Epson America Sees Healthy Market Opportunities for Business Inkjet MFP

It’s been said that the SMB office environment is the last great, untapped frontier that inkjet printing has yet to conquer. But now that inkjet is beginning to infiltrate the BTA channel, courtesy of new product introductions from both Epson America and HP, it will be interesting to see how dealers embrace these alternatives to laser.

Some observers are skeptical, believing business inkjet will yield a lower volume of consumables and reduce service needs that cut into dealer margins. Other industry followers believe business inkjet can be successfully integrated into managed print service programs.

Mark Mathews, VP of North American Commercial Marketing

One person who is bullish on the possibilities offered by business inkjet is Mark Mathews, vice president of North American commercial marketing for Epson. Mathews, the former president and CEO of Toshiba America Business Solutions, shared his views with ENX Magazine on the construction of a BTA channel to sell Epson’s new WorkForce Enterprise WF-C20590 A3 multifunction printer and other inkjet offerings. He is confident that inkjet can make a gigantic splash in the business equipment market and believes Epson is well positioned to leverage the B2B market confidence it has already generated through its wide format and POS printer offerings into a thriving business inkjet product line.

Mathews also spoke on the subject of Epson’s Replacement Ink Pack System, its relationship with distributor Impression Solutions and the need to protect its product patents. But one thing is clear: Epson is attacking the SMB office space with gusto. Backed by millions of dollars in R&D, Epson is on an ongoing quest to form a viable BTA channel that will include hundreds of dealers bringing the WF-C20590 and other business inkjet products to market.

Tell us about your career path leading up to Epson.

Mathews: I’m a longtime office equipment industry guy, having spent more than 20 years at Toshiba America Business Solutions. I started as a product manager and eventually became president of the organization. I ran the operations for North and South America for office equipment. Four years ago, I went into the 3D printing world, working for a small, quasi-startup type of corporation for a couple of years. After that, I did some strategic consulting for Epson’s new products. That eventually led to a conversation about coming on full time and helping dramatically expand their commercial B2B business with emphasis on office equipment. I’ve been here full time since last November.

I have responsibility for multiple B2B products: business inkjet printers and business projectors with the ARVR group that are head mounted displays (HMD) for augmented reality. I also handle small POS printers, the types used for printing behind the counter—if you look behind the counter, 7 out of 10 times, it will be an Epson printer. I also handle robotics, a fascinating and rapidly growing space. They’re all B2B products with a wide variety of technologies.

What were some of your key objectives in the BTA space heading into 2017?

Mathews: Historically, we’ve had a small BTA channel and we’re coming to market with new products. The biggest one this year is the WorkForce Enterprise WF-C20590, a 100-page-per-minute inkjet product targeted at the office, specifically the color laser market. We’re going to go head-to-head with the big guys in the market with our disruptive technology. When I joined in November, we had just a couple of people on the team. We’ve been actively recruiting people and building a channel to sell that as well as our other business inkjet printers. Our number one goal this year is to recruit and activate a BTA channel to sell our products.

Epson team at Chicago Regional Event
(from left) front row : Mark Mathews, Scott Marsic, Yuta Takada, Lauren Lung, Larry Trevarthen. Back row: Elliot Williams, Rebecca Randich, Teruhisa Sato.

Business inkjet is a big topic these days with Epson and HP leading the charge. Tell us about the market opportunities and some of the key points of differentiation in Epson’s value proposition.

Mathews: That whole discussion is what brought the WorkForce 20590 to the marketplace. Inkjet has two or three significant advantages over laser technology. Number one, it’s got a lower total cost of ownership over laser. The cost to put ink on paper is dramatically lower than laser. Because it’s an ink-based product, there are fewer moving parts, and as a result it is more serviceable. That represents more service profitability for a dealer. They won’t have to go out as much to fix it and when they do, the fix will be quicker. It has lower energy costs, as you can plug into a standard 110-volt outlet. Those are all tangible benefits for the end user and the dealer, with higher margins.

The last place where ink hasn’t gone into is the high-end office equipment market. If this replicates like we think, it stands to be a very disruptive product in the office segment.

