Friday, January 29, 2016

The Future of The Imaging Industry Isn't Print


"Please State the Nature of The Medical Emergency"

About a year ago,  the owner of an office equipment dealership rang me up asking for advice.

His largest "managed print services" (toner) account was being threatened by an IT company offering a full range of IT services including supplies and service delivery on 'his' printers.

He was in a panic.

Like dozens before him, he wanted somebody to say it was going to be okay; that what he was doing today, "building long and deep relationships with his customers", providing "the best service at the lowest price", was enough to save the patient - his 20 year old, $5 Million, family owned business.

I told him to change.

I told him hope resided in a future with fewer technicians and reduced overhead.  I repeated the "change your business model" mantra, begged him to exit toner delivery and get into the IT side of the world.  I offered contact information at Collabrance; urged him to reach out to a little know company called PrinterLogic and talk to his customer about reducing costs by eliminating print servers.

He fought me.

Of course I proposed taking a quick look at his operation, give some basic recommendations and make the necessary connections for him to explore - all for a poultry $2,500.00.  No warranty or money back guarantee, but for the price of a trip to ITEX, he could have gained a fresh perspective and possibly made some profitable connections.

He didn't.

I have no idea if his business still feeds families or drifts on the waters of denial.

Here we are on the edge of 2016.  The copier industry insists on fooling itself into relevancy as small dealers are gobbled up and bigger ones sell out to investment groups.  The OEMs?  Splitsville.

Today, if you were to ask, "Greg...what the hell can I do now?  I've social media'd up my company, I'm first in google search, but MpS flopped, managed IT services is not working and the only people buying copiers are schools, churches and the government!"

  • You've tried digital signage
  • You've looked at water service
  • You're not sure about managed services
  • Your managed print services program is not delivering 42% GP
  • 3D Printing looks cute, but you can't seem to get your head around a profit model

Now what?

One word, kid - "TeleHealth"

I'll let you do the googlitizing.  The fastest growing area for technology and monthly recurring revenue is the healthcare arena and has nothing to do with printers or copiers.  I'd think about assembling and supporting connected, healthcare devices.

Not heart monitors - think bigger.  Think about this:



It's connected, contains technology components, requires assembly, and clients might pay for 24/7 monitoring and service.  Relevant. Expanding. Service based.

Curious?

greg@grwalters.com


Thursday, January 28, 2016

Xerox Jettisoning Hardware 8 QTRs of Decline:The Death of the Copier


Like those forgotten print jobs, the WSJ reports Xerox will leave their hardware business in the exit tray.

Are you seeing double?  One business for hardware, one for services.  Didn't Xerox just buy their services division a few years ago?

Not only this, but Icahn will be given the seats on the board of the company holding Xerox's services business, the Journal reported.

Tell me again, how the copier is still relevant?

Two of the largest technology companies in the world have now split in two.

From the Xerox announcement:

"Today’s market realities require greater agility and flexibility, the ability to innovate and adapt technology to address clients’ fast-evolving needs, and a more focused and efficient approach to operations and capital allocation.

As a result, it has become increasingly clear that the Document Technology and BPO businesses serve distinct client needs, have different growth drivers, and require customized operating models and capital structures. Thus, the separation of the two businesses will enhance their competitive positions and create significant value creation opportunities, including:

Enhanced strategic and operational focus. Each company will leverage its areas of strength and differentiation to address distinct market trends and opportunities. The Document Technology company will invest selectively in growth areas while ensuring continued operational discipline and capturing transformative productivity. The BPO company will focus on leadership in attractive market segments to deliver differentiated solutions to its clients and drive profitable revenue growth.

Simplification of organizational structure and resources. Each company will be able to adapt faster to clients’ changing needs, address specific market dynamics, target innovation and investments in select growth areas and accelerate decision making processes.

Distinct and clear financial profiles. The separation will enable each company to leverage its distinct growth profile and cash flow characteristics to optimize its capital structure and capital allocation strategy.

Compelling equity investment cases. As standalone companies, both companies will offer distinct and compelling investment propositions with differentiated financial profiles, growth drivers and business prospects."

Xerox also announced today a three year strategic transformation program targeting a cumulative $2.4 billion savings across all segments. The program is inclusive of ongoing activities and $600 million of incremental transformation initiatives. The company expects $700 million in annualized savings in 2016.

Take a look at the graph.



What could this mean? Icahn is satiated for a bit. The hardware business, once separated, may be easier to sell.

The Death of the Copier is, once again, substantiated.