If Óscar Sánchez could have his way, the year 2020 would be completely erased from memory. In fact, the president and CEO of Kyocera Document Solutions America doesn’t want to use the pandemic year as a basis of comparison to future performance.
Nor does he want it to be an excuse for not continuing down the road of transformation he laid out upon taking the helm of U.S. operations three years ago.
The pandemic may have visited the manufacturer with the same impact as other OEMs, but the downturn in business volume didn’t have a deleterious effect on Kyocera’s technology blueprints. The Fairfield, New Jersey-based firm moved forward with its Evolution Series of A3 devices, which will grow to include 10 different speeds during fiscal year 2021. It will roll out an A4 line geared toward the home office and will offer subscription-based pricing for A3 and A4 devices. The manufacturer is also working closely with dealers to help them reconcile the revenue gap between A3 and A4.
The truth of the matter is, end-users have changed their buying habits, and Sánchez is working hard to ensure Kyocera is there to help its reseller partners navigate the evolving landscape. And whether it’s through periodic blogs, face-to-face interactions or the Dealer Kickoff meeting—which returns later this year—Sánchez aims to communicate that Kyocera is moving forward and is ready to pick up where it left off in 2019.
Obviously, 2020 was a year like none we’ve seen. How did Kyocera perform from a business standpoint?
Sánchez: It was the most difficult year in our history. At the beginning of our fiscal year, like most of our competitors, the first three to four months of the year were extremely complicated and a bit of a struggle. Around August/September, it seemed we were going to have a quick recovery with more decent revenue levels. But November/December, as well as the first couple months of 2021, were pretty challenging. It’s safe to say that the past year has been a bit of a rollercoaster. The total revenue for the company declined 24%, which is fairly significant, but again, it’s basically in line with our competitors. In talking with our dealers, most of them have witnessed revenue drops of 20% to 30%. It was a difficult business environment, and we tried to cope as best as we could. But it certainly impacted our revenue and financial performance.
Provide some insight into Kyocera’s strategic approach during the pandemic and how it pivoted to meet the needs of its reseller partners.
Sánchez: The big change was we had to support our dealers and work in a different way than we had previously. With all organizations working from home, that obviously made it difficult. It required us to adapt our systems and processes to be able to support our dealers in the way they had become accustomed. I think we succeeded for the most part. In the process, we tried to be as visual as possible through frequent communications, virtual trainings and trying to make sure that everybody was focused and on track. We also tried to help dealers with their most important needs, particularly at the beginning of the pandemic. They were dealing with financial issues, especially a lack of cash, so we tried to be flexible with payment terms. We reduced the target for dealer rebates three times over the course of the year. In a nutshell, what we tried to do was make sure our dealers didn’t feel alone, that they would experience the same level of support that we gave them before. While we always feel like we could have done better, I think we succeeded for the most part.
Earlier this year, Kyocera rolled out a pair of Evolution Series A3 devices. How have they been received thus far, and how does this series address the evolving needs of end-users?
Sánchez: This line had a great impact in the market; it provides many of the things that customers are currently seeking. One of the main aspects of this new series is the security features. We’re incorporating the most advanced security technology that’s currently available in the market. Security has become a critical part of printer administration. The artificial intelligence components are very complementary to the product and address customer needs in terms of remote monitoring and quality of print. This is only the beginning for the role artificial intelligence will play. When we talk to the dealers, I think a very important component is the idea of speed license. We have a common platform; we launched two speeds, 25 ppm and 35 ppm, but only one common platform. That means that dealers can increase the speeds up from 25 to 35. When we launch the full line later this year, there will be 10 different speeds with only four main engines. For dealers, that means they only need to have four different products in their inventory, but they can have up to 10 speeds. This will help in terms of flexibility and their financial situation.
You’ve really kept clients abreast through blogs that have touched on many subjects, from the pandemic to changed business realities. Talk a little about the outreach value this has provided.
Sánchez: I’ve been in this industry for 25 years, and when I was in Europe, I knew the dealer network very well and maintained close contact with the members. When I came to America three years ago, obviously I didn’t know the dealers as well, and they weren’t familiar with me. So this was my opportunity to speak up and be heard. I like to be vocal and provide my opinions. I understand I’m not always right, but the blogs have given me the opportunity to provide my thoughts about what’s going on in the industry and the economy in general. From my point of view, I think it’s been very successful. Many players in the industry have reached out to me, telling me they agree with some of the things I’ve said. And sometimes they disagree. But it’s important to initiate a conversation. Given the pandemic circumstances, communication is vital, and I like to play the analyst role. I think it’s very important to have open communication with employees, dealers and customers, and that’s what I try to do. It’s all around opening a dialog. I just hope people don’t get tired of it.
