Printers Vs. Copiers - The Saga Continues

Part I - Hardware Market Review

Ten years ago, industry watchers were excited about the so-called convergence of copiers and printers along with the markets for those machines. As digital technology supplanted analog and light-lens machines went the way of the buffalo, copier vendors became equipped with product portfolios that allowed them to go toe-to-toe with printer OEMs. At about the same time, firms like Hewlett-Packard, Lexmark, Oki, and other printer manufacturers found that they could fairly easily add functionality like copying, scanning, and faxing to their products and do it inexpensively. As a result, printer vendors started sniffing out opportunities in the copier space while copier vendors attempted to lure pages away from printers. Almost immediately, the printer and copier firms were locked in a fierce battle over the office.

To better position themselves, copier and printer firms established strategic technology alliances. One of the most recognized laser printer brands in the world, in fact, resulted from an early alliance when a copier company agreed to supply a printer firm with print engines. Canon and HP's legendary partnership has allowed the pair to dominate the market with the LaserJet line, which has enjoyed an overwhelming majority of market share for many years now. While perhaps not as well known, other printer OEMs have partnered with copier firms. Lexmark and TallyGenicom, for example, tapped Fuji Xerox for engines. Copier companies have done the same thing. Ricoh, Sharp, Toshiba and others sought technology from such printer OEMs as Lexmark and Samsung to broaden their product offerings.

Acquisitions and overall industry consolidation over the past ten years have also helped copier and printer firms better compete with each other. Many firms have used M&A maneuvers to expand into new market as well as fill in any gaps within their product portfolios. Most of today's leading digital imaging firms including Konica Minolta, Kyocera Mita, Xerox and others were formed-either in whole or in part-through some type of consolidation. As a result, copier and printer vendors can offer their channel partners with an assortment of equipment ranging from entry-level desktop units to larger device capable of supporting higher print volume environments. The lines are clearly getting blurred.

Over the next few issues, I'll offer you a look at where things stand in the copier-printer wars. This month, we'll look at the current situation in hardware markets and how they've changed and stayed the same. Next time, we'll look at how printer and copier companies compete for highly coveted consumables revenue. In my last article, I'll contrast the channels for copiers and printers as well as offer some comparisons.
Situation Normal

Many of the challenges that initially limited sales opportunities for companies selling copiers into printer markets-and vice versa-still exist today to one degree or another. Historically, printers were acquired by the IT department while copiers were the darlings of facilities and office managers. Each group had their own budgets and hierarchies, and often they occupied very different places on the "org chart." To place machines on a company's network, the copier sales force had to pursue IT managers. Conversely, to gain any share of the copier market, printer manufacturers had to win over the facilities managers with their MFPs. While there have been some changes, these separate groups of customers remain loyal to their respective technology vendors. IT teams continue to prefer printers, while facilities managers remain partial to copiers.

One reason why the customer groups remain so distinct is because the way that copier and printer vendors sold their products. Copiers are usually leased with an inclusive supplies and service agreement via a "per click" charge, and these all inclusive purchase solutions are attractive to facilities managers. Capital outlay is minimized with a lease and, unless there is some extraordinary event that requires significantly higher print volumes, the copier lease payment is the same month after month making it easy to budget for. Moreover, if the machine stops running, the office manager just requests a repair and incurs little or no expense. Printers and printer-based MFPs are usually purchased by IT group. They are attractive because these machines often provide years of service before failing. Once printers or printer-based MFPs have been configured to operate in a particular IT landscape, they can be easily redeployed to perform a variety of jobs over the course of their lives. Often a printer will start out as a workgroup unit, then move to a smaller set of users, and end its life in a mail room churning out labels. Although consumable costs can vary from month to month and printer consumables can be more expensive than copier supplies, the printer equipment acquisition cost is generally lower.

What's The Real Difference?

Both printer and copier firms have radically altered their products to be able to compete more directly. Products have changed so much that analysts frequently ask themselves, "So what's the difference really between a copier and an MFP?"

