From left, John Reilly, Rob Reddy, Pete Kowalchuk, Kris Tanner, Sam Yoshida and Chuck Wingard
Shinichi “Sam” Yoshida was honest and upfront with the press and analysts who gathered Feb. 11-12 at the Waterstone Resort & Marina in Boca Raton, FL, for the annual state of the Canon conference event. Canon’s story is a bit “boring,” because the global manufacturing leader continues to perform above the rim from both a financial perspective, as well as in delivering solutions to its customers.
The tongue-in-cheek estimation aside, it has been an eventful year since Canon last gathered the press in the Sunshine State. Last July, Toyotsugu Kuwamura, executive vice president and general manager of Canon U.S.A.’s Business Imaging Solutions Group (BISG) and chairman and CEO of Canon Solutions America, announced he was retiring after 38 years with the company. That opened the door for Yoshida to return to the U.S., where he had previously spent 23 years with Canon U.S.A., to take the helm at BICG.
In addition, BISG has been rechristened to Business Information Communications Group (BICG) to better reflect the company’s focus on enabling customers to better manage and share their information. But the organizational updates aside, Canon continues to post enviable performance figures. The company pulled down $35.6 billion in net sales, with income of $2.3 billion. The office continues to dominate Canon’s global pie, accounting for 46 percent of its revenue. As usual, Canon invested 8 percent in research and development and remains one of the top global performers in patent ownership.
BICG’s revenue was up a modest 1 percent, but it marks the seventh straight year in which Canon has grown in the dealer channel. BICG highlights include a 29 percent increase in production printing, a 12 percent bump for commercial printing and a 21 percent rise in display graphics.
Of the name change, Yoshida noted, “When you think about the market and customers, you have to go beyond just the product. We’re in the business of better helping our customers.”
Opportunities Abound
Sam Yoshida, Canon
In 2019, Canon is bullish on the opportunity for cloud-based growth, and it is a top priority of IT spending in the SMB space as the manufacturer seeks to improve network security, expand cloud use and integrate on-premise and cloud resources for clients. Production printing continues to be an area of opportunity with the movement of offset to digital printing, and a projected 13 percent CAGR for digital color between 2018 and 2021. Vertical markets remain fertile ground, and the company estimates that two-thirds of SMBs will embrace the digital transformation by 2023.
In addition to its inkjet endeavors through its advanced line of Oce products, which has catapulted it to the top of the marketplace, Canon is exploring ancillary opportunities through health care optics, rockets and satellites (it has a satellite orbiting earth, taking high-resolution images), textile printing and mini photo printers. Canon furnished its guests with samples of its IVY mini-photo printer.
Canon recently augmented its position in the video surveillance space with the acquisition of BriefCam, a video content analytics solution. The system can analyze hours of security video within minutes and quantitatively analyze to derive actionable insights for data-driven safety, security and operational decision making. BriefCam is currently being used to monitor the Statue of Liberty, the Empire State Building and Amtrak. It’s a marriage of Big Brother and bleeding-edge technology.
CSA Performance
Pete Kowalchuk, president of Canon Solutions America, provided a CSA review of 2018 and look ahead to 2019. He notes the company offers products that range from under $1,000 to high-ticket print production devices, with software as the glue and common denominator. Production print solutions enjoyed nearly 30 percent growth while display graphics ballooned 129 percent. Inkjet increased by 12 percent, and enterprise color (14 percent) and enterprise black and white (3 percent) both notched respectable gains.
“We know our customers, know our employees and we know our culture,” Kowalchuk observed. “By focusing on the customer, it has given us the ability to grow our business.”
He addressed the growing need of data security, pointing to statistics that illuminate the growing challenges faced by global businesses: one in 10 breaches are paper-related, and the cost of the average data breach is $3.6 million. Even more concerning is the fact that one in four businesses will experience a data breach. In the United States, a data breach can cost $7.9 million.
Kowalchuk outlined Canon’s Five Pillars of Security, which fall under two subgroups, device security and cybersecurity. Here, Canon has partnered with a number of security specialists. The OEM provides Phishline from Barracuda, which offers a cybersecurity fire drill in the form of a phishing test. One of its newest offerings is EventSentry, a SIEM solution, and last December Canon partnered with PrinterLogic, which provides for server-less printing. On the device side, Canon continues to enhance its myCSA, a secure account management tool.
Account Growth
CSA’s Francis McMahon
Francis McMahon, executive vice president of Production Print Solutions (PPS), noted that 2018 represented the finest performance ever in production printing for Canon. Page growth exploded to 83 billion pages. Revenue grew 102 percent year over year, and PPS boasts the top market share in continuous-feed press placements. Hardware placements grew in every category, and Canon reeled in 60 new accounts, compared to just 15 in 2017.
The heralded Oce VarioPrint i300 saw 18 percent growth as well (as an aside, one customer ran a staggering 10 million pages in one month on the i300). For perspective, McMahon showed a graphic that lined up 10 million pages, which nearly reached the top of the Empire State Building. The ProStream 1000 enjoyed a solid 2018 debut with four installations.
