The Death of The Copier Dealer

8/2008

I was reading and responding to a post by Ed Crowley about Managed Print Services when it hit me ...wasn't there a time when computer dealerships were like Starbucks; on every corner of every city, town, and village? 

I'm not nuts, right? I do remember correctly, don't I? Of course I do because I worked at an Inacomp and competed with ComputerLands while working at MicroAge. My first computerized accounting system was installed on an IBM PS/2 Model 60 running Novell severing two workstations. 

So, yes, there was a time when you could open a phone book and the computer section would contain a dozen pages of dealers, software houses, VARs, and computer service locations. 

Check out a phone book now - that is if you can find one - and see how many computer dealers are out there; then go to "C" for "copier dealers". 

 Back to the Post - In one of the responses to Ed’s post, this caught my eye - 

 "...the Vendor is about making money and moving their products and services. ... a customer needs to look for a vendor that is well versed in both industries(Copier and Printer) and that is going to focus on a STRATEGIC partnership, not just focused on moving a “box” whether it be some sort of imaging device (Printer, Scanner, Fax, Copier, etc), a service contract, or supplies..." 

 Agreed - and based on this, I would suggest a RADICAL shift in Paradigm.

Vendors should become "Partners". Remember, vendors, push carts full of hotdogs down the street. I also recognize that pulling the "hardware" element out of the existing copier dealer model is impossible. Not because a new model can't make money, but rather, because the new model is too difficult for "old school" merchants to comprehend. 

I wrote a bit about Matt Espe's quarterly conference call last week. One, small, seemingly innocuous comment stuck with me, Espe said, "...the very low-end office black and white continues to go to the retail channel and continues to go from copier technology to printer technology… you're seeing actually some improvement in functionalities clearly at much lower price points by the tier two guys. 

And you are seeing that kind of shift from copier distribution to retail. We don't play there..." From “copier distribution to retail”. 

 It's deja-vu all over again. We use to joke, while at MicroAge, that Wal*Mart would someday sell High-End PCs; we laughed at the possibility.

We were wrong.

Additionally, "from copier to printer technology..." isn't that the HP model? And guess what, for me, on a daily basis, I see copiers in places where "printer-based MFPs" should be - about 90% of the time the copier that was sold to the customer has capabilities well above everyday usage and function requirements. 

For example, in the last two weeks, I have surveyed fleets totaling 107 copiers. All but seven are 55 pages per minute units, most with a 3-hole punch. The average monthly volume on each machine is no greater the 11,300. This average is by machine over the life of the 60-month lease. The manufacturer’s published volume per month is up to 200,000 images. Oh, and the punch unit is never used. As a matter of fact, in a department that did need a 3-hole punch, the copier DID NOT have a punch and they ran the pre-drilled paper through the machine. 

In the past 6 months(2008), in every single one of my surveys, 99% of the machine specifications are well over the real-world usage – as a matter of fact, I have found, when looking at all the surveys as one, the average volume per machine is 10,234 images each month. Isn’t that the number HP came up with when they did a study of all the printers in the world? (It was around 10k/unit, you can look it up) 

Consider this: If the aforementioned machines have the ability to process 200,000 images in a single month, their price has been set to reflect that capacity.  – you’re...paying...for... too... much.... capacity. 

 It’s kind of like that scene in Indiana Jones when Indy and his friend realize the Germans “are digging in the wrong place” isn’t it? This is just one facet of the Copier Model- interesting, no?

- perhaps, we are witnessing the beginning of The Death of The Copier Dealer...?

Kyocera in The House...the MPS House?

Kyocera unveils managed service

From an article by Nick Booth, CRN. He is discussing Kyocer's new program with Kyocera’s distribution manager, Alicia Shepherd...

“The printer is the only IT product whose sales model has not changed in 10 years. There are endless options for print applications, so customers will only get the most out of their printing inventory by adopting it as a managed service.” she said.

Welcome aboard.

The number of "players" continue to increase, but...wait...I seem to remember Kyocera sells...hardware, right?

Well, it is the beginning of the month...isn't it?

Canon Copier Profit Down 12%

Clippings from the news...


Forbes-

Japan -

TOKYO, July 24 (Reuters) - Japan's Canon Inc posted a 12 percent fall in quarterly profit on Thursday, hit by weaker monochrome copier demand and a firm yen versus the dollar, but the camera and office equipment maker kept its full-year outlook that exceeds market expectations.

