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Thursday, January 14, 2010 Chimes In On MPS and A4's in 2010

As the economy recovers, buyers look to office products for cost savings
Canon, Xerox, Sharp, HP and other office equipment manufacturers forecast 2010

By Nancy Hitchcock -- Purchasing, 1/14/2010 2:00:00 AM

As businesses look ahead in 2010, industry experts are "cautiously optimistic" that the economy will improve and predict that companies will continue to evaluate their office environments, implementing measures to improve efficiencies, increase productivity and cut costs.

"I don't believe anybody in 2010, as in 2009, is going to be spending money unless they're spending money to save money," says David Bates, vice president of product marketing at Xerox in Norwalk, Conn. "The good news is we're helping people save a lot of money."

Companies gain the most value out of their office equipment—often with assistance from suppliers—by adopting several solutions: They're implementing managed print services (MPS), consolidating office equipment, installing multifunction products (MFP), shifting from A3 to A4 devices and improving the flow of electronic information.

MANAGED PRINT SERVICES. Aiming to drive down costs, businesses review their printing infrastructure to assess where to improve efficiencies. Companies are leveraging expertise of office equipment providers to rightsize equipment and improve information flow.

"Companies have been offering MPS for a few years, but it is gaining traction now because with the economic times we're facing, it's a way for companies to lower their costs substantially," says Keith Kmetz, vice president of hardcopy peripherals solutions and services programs at IDC in Framingham, Mass. "I've heard from companies that they've seen as much as 50% savings, but probably on average, savings are in the 20% to 30% range."

Canon provides customers with tools and advice to better manage costs. "Typically when customers come to Canon looking for services, we help them analyze and understand the costs associated with their existing output environment," says Dennis Amorosano, senior director with solutions marketing and business support at Canon in Lake Success, N.Y. "They would be looking for recommendations like software tools and other technologies to rightsize their fleets and put in place the necessary infrastructure to help them manage those costs. We've been doing that for customers, and expect that to continue in 2010."

Konica Minolta assists clients with managing their overall print environment with its optimized print services (OPS) program that it launched in January 2009. "Over the past several years, we have witnessed a growing awareness in our customer base of the need to develop and deploy strategies to better manage their print assets," says Kevin Kern, senior vice president of marketing at Konica Minolta. "The solutions approach to the business is a critical part of helping customers be more efficient."

SIMPLIFYING PRINT PROCESSES. Another solution that companies implement to save money is to consolidate the number of inkjet and laser printers sitting on desktops and use more shared workgroup devices in the office. Centralizing equipment leads to fewer devices to manage. Companies can better control supplies and maintenance of the devices as well.

"Often, companies will have a range of different suppliers, contracts and leasing arrangements," says Kmetz at IDC. "It can become very difficult to manage, and it's challenging for a purchasing manager. Under a managed print services contract, you consolidate everything, and perhaps it's under one contract.

"The MFP fits into that device consolidation message," he continues. "It's not only consolidating the functions into one box—the MFP is not just a printer, it prints, scans, faxes, and copies—but you're also dealing with supplies management. If you have a fax machine, a printer, and a copier, they might be from three different suppliers, plus the purchasing manager needs to procure three types of supplies. If you have an MFP you're just dealing with one supplier."

The transition from single-function printers to MFPs is very strong in the color laser market, reports Kmetz. About 46% of the shipments in this market are MFPs and "that is projected to grow, reaching 53% in 2010 and upwards of a little over 60% in 2013," he says. "The strongest shift is in the inkjet market where that has pretty much turned over to a virtual MFP category."

In the MFP market, a shift to color still exists. "In 2009, we saw 27% color penetration in the MFP market and that's expected to grow to 31% in 2010 and continue to increase," says Kmetz.

Printing with black-and-white printers is still the lowest cost option for printing, he says, adding that the market will continue to operate with 80% black-and-white devices and 20% color.

A3 TO A4 STRATEGY. Another cost-cutting measure taking place in the market is a shift from A3 to A4 devices. As companies evaluate their printing and copying requirements, they're realizing that the majority of their output is on letter-sized paper, yet the majority of their printers and MFPs offer ledger-sized media.

"Purchasing managers should consider whether they could replace some of their higher cost, higher-to-maintain A3 equipment with lower cost A4 equipment and still have the same productivity and efficiency, but lower their costs substantially," advises Kmetz. "They'll still need A3 equipment but maybe not so many devices."

Sharp finds that many of its customers don't need full-sized MFPs and introduced a product line last year called the Frontier series. "The letter-sized MFP is a derivative product of our full-sized MFP and we've seen phenomenal growth," says Mike Marusic, vice president of marketing and service at Sharp in Mahwah, N.J. "That's where the market is exploding."

Sharp will also introduce the Frontier Scan Pro A4 MFPs featuring a more robust scanner to meet the higher scanning demands on an MFP.

ENVIRONMENTAL BENEFITS. Green initiatives will stay on the priority list because they also provide cost-cutting measures. "Overall, to us the environmental story and the cost story are exactly the same. If you reduce your environmental impact, you lower your cost," says Larry Trevarthen, market development director, laserjet enterprise solutions, imaging and printing group at HP in Boise, Idaho. "If you want to reduce costs, you can have fewer devices that run on more energy-efficient platforms. For example, instant-on technology, which we have on products, uses 50% less energy than competitive products, which lowers your energy bill. Another example is duplexing, which reduces paper and the paper bill."

Xerox launched the ColorQube 9200 Series MFPs in 2009, a high-speed solid ink device that eliminates 90% of waste because it has no cartridge; it uses a block of ink. MFPs lower costs by enabling customers to pay only for how much color is used on a page. "That's been popular because it's a completely different paradigm in the metered page world," says Bates. "Customers are buying the device because they're spending money to save money."

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