Gartner recently recognized Kyocera in its Voice of the Customer survey on MPS, with your solution receiving high marks. What elements help to set Kyocera apart from the competition?
Sánchez: This was, for me, one of the highlights of the year. MPS has been around for a long time, but I feel there’s still a lot to be accomplished between us and our dealers. I think many elements in the Voice of the Customer survey were important. Basically, the main element is service capabilities. Kyocera is a dealer-oriented company, with most of our services delivered by dealers. So I think this is a recognition of the work that they do. When we talk about MPS, do an assessment and plan an MPS project, we see the possibilities that MPS has for our customers in terms of savings and managing their fleet. The biggest problems can occur during the execution phase. Given the area where we ranked highest was in the planning and execution of MPS, that means we deliver on what we promise.
Kyocera has been named Best A4 Manufacturer three years running by The Cannata Report. Given the continued emphasis on A4, which accelerated during the pandemic, how can Kyocera continue to raise its game and be among the top providers?
Sánchez: I think our A4 line has always been a strong suit. Kyocera is the only OEM that has the copier core component—because we literally sprung from Mita—and our printer component, so we have the best of both worlds. Our A4 line benefits from not only the product and its technologies, but also the fact that we offer a three-year warranty, the toner is the only consumable and we have a comprehensive lineup. We’re seeing a clear switch from A3 to A4, and this is a challenge for dealers because it’s a critical area of revenue, given the price differential. We need to help dealers expand their install base to help close the revenue gap produced by the shift from A3 to A4.
At the end of this summer, we’ll launch a new A4 line focused on the home market, and I think that will be a good expansion for our A4 dealers. Also, we’ll be announcing a big KDA campaign [in June] to promote a flat-rate program primarily for A4 devices. Customers increasingly are focusing on subscription-based services and the desire to play a flat, monthly fee. This is an opportune way to expand our capabilities and potential market. The pandemic has not only changed what customers buy, but also how they buy. In this sense, subscription-based services have become increasingly popular, and our industry will be affected by this as well. So, we need to be ready for that.
The loss of in-person events was keenly felt by many OEMs. What is Kyocera doing to replace that level of partner interaction and ensure its messaging is hitting the target?
Sánchez: Again, it’s a matter of being as visible as possible—that was the same message I gave to employees in my first-ever speech to the company. That became more difficult during the pandemic, so I’m trying to establish as many communication channels as possible. I reach out to dealers quite often to understand what they think and how we can do better. Fortunately, I’m resuming traveling to meet face to face with dealers. Even with virtual alternatives to communicate with the market, it’s not enough. In November, we will hold our traditional Dealer Kickoff in San Antonio, Texas, our first one since the pandemic began and probably one of the first in the industry. It will be an opportunity to regroup with our dealers, understand where we are and see how we can move forward. It should be a great event. I think a combination between physical and virtual outreach is the right balance. Recently, we opened our headquarters in New Jersey to utilize our Virtual Experience Center to conduct product demonstrations for our dealers and customers, as well as host internal employee meetings.
Is there anything new on the horizon from a product or partnership standpoint?
Sánchez: The home office A4 line will be released later this summer. We’ll be launching the full Evolution Series with 10 speeds, so there’s eight more to come. Inkjet has become more important for us, so there will be more products in the line, most likely in 2022. We’re also focusing heavily on ICT (information and communication technology) solutions. Our industry and the channel need to have additional streams to compensate for the missing revenue from printing volume decline. We’re offering ICT services for our direct organizations, and this fiscal year we’ll be able to offer ICT services to our dealers. Finally, we’re focusing on document management. Due to the pandemic, workflow management/document management has become more and more critical. Kyocera acquired three document management companies in Europe in the last five years, and during this fiscal year we’ll launch new ECM products into the U.S. market that we developed.
What is Kyocera looking to accomplish in 2021?
Sánchez: We’re hoping for a full recovery and return to previous levels. I’ve stressed over and over to my team that we want to forget about 2020. We cannot compare the revenue in 2021 to 2020 because obviously we’re going to do better. So, we’ll be measuring performance against 2019, with a goal of establishing the same revenue we had that year. That will signify that COVID is over from a financial point of view. We’re confident we can accomplish this; April was the first month of the fiscal year, and we had a really strong performance. In addition to the financial performance, we want to accelerate our transformation strategy. What we’ve been trying to do over the past three years represents a great transformation for KDA. Even during the pandemic, we never lost focus on improving our technology, processes and teams to improve the way we’re supporting our dealers. While we had a great company here in the U.S., we needed to make a drastic change. Those changes are ongoing, and our dealers need to see now how this transformation will benefit them. We’re looking beyond that return to our previous revenue and improving short-term financial performance. We have ambitious plans for the future. It will be an exciting time for us.
