. Your survival depends on supplying products and services your clients cannot live without. If you can do that, the interesting times ahead may prove to be profitable and prosperous.