April-June operating profit at Canon (nyse: CAJ - news - people ), which competes with Xerox Corp (nyse: XRX - news - people ) and Ricoh Co Ltd (otcbb: RICOY.OB - news - people ) in printers and copiers, dropped to 160.15 billion yen ($1.5 billion) from 181.47 billion yen a year earlier.

Reuters-

Profitability at its office equipment operations has come under pressure as an economic slowdown has meant businesses are putting off buying or replacing copiers, although its high-end digital cameras enjoyed brisk demand.

The company, which competes with Xerox Corp (XRX.N: Quote, Profile, Research), Ricoh Co Ltd (7752.T: Quote, Profile, Research) and Konica Minolta Holdings Inc (4902.T: Quote, Profile, Research) in printers and copiers, is also grappling with the soaring cost of raw materials and the profit-slicing impact of a stronger yen.

"We expect the yen to remain strong and for high raw materials and fuel prices to continue. The operating envrionment is tougher than we had originally thought," Canon Managing Director Masahiro Osawa told a news conference.

Yahoo News -

Canon said its group operating profit dropped to 160.15 billion yen in the April-June quarter from 181.47 billion yen a year earlier. Net profit fell 13 percent to 107.84 billion yen on sales of 1.11 trillion yen, down 1.9 percent.

Excerpts From Espe

IKON has turned around, will it last?


These are some questions asked of Espe after the 3rd quarter conference call:


Amanda Seguin – Lehman Brothers

"...Okay. And then one more follow-up. On the Konica Minolta Danke deal, just wondering if that’s changed, if there’s any update on your relationship with Konica there and the machines in the IKON channel?

Matt Espe

Nope. Konica, we like the 350 and the 550, the equipment is terrific and the relationship is intact.

Shannon Cross – Cross Research

"Hi, good morning."

Matt Espe

"Hi, Shannon."

Shannon Cross – Cross Research

"Couple of questions. Just starting – can you talk a little bit about the competitive environment in the services business as you go out and do some of these bids, the sweep bids and that, you know, with the HP getting a bit more aggressive, Lexmark is probably desperate from a desperation standpoint I would say? And then they are also obviously playing their queue. I’m just curious at sort of what pricing, what it looks like in terms of how savvy customers are becoming in terms of getting all of you to price against each other and then what people are looking for and what sort of drives their decision-making?..."

Matt Espe

"Well, let me try to answer that. That’s a very good question. For many of our customers, this is now round two or three of outsource agreement, certainly round two.

So to your point, the customers are more savvy.

But what we are seeing is, we continue to see extremely high retention rates because the switching costs are high. And we’ve been able to leverage fairly strong product portfolios with very strong workflow solutions at our customer base. As a result, you just tend to get embedded into clerical workflow. So the switching costs are a little bit higher. So it makes it very difficult even for companies – strong companies like Canon – or I’m sorry, Xerox and HP to come in and knock us out.

When it’s a brand new "Greenfield", if you will, it’s a little tougher, but we have very strong references. So it’s – we think we are very well positioned because we’ve got a very broad and diverse product range and we’ve got great leverage with very strong workflow solutions, and we’ve got great process experience in a number of verticals.

Our product line – the equipment lineup is stronger for mid-market than a couple of manufacturers you mentioned. Our experience is broader and deeper, and our ability to sort of refresh the offering during the course of a managed service agreement is very good. And we’ve got a very, very good track record of delivering on precisely what we commit to. And that brings some sustainability as well."


My summary:

- IKON has moved from OMD to Oracle
- Color equipment revenue up 12%, placements up 7% and color equipment is no 38% of total units.
- B/W Office revenue down 11%
- IKON is losing low-end office market to "retail"; is of no concern
- Production up 3% B/W, 6% color
- 39 C7000's and 33 C6000's sold past quarter
- Analogue now at 7% of MIF (Machines In Field)
- Professional Serivices/Total Managed up 4% due to new programs to existing customers
-
Source - Seeking Alpha, here.

It's not Easy Being Green - "Don't Take My DeskJet"

You really can not make this up...I have been performing a few assessments lately, and the cultural impact is most observed when we try to remove the desktop units...

You gotta go here at ComputerWorld "Shark Bait" and check it out.

Break Into Pharmaceutical Sales By Selling Copiers?

I found this article somewhat interesting. 

 From the article: "...The technology market including copiers is a very different type of sales environment compared to pharmaceutical sales. Since customers can often be one-time purchasers only, salespeople in technology tend to use a more aggressive form of sales in order to secure the orders..." -- Technology salespeople are more aggressive. 