Whenever inkjet has entered in the market, it has won in the long term. With consumer inkjet, when you look at the Best Buys, Staples, and Office Depots of the world, almost all of the technology is inkjet, about 95 percent. Look at wide format, where more than 90 percent of units are inkjet. If you go into the production space, almost all of the high-end products are inkjet based. Twenty percent of the output is inkjet and that will move to 40 percent in the next four to five years. The last place where ink hasn’t gone into is the high-end office equipment market. If this replicates like we think, it stands to be a very disruptive product in the office segment.

What has been the response to business inkjet during Epson’s dealer meetings?

Mathews: We’ve had five recruitment events across the US in Atlanta, Dallas, Philadelphia, Chicago and Los Angeles. We’ve hit all of the regional BTA shows, most recently in Las Vegas, and have probably done more than 10 events between our sponsored ones and the industry trade shows. We have been in front of hundreds of dealers, and the interest level is extremely high. One reason is dealers are looking for something different to sell. Many of these guys are competing against a local OEM branch who’s selling direct to end users. They’re looking for something disruptive, and this product comes in as a more profitable product line for them, targeted at high-speed color, which is the fastest growing segment in the market.

What’s interesting about Epson coming to market is we have no legacy in laser, so I have nothing to fund or support. With the pure business inkjet play, I can bring the best product to market, the best technology, and I have no channel conflict. We’re starting from ground zero to build a channel. With Canon, Ricoh, Konica Minolta, Sharp, and Toshiba, they’ve all got multiple competitors in their back yard. We’re getting our first shipments in July. They were allocated two months ago, every machine has a name on it, and they will be out the door. Over the next couple of years, we will recruit several hundred dealers and we’ve made substantial progress on that number already.

Has there been resistance from dealers who sell the laser-based products?

Mathews: The biggest thing is that even people who haven’t sold Epson before know it’s a good name and a good brand. Most of them have had positive experiences with either Epson wide format or projectors. We have to prove ourselves with the business inkjet machine. I was expecting pushback that the end users didn’t want ink in the office, but that did not really come up during our conversations. The idea was the end user really doesn’t care what they have in the office, and many of them don’t even know what they have. People asked me about HP coming into the market and I said that’s actually good for us, because it validates our concept. It’s interesting—the two largest inkjet guys are coming to the market at the same time with the technology. Clearly, Epson brought me on board to help build this team, not just on the sales side, but in the service aspect and the back office as well. We’re moving quickly.

The biggest thing is that even people who haven’t sold Epson before know it’s a good name and a good brand. Most of them have had positive experiences with either Epson wide format or projectors. We have to prove ourselves with the business inkjet machine.

A little more than a year ago, Epson rolled out its partner training program for authorized Epson ImageWay and Envision commercial business partners. Tell us a little about it. How has it been received so far?

Mathews: We’re actually revamping the program and went through a major redesign. The printer program is called Business First. We’re doing it for those high-end products, these enterprise products, as an authorized reseller program. These are not generally distributed. One of the questions we get is who’s going to sell this thing, because people see us in Best Buy. But clearly, that category of distribution is not suited for this kind of product. We’re going to have an authorized channel that we sell through that has to meet the requirements of service and sales. As you might expect, service is a huge component on these high-speed products. In terms of the return for those in commitments—and the different benefits you get for being in the program in terms of pricing and different levels of support—we’ll be rolling that out as we launch the product itself.

In March of 2016, Epson announced a partnership with distributor Impression Solutions (ISI) to market Epson’s Replacement Ink Pack System, providing extensive reach into the US BTA channel. Has it met with expectations and what are your goals in this regard?

Mathews: It’s gone well. Our Replacement Ink Pack System product is for our segment 1 and 2 devices, the 20- and 24-page-per-minute class of product. We brought ISI on board because they have a good customer base specifically targeting BTA, and it gave us a way to quickly get on board. I find ISI to be a value-added distributor. They do a lot in terms of recruitment, training, and support, and that was a way for us to scale quickly. Those five regional shows were done in conjunction with ISI, and it was a combination of their customers as well as people we had recruited to bring into the show to meet them. That’s a good indication of our trust in them and the usefulness they brought us in the relationship.

Replacement Ink Pack System devices offer significantly lower costs per page than laser. How has it been met within the SMB space in terms of adoption and what are the challenges you face?