In general terms, copiers and printers/printer-based MFPs support different applications. Digital copiers are generally robust enough to support a number of users. They also are available in various configurations that allow them to support a broad range of papers and specialty media. In general, copiers can also provide a workgroup with a variety of finishing options including stapling, hole punching, binding and more. More and more, copiers now allow offer other functionality such as workflow tools and security features. Printers and MFPs, on the other hand, can support some of these features, but more often they are configured to provide for simpler printing needs and support a more narrow range of media and offer very few finishing options.

The other big thing that differentiates copier and printers are the channels the machines move through. For many years, copier moved through dealers and business technology channels while printers had more general distribution moving through retailers and e-tailers as well as IT VARS. Oftentimes the printer or printers were an add on component to a larger technology centric sale or solution. For example; purchase X number of printers for each Y number of computers or servers bought. This situation has changed. Printer companies have had some limited success in moving products through copier dealers. Copier manufacturers, however, have stratified their offerings so that they can aim products at specific market segments while avoiding channel conflict. As a result, we see more and more copier companies finding retail shelf space. Canon, for example, has at around a half-dozen different machines on display at Staples. I'll talk more about channels in an upcoming article.

By sub-segmenting the market, copier firms have successfully penetrated the printer space. As noted, printer OEMs have been less successful getting copier pages. And this has been true historically. HP, for example, has struggled over the years in their attempts to penetrate the copier markets. The firm signaled it was ready to take on the copier industry when it launched its LaserJet 5si Mopier back in the mid-90s. But the results were lackluster. HP also partnered with Konica Minolta to better compete in the copier space in 2003 but had little success. With the launch of its LaserJet 4345mfp in 2004, HP did manage to shake up the A4 monochrome copier market, but it has not really scored big since then. The firm was targeting the convenience color copier market with its HP CM8050 and CM8060 Edgeline ink jet units. The low per page costs offered by these machines, however, have not seemed to gain much traction in the market. Only time will tell if the Edgeline devices will be the next 4345mfp, but right now they seems to be more like the Mopier.
Samsung is the latest printer vendor to enter the fray. Executives for the firm have articulated the firm's intentions to be one of the top printer OEMs. While Samsung may eventually become a market leader, it is doubtful the company has made much money with its printers to date. Most Samsung devices are low-end units that do not seem to offer much margin. All that may be changing if Samsung can successfully enter the copier market. In 2007, the firm released the Segment 4, SCX-6345N, a 45-ppm MFP that sold for $2,999. Last year at the ITEX show, Samsung introduced two additional digital copiers, the 55-ppm, monochrome SCX-6555N, which sells for $3,999 and the $4,999 40-ppm CLX-8380ND. These machines should provide the firm with the margins not available from low-end printers. In an attempt to grow its market share in the copier space while maintaining its retail real estate, Samsung announced that its high-end machines would be sold exclusively through copier dealer channels. Also, it must be pointed out that Samsung has been pretty successful in manufacturing entry level printers for several other firms, including some major copier players such as Xerox.

With firms like Danka, Global Imaging Systems, and IKON now in the hands of copier manufacturers, it will be tough for Samsung and any other printer OEM to find a large channel partner in the traditional sense. Samsung has signaled it understands this and is willing to be a second- or third-tier brand in the copier space. The firm also says that it "gets it" when it comes to managing the copier channel and can offer rebates and compensation plans that copier dealers will respond to better than other printer OEMs have offered in the past.

It is clear that the market remains in a state of convergence, which has been ongoing for at least ten years. For people and organizations that market, sell and service these products and their consumables, this can be a very exciting time. Gaining some insight into how these companies are maneuvering in the marketplace and how the landscape of the channels come together can be critical to positioning your company for success. Hopefully, this series of articles can help you gain some insight into this dynamic arena.

With over 12 years of experience, Charles Brewer is an independent consultant for the digital imaging industry. He is a contributing editor to Lyra Research's Hard Copy Supplies Journal published, which he managed from 2005 until 2009. Brewer has authored numerous articles, reports, and white papers on hardware as well as toners, inks, and media and has worked with various OEMS and third-party supplies vendors.