Ok, well, it seems that almost everyone outside of the industry has got all of us salespeople inside the industry all figured out. I haven't looked at a possible client as a "one-time" purchaser in nearly 10 years. 

 More -- "...An overly aggressive drug representative can easily turn off physicians and even lose the opportunity to future appointments. I’ve actually seen this happen to some drug reps out in the field as doctors have candidly told me that they refuse to see certain reps because of their aggressiveness. 

Therefore, some pharmaceutical companies will not hire former salespeople who were in more aggressive selling environments unless they can prove that they can tone their styles down to adapt to the pharmaceutical medical scene..." -- Tone THIS down, I got you're TONE...right...here... "... whether one should try to get some experience selling copiers in order to break into pharmaceutical sales. 

The answer is all previous sales experience dealing with real customers is an asset whether it is dealing with copiers, rental cars, medical equipment, or even retail sales. 

 The key is being able to use these selling skills and adapt one’s style to fit in well with the pharmaceutical sales environment. In many ways, selling technology equipment can be a more challenging form of selling because in many cases, one doesn’t get the benefit of follow-up appointments with customers..." -- I think this guy just "dis'd" me... didn"t he? 

Well, I remember a few years back when a Pharm recruited all the USC cheerleaders for sales positions. It is a brilliant idea and one I would participate in, especially the interviews - but I digress. 

Check this funny blog post about Pharm-Rep watching. But how can anyone from an industry like that make judgments like this? Click to email me.

Printer Operations Group - Ed Crowley Brings them into the Light

This Post introduces POG but the real "gold" is in the white paper found here.

Go get it.

I was impressed. The ideas are good.

What I find most intriguing is that this represents yet ANOTHER definition and approach in Managed Print Services - specifically from the true, billable, Consultant side.

I will not break down the white paper - go get it.

But here some highlights from the White Paper:

- Billing for assessments

- Vendor Neutrality

- The Deployment Curve - 4 stages

- "Root Cause Analysis"

- Result of an assessment is a Road Map not a Proposal for Products

- Cultural Navigation

Bad Experiences with Leasing - Toshiba, IKON, Canon, Saxon

The copier industry has a self inflicted black eye

Here from a Church in Florida-

Leased Copier-The Final Punishment
By Kevin McCord

"...When renewal time came around last year I was interested in working with them again, but found their prices far too high. I was in a position to buy a machine outright. When they got wind of that, they pulled out the lease agreement. We were a few weeks beyond the 90 day notice for non-renewal. The lease agreement locked us in for 12 more months with a machine we didn't want to use. They were not interested in our future business enough to let us give written notice a few weeks late even though we had spent those weeks in negotiations with them..."

Here from a school I think near San Francisco -

Copier leases: A few experiences and thoughts
By Greg Beuthin

"...We had two major beefs with our current copier lease company:

1. Response time was supposed to be 4-6 hours, but we had increasing delays, up to 8 hours in some cases. And often what would happen is an agent would arrive, and 15 minutes later declare “Parts are on order, I’ll be back in X days.”
2. We had an per-machine copy quota system. On the simple b/w copier, our lease included 18k copies a year, on the large multi-use one, 380k However, because of location, the b/w copier was used far more than the other copier, and we got hit with massive overage charges - even though we were twice as much under quota for copies on the large machine..."

-- more --

"...It’s stories like this that are helpful to people when they are reviewing their final lease copy agreement. We got screwed by Canon similarly, but only for 3 months (our lease said we had to provide 90 days notice, so we had to pay for 3 extra months). Of course, had I not waited until the last week to finalize a contract with another company, I would have been better off..."

Here a bad experience -

Shame on you Toshiba Business Solutions

"...In order not to “auto renew” most copier leases have a very strict code of how, when and where to send your formal cancellation notice. And if you don’t abide you have just bought yourself another 2 years with an outdated copier, congratulations.It’s the equivalent of a current boyfriend or girlfriend denying your right to break up with them because you didn’t do so at the right time or place... "

In this post from a church -

I hate Ikon Office Solutions

"...After 3 years of leasing a copy machine from this company our contract is out at the end of the month. That is a good thing...since we own a machine now we don't need to lease one. The contract is out, we have to pay the remainder of the lease...which is right and fine. What is wrong is that they charge us to come pick it up!!! I lease a machine from them (Ikon)...which means it is theirs and DOES NOT belong to me (newpoint)...their words in their contract. So they send me to a company that will come pick it up...for $375!!!!! ..."
-------

Anecdotal, I know. But still - the story is repeated over and over.

