Whoever said “The more things change, the more things stay the same” obviously hasn’t spent any meaningful time in the office technology industry. Change was evident from the onset of 2018, beginning with the start of the would-be Xerox-Fujifilm union, and the year maintained that tone throughout. Between an onslaught of mergers and acquisitions, and scores of leadership changes, it seems the evolution of the industry is not relegated to managed services and ancillary products and services “beyond the box.”
We’ve pored over every issue and newsletter to bring you a condensed look at the leading stories of 2018. Though many faces, names and addresses may have changed—some willingly, some unwittingly—it is merely a reflection of our industry’s evolution. As the dealer space morphs from its current form, creating larger entities more equipped to address the needs of their client base, it will force other elements (manufacturers, suppliers, distributors) of the industry ecosystem to adjust in order to survive. And that’s a good thing.
Here, in no particular order, are 10 storylines that shaped 2018.
Xerox, Fujifilm $6.1 billion deal falls through. In a saga somewhat reminiscent of the power-struggle film Barbarians at the Gate, a tentative deal to merge Xerox with Fuji Xerox at the beginning of the year took a wicked and winding path when shareholders Carl Icahn and Darwin Deason strenuously objected. The pair contended that the proposed offer severely undervalued Xerox, and they took Xerox to court. They accused Xerox’s then-CEO Jeff Jacobson of hammering out a deal with Fujifilm that would save his position with the company.
In a drama that played out for much of the spring, Xerox ultimately announced it would not pursue the merger with Fuji Xerox. John Visentin was installed as CEO, and a number of executives backed by Icahn and Deason assumed spots on Xerox’s Board of Directors. Jacobson and five other board members submitted their resignations. In June, Fujifilm filed a $1 billion suit against Xerox for breach of contract. While Fujifilm won an October appeal overturning preliminary injunctions sought by Deason and Icahn, Xerox appears steadfast in searching for other avenues to enhance shareholder value. In other words, this saga is far from over.
M&A madness. Last year, we reported that there was an unprecedented rash of mergers and acquisitions throughout the industry. This year has been equally active. Visual Edge Technology (see below) led the way with 18 deals, but the company was by no means alone. There were scores of deals made by all facets of the office- technology ecosystem, and we’ve included a few dozen for your consideration.
Marco was once again an active player, snapping up Phillips Office Solutions, Governor Business Solutions, Prime Office Innovations, Rudzinski’s Business Equipment and ETC ComputerLand. The Oval Partners/Flex Technology Group combination added Marimon Business Systems and RS Business Machines. Donnellon McCarthy Enterprises obtained Columbus Office Solutions & Systems and Tri State Business Equipment. Loffler acquired Optimum Communications Corp. and Novatech purchased e/Doc Systems. Meritech acquired ACE and Datamax added East Texas Copy Systems. EO Johnson picked up Office Enterprise Inc.’s copier/printer division and Cornerstone Technology’s IT services business. Proven IT obtained Resolve Technology Group and Atlantic, Tomorrow’s Office added Gear 3 Technologies.
Other deals of note include Applied Imaging acquiring Hasselbring-Clark, Centric Business Systems obtaining Webster Integrated Technologies, WiZiX Technology Group onboarding Complete Business Systems and Hilyard’s Business Solutions obtaining Automated Copy Systems.
On the manufacturer/software/supplier side, Sharp added American Business Machines and Konica Minolta brought on VeBridge Holdings. ECi Software Solutions added PrintFleet, Vineyard Software Corp. and Office Document Consulting. CET Group annexed Q2 LLC and Carolina Wholesale Group picked up Gilpez Office Products. Kofax obtained Nuance Document Imaging, a division of Nuance Communications.
Visual Edge Technology’s shopping spree. This year’s winner of the most-punched frequent buyer’s card is Visual Edge Technology (VET) of North Canton, OH. By our count, VET has added 18 dealerships to its platform during the course of the year: Brady Business Systems, JANCO Business Systems, FastForward Digital Solutions, Zymphony Technology Solutions, CopyRight, COUNSEL, Midwest Office Automations, United Business Machines, A-COPI Imaging Systems, A.B. Dick Document Solutions, H.C. Berger Company, Business Technology Partners, N2N Technologies, Office Systems, Dunn’s Business Solutions, Technocom, KenMark Office Systems and Mercury Document Imaging.
That brings Visual Edge’s unofficial count to 37 acquisitions overall. But the likelihood is high that by the time you finished skimming through the list, another dealer or two has been added.
Ray Morgan Company, UBEO Business Services join forces. In a move that came in just under the wire, UBEO Business Services of San Antonio, TX, announced it had merged with Ray Morgan Company of Chico, CA. This is definitely one of the biggest deals in recent memory, with the combined companies touting a workforce of more than 700 employees, an installed base of 135,000 machines in field and sales of more than $200 million. This is the third partnership engaged in by UBEO since it aligned with Sentinel Capital Partners in April of this year. With 20 branches throughout California and Nevada, Ray Morgan Company will be the Western Region Hub for UBEO. The companies will benefit from their combined competencies in MPS, managed IT, document management, among other areas.
Toner cartridge litigation continues. Canon has a long history of defending its intellectual property rights, and 2018 proved to be a year of high activity within the legal system for the Tokyo-based manufacturer. Early in the year, the company announced it had launched patent-infringement suits against 49 manufacturers, distributors and resellers of toner cartridges and photosensitive drum units.