On the large-format front, Rob Reddy, senior vice president of LFS Operations, provided an overview of the OEM’s 2018 performance. Aqueous inkjet units grew 3 percent to 28 percent of the market and flatbed printing’s market share, led by the Arizona line, increased to 13 percent. Introductions were made to the imagePROGRAF line, with the new TM series of five-color pigment printers and Professional Print and Layout software. On tap is the new Canon Print Large Format App, which will include news, promotions and updates aimed at enhancing user experience.
Other new products include the Oce Arizona i300 flatbed in-line printer and the Oce Touchstone for multilayer raised profile printing.
Reddy also gave an update on the Colorado 1640, a 64” roll printer which has 800 placements worldwide. “We’re only beginning to scratch the surface with the Colorado,” he noted.
Heights of Colorado
Canon’s John Kaufman (left) and Chuck Wingard, Tree Towns Imaging
To underscore the Colorado’s success, John Kaufman, senior marketing specialist, conducted a one-on-one interview with Chuck Wingard, president of Tree Towns Imaging & Color Graphics. Tree Towns, which installed their Colorado 1640 last August, specializes in printing large-format displays for hotels, museums, trade shows, hospitals and events, among other things. Wingard noted that his company has churned out 61,000 square feet of product to date, with an average of 12,200 square feet per month.
“The big plus is how much product you can run through the Colorado in an eight-hour day,” he said.
Canon then provided a couple of panel presentations, the first given by John Reilly, senior vice president of Global Managed Services. Reilly’s enterprise services overview included a pair of heavyweight clients: Jennifer Gilliland, director of desktop engineering for Phillips 66, and Kris Tanner, manager of the Solutions Support Group at Schneider Electric. Both spoke to the value Canon provided in managing their printing environments.
From left, Kris Tanner, Jennifer Gilliland and John Reilly
“Canon came in and right-sized our printing environment,” Gilliland said. “Their products were more advanced and the devices were easier to use. Canon had a vision around our future state…they could see our short-term needs and meet our goals, as well as look ahead to the future.”
The second panel studied Canon’s approach to the evolving office landscape and featured Karsten Huster, president and CEO of NT-ware, who traveled to Florida from Germany to speak along with Canon’s Kristen Goldberg and Mike Betsko. Goldberg brought a few chuckles from the audience when she coined the phrase Techmanity, a combination of technology and humanity. Goldberg—the director of enterprise and desktop solutions marketing for BICG—added that the human element is often overshadowed by the talk of technology when the point of technology is to create communications that are “better informed, more efficient and more secure. The advances we’re seeing in technology help them achieve that.”
Dealer Success
Mason Olds, SVP and GM for Sales, Canon BICG
Rounding out the presentations was Mason Olds, senior vice president and general manager of sales for BICG, who sat down with Ray Morgan Co. President Greg Martin for a dealer market overview. Last November, Ray Morgan—the largest independent Canon dealer in the western U.S. and second largest overall—merged with UBEO Business Services (private-equity backed), creating a company with combined revenues surpassing $200 million.
Olds mentioned that dealer revenue growth is up 2 percent for Canon, but more importantly, it was the seventh consecutive growth year, totaling 29 percent from 2011-2018. Unit sales for enterprise rose 9 percent, with A3 color experiencing a 15 percent bump and A3 black and white rising 5 percent. Production (toner cut sheet) enjoyed an impressive 29 percent rise, and black-and-white production garnered a 23 percent (!) increase.
Olds also outlined some of the challenges in the channel, from attracting a changing workforce to the industry, addressing the declines in page volume and cost per copy, and the continued push to color (Canon’s success in monochrome notwithstanding), solutions, diversification and the influx of private equity money into the industry. He also alluded to how continued M&A activity is adding pressures while changing the face of the landscape.
Martin talked about the key role that Canon’s uniFLOW has played in the last 12 months, enabling the dealer to secure a dozen $250,000 job takedowns where uniFLOW represented a significant aspect of the deals. “The integration that uniFLOW has with the firmware is a real difference maker,” Martin said. “We just won a million-dollar university deal and uniFLOW was one of the key reasons. NT-ware has been a great partner and they’ve helped us with some customization. Our ability to attract network and software types of individuals to help our team, along with our sales force, has been a great win.”
In partnering with UBEO, Martin observed, “We got the best of both worlds. We took some money off the table, we were able to retain our culture and maintain a strong equity position going forward. We have resources to grow. We’re in a growth mode…it’s a lot of fun and I see a lot of success. We’re entrepreneurs, and as long as entrepreneurship lives on, business is going to be great.”
Given that the Canon event was condensed to a single day, the manufacturer was able to pack a lot of information into a short timeframe. The numbers certainly meshed with the narrative, and it will be interesting to see how the Canon story unfolds over the duration of the year.