Mathews: The dealers who do best with it understand the product. It comes with a very large capacity for ink and in most cases, the ink will last the life of the lease—up to three years. It’s the perfect product for applications in the dealership where they want a low-touch environment, but can still control the relationship. Because the ink’s included, they get all of the funding up front; they don’t have to wait down the road to get the consumable revenue. The price point is high enough that they can get it leased, so it’s still under a contractual relationship. They still control that as well as the service contract. So for dealers who understand that sort of slightly different business model than the copier model—which requires periodic toner shipments, billing, and invoicing—this is a clean way for dealers to get units in quickly, get them installed, get totally funded on the entire transaction up front, and not have to go out and service. It’s great for small office businesses and awesome for remote offices where they might not have great service coverage or shipping.

What changes in the BTA space are influencing your go-to-market strategy, and what influences will play a role in your strategy going forward?

Mathews: BTA is the obvious choice for distribution and installation of those products. We thought we could bring something to the dealers to supplement them. We tell them that our goal and expectation is to not replace their existing line. But we do believe we can bring in an option for them to get net new business for their dealership. This gives them a product to compete against the laser manufacturer and it opens the door into accounts that they couldn’t go into previously. There’s a lot of buzz around it because HP is coming into the market at the same time. It’s a color-based product, so you’re talking high-volume, high-profitability customers.

Earlier this year, Epson America filed three patent infringement complaints against companies selling newly built and remanufactured ink cartridges on the Amazon Marketplace. What is your opinion on the recent Supreme Court ruling in the Lexmark case, and will it impact Epson’s ability to protect its patents?

Mathews: We work hard to protect our after-market business. We’re going to adamantly ensure that there’s a level playing field. If someone violates the law, we’re going to protect our interests. At the end of the day, Epson’s name is on the machine. That consumable is a big part of the ownership experience with the name. It’s not just about protecting the consumable business. It’s about protecting the next purchase of the machine. We want to ensure that they get the best possible ownership experience and that the next machine they want to pick is an Epson. We’ve taken actions specifically against certain manufacturers or distributors that come to the US, as well as some of the uncontrolled marketplaces where there are a lot of generics, clones, and trademark infringements.

In terms of the Lexmark case, there’s probably a couple of situations where we can’t go after people as strongly. But the people we do go after have clearly violated patent law and intellectual property law. In our mind, it’s not a very gray area. For the vast majority of the places where we go after people, the Lexmark ruling won’t have a significant impact.

Tell us about your distribution models for the other B2B products under your responsibility.

Mathews: Robotics has a specialized channel that they go through, distributors and system integrators. Most resellers and system integrators have the same values, needs and requirements. ARVR goes through multiple channels of distributors, including specialized resellers. Our biggest partner is DJI Drones, so our number one best-selling application is for use in flying DJI Drones. They’re the largest drone manufacturer in the world and we have an exclusive relationship with them to be a first-person viewer system for the drones. POS Printers go through sellers and system integrators. We’re market leaders there. It’s a mature market with an established distribution channel and we have deeply loyal customers.

Where do you see your optimal growth opportunities?

Mathews: It’s all about attacking the office equipment market in segments 2 to 5. We have zero revenue there, so it is all new opportunity for us. It’s a huge market and we think we have a very strong story to tell there in terms of product differentiation. We think we have very good distribution. We’re pushing hard right now.

It’s all about attacking the office equipment market in segments 2 to 5. We have zero revenue there, so it is all new opportunity for us.

What are your goals for the balance of 2017 and the coming year?

Mathews: The number one goal is to build a robust, comprehensive BTA channel. That means recruitment, activation and sell-through for us and our resellers. The product itself has been in development for many, many years. This product’s father and mother are actually from the industrial printing space. This is a high-speed industrial printer that has been slowed down into the office equipment space. The key was learning how to cost-effectively mass produce that type of technology at a price point suitable for the office equipment space, and we did that. Hundreds of hundreds of millions of dollars have gone into the product; now we’re ready to sell it.

Erik Cagle
About the Author
Erik Cagle is the editorial director of ENX Magazine. He is an author, writer and editor who spent 18 years covering the commercial printing industry.