In late August, Canon claimed a victory over Ink Technologies Printer Supplies, gaining an undisclosed cash settlement in a case involving toner cartridges sold for use in various HP printers. Ink Technologies is prohibited from making, using, selling and offering for sale in the United States, and from importing into the country, toner cartridges that Canon accused of infringement, including the HE-CF360X, HE-CF361X, HE-CF362X and HE-CF363X product designations.
Epson also filed suits in early March, going after what it claims are infringing sellers of large format printer cartridges and remanufactured cartridges using third-party infringing circuit boards. All in all, it was a challenging year for remanufacturers, new-build entities, distributors and resellers trying to carve out a larger slice of the toner cartridge pie.
HP adds Apogee to portfolio. HP solidified its bid to aggressively pursue the A3 office market space with the summertime acquisition of United Kingdom-based equipment dealer Apogee Corp. in a deal worth $456 million. Apogee is Europe’s largest independent provider of print, outsourced services and document/process technology.
The deal is a key cog in HP’s quest to disrupt the $55 billion A3 copier market and builds on its printing strategy to enhance its A3 and A4 product portfolio, build differentiated solutions and tools to expand its managed print services and invest in its direct and indirect go-to-market capabilities.
“The Apogee acquisition extends HP’s print leadership by boldly leveraging the industry shift to contractual sales as we aggressively pursue the A3 office market,” said Enrique Lores, president, HP Imaging and Print. “We’re augmenting our go-to-market and enhancing our ability to deliver the services necessary to win in the profitable contractual market. This deal complements our broader channel strategy and HP remains committed to building our business through our best-in-class partner program.”
Abundance of manufacturer, supplier leadership changes. There was a flurry of changes atop the command chain of several major manufacturers and suppliers during 2018. One of the most notable was the lone firing among the biggest players, when Xerox CEO Jeff Jacobson was forced out amidst the springtime drama involving the company and its dissident shareholders (see Xerox-Fujifilm saga above). Jacobsen and a number of board members submitted their resignations, with John Visentin assuming command as the new CEO. Steve Bandrowczak was named Xerox president.
One of the biggest surprises saw Guy Gecht step down after 19 years as the CEO of Electronics for Imaging (EFI). Gecht, who will remain on the board of directors, was replaced by Bill Muir, the former COO of product solutions company Jabil. Sharp was able to look from within to find its new leadership when Doug Albregts left to pursue an opportunity with Scientific Games. Mike Marusic, a 16-year veteran of Sharp, took the helm.
Oscar Sanchez was named the new president and CEO of KYOCERA Document Solutions America, replacing Yukio Ikeda. Canon Solutions America Chairman and CEO Toyotsugu Kowamura retired and was replaced by Joe Adachi.
Online Tech Stores, which goes to market as Supplies Wholesalers, announced in the fall that Greg Greenwell was succeeding founder Bob Willmes as CEO. Greenwell, a 20-year veteran, had owned an MPS dealership that he sold to DEX Imaging. Meanwhile, at DocuWare, company presidents Jürgen Biffar and Thomas Schneck announced plans to step down effective the start of 2019, with Chief Technology Officer Dr. Michael Berger and Chief Revenue Officer Max Ertl filling their roles. Ken Lalley became CEO of Static Control, replacing Bill Swartz, who retired.
KYOCERA throws hat in high-speed color inkjet ring. The KYOCERA Innovate dealer meeting in April was a resounding success for the manufacturer. Fresh off a year in which it acquired DataBank, the OEM showed no signs of slowing down when it provided a sneak peek of the TASKalfa Pro 15000c high-speed, cutsheet production inkjet printer. During its product fair, long lines of attendees waited to enter a closed-off room for a 10-minute presentation, and it proved to be the highlight of the meeting. The 15000c boasts an output speed of 150 ppm A4 and 146 ppm letter, and can handle media up to 13×19”, with a print head resolution of 600×600 dpi. Dealers can target clients including CRDs, in-plants, nonprofits, direct mail/service bureaus and print service providers.
“For us, it was a logical extension of the product line. Our technology affords us the ability to get into inkjet in a fairly easy manner,” noted Danielle Wolowitz, vice president of corporate marketing. “This is a KYOCERA Document Solutions product and we’ve developed it from the ground up. We’ve been working on it for a while; something of that magnitude doesn’t happen overnight. They’ve taken very careful consideration into the market.”
Companies seek to rebrand. The trend toward rebranding is certainly not unique to the office technology dealership space. Many companies, particularly those in industries with offerings that are viewed as mature or old school, have implemented name changes to reflect a more diverse and technology-driven offering of products and services. Some rebrands include NovaCopy of Nashville, TN, which recast itself as Novatech. Denver-based All Copy Products rechristened itself as ACP, with a new logo and tagline—Complete Office Technology Solutions—to recast itself as a full-fledged technology company. Another example is Des Plaines Office Equipment (DPOE) and sister company Kramer Leonard McShane’s. DPOE President Chip Miceli put together a committee to create a name that would better position the firm in going to market, and the result was Pulse Technologies. The company is preparing a major marketing campaign to promote the move in 2019. And on the leasing and financing side, EverBank became TIAA Bank.
Konica Minolta absorbs MWA Intelligence. Konica Minolta bolstered its All Covered platform with the acquisition of enterprise resource planning specialist MWA Intelligence (MWA) of Scottsdale, AZ. MWA is largely credited with pioneering the first ERP platform for the imaging channel.
“The acquisition of MWA is key for delivering Konica Minolta’s corporate ambition to provide all dealers in the imaging channel a true ERP platform to facilitate the future of work, regardless of the product lines they support,” Konica Minolta President and CEO Rick Taylor said. “This acquisition will help accelerate the pace of change in the market.”