It’s almost a running joke within the confines of industry conversations. Every year, a bevy of observers will point to what they feel is a glut in the manufacturer community and quietly predict, “We’re going to see some OEM consolidation this year, for sure. There aren’t enough dealers in the industry to sustain 10 or 11 OEMs.”
While I’d tend to agree that there are a disproportionate number of providers to the dealer/VAR community, the likelihood of two (or more) OEMs joining forces is quite remote. Each one of them has a particular strength (an “out pitch” if you will) that differentiates them to a degree. Most OEMs feel they are equipped to take market share (a popular refrain at all manufacturer events I attended this year) and simply do not need to buy out a competitor, which is a crazy expensive proposition.
Some of the OEMs that have a smaller share of the industry pie are also in the unique position of being part of a large organization with interests in other industries and technologies, and are doing extremely well from a corporate standpoint. Others have U.S. operations that are faring much better than the parent company. This all adds up to it being unlikely that one OEM will acquire another.
(Fast forward three weeks, when I’m tap-dancing around why a just-announced merger between two OEMs was completely unpredictable. Hey, we’re no different than meteorologists.)
With that in mind, we would like to recognize Ricoh and Toshiba (TABS) with 2023’s Most Compelling Story award. If there ever was a trend that could further negate the need for consolidation among industry OEMs, it is this one.
Opinion
The news broke in May quite unintentionally via a timely disclosure to Japan’s Nikkei, which kind of caught Ricoh off guard. It was a natural fit; TABS and Ricoh had been doing business for quite some time. TABS is a top DocuWare reseller, and Ricoh produces a number of accessories in TABS’ products.
“The fact that we already had a relationship with Ricoh and that they manufacture some of our accessories made it easier to have fruitful and honest discussions that led to this agreement,” Toshiba President and CEO Larry White told ENX in June. “I’m not privy to whether other manufacturers have entertained the same types of discussions, but certainly, we were the first to get it done. It was the right thing to do. Everybody is going to face the same set of circumstances because manufacturing is really expensive. We need economies of scale in manufacturing. When that scale starts to decline, it creates issues and you have to adjust what you’re doing.”
Without rehashing the full details (check out this article and another) one could make an argument that eliminating manufacturing redundancies and the subsequent efficiency and cost savings was sufficient rationale to move forward with the joint venture. But the really exciting stuff is on the horizon, when the companies will jointly develop technologies, and that’s probably two years out. Then there’s the opportunity to cross-sell techs into one another’s client base.
The fact that both of these OEMs are open to the idea of sharing, while still maintaining competitive integrity, bodes well for the industry. There’s not a lot of secret sauce in MFPs, so ganging up the manufacturing is really not that big a deal. Product development, a differentiating factor, is another matter.
Fallout
Whether the JV is a triggering event remains to be seen. There’s always the chance that other JVs could sprout up that deal only with manufacturing synergies and not necessarily represent a conduit to joint technology innovations. It’s like roommates splitting the rent but not the grocery bills. My guess is that the balance of the OEM community—mindful of the risks—will keep close tabs on the Ricoh-TABS partnership to see if this great experiment can be successful.