Leasing is a difficult issue to understand and it should be simple. It should be easy to understand and easy to explain and Leasing should be explained and all the ramifications transparent.

I think the necessity of "contracts" does not over ride the

One Organization's Paper Operational Review

In Virginia, "...Participants included Senator Fred Quayle, Delegate Dave Nutter, Gwen Baily Assistant Clerk of the Senate, Linda Belflower of the Virginia Employment Commission, Paula Dehetre of the Office of Workforce Development, Fred Duball of VITA, David Nims of the Department of General Services, Tiffany Moklebust of Gartner Group, Stephanie Holt of Xerox, and Jim Dougherty and Tony Williams of Virginia Correctional Enterprises..." 

The article is here. 

Some of the items I found of interest - 

Current Costs - "...Virginia departments and agencies currently have a printer inventory of 34,221 and thousands more copiers. In FY06 the state spent $7,499,837 on paper, stationery and forms..." "...In addition to the printer, copier, and paper expenditures, the state spent $37,702,417 on printing services that include designing, printing, collating, and binding..." 

The Recommendations The reports put forward 5 recommendations, but I like number 4:

 "Recommendation 4: Move toward or transition to the implementation of managed print services--as appropriate for meeting agency and department mission and goals. Managed print services (MPS) are services offered by an external provider to optimize or manage an organization’s document output. An MPS contract can include assessment services, asset management, output management services, and support services. The external service provider either owns or leases the hardware, with the customer paying a monthly or quarterly fee—based on a cost per page or cost per seat. 

Gartner suggests that candidates for MPS are midsize or large organizations with 100 or more employees. Agencies and departments should document their print needs and determine if the use of managed print services would reduce their print cost." Seems the Great State of Virginia "gets it".

Shareholders Petition Court to Delay EDS/Hewlett-Packard Merger Vote, Announces Baron & Budd, P.C.

DALLAS--(BUSINESS WIRE)--At a hearing scheduled by Collin County District Judge Greg Brewer on July 24, shareholders of Dallas-based Electronic Data Systems (EDS) will be asking the Court to postpone the July 31 shareholder meeting

It looks like stockholders are questioning the sell price of the deal - because of the increase in revenues and better EDS profit over the past 12 months.

They want more money.

Managed Print Services: Leading Edge and Bleeding Edge

Don't let the SALES GUY touch the machine! 

I recently had the honor of attending a training session intended for "technical" types. Both pre-sale and post-sale technicians were in attendance - about 13 of them and 1 of me. Resellers from all over the country - Edgeline resellers; Edgeline technicians.

That's right. 13 techs and one salesperson. Oh, the fun we will have.

The classes were covering Job Accounting in session one and Printing Security in session two.

I won't bore you with the details, but I will tell you this - early in the first session the instructor queried, "...what's going on out there in the field, do your customers seem to be interested in reducing printing costs?" - I am paraphrasing the question but the response, or better yet lack of response, I am not.

The collective answer? "Nope." "Not on any customers mind or radar.", "They just want to reduce their lease payment, that's all"

I fell out of my chair - I blurted it out, "MPS is the hottest issue out there right now, if you think your customers aren't on it, you are wrong." - And my reward for being one of the first to contribute to class discussion?

Dead silence. Blank stares. Crickets.

The first time I participate in class, this is what I say? I felt it was going to be a very long two days.

Well, the experience improved - a great deal. The guys represented the highest level of certification available from HP. I found everyone engaging and knowledgeable about the industry and their place in it.

We all have common struggles, challenges, and successes.

Still -

After reading Ken's articles, "Crossing the Document Output Divide" and "Customers Don’t Know What They Don’t Know." I wonder exactly where MPS is in the industry. It doesn't feel mainstream. It feels new and frontier-like. It feels like we are still making this up as we go along.

I wonder about the blank stares and shrugged shoulders I observed in class. I wonder about the blank stares I receive after I explain my version of MPS to a prospect.

With Managed Print Services, "Bleeding Edge" and "Early Adopters" are titles not only applied to prospect types but also Provider types.

This is a special time.

Leaders Lead.


Click to email me.

Men With Pens

Shooting From the Hip

No, they do not sell Penis-Mightiers. In my quest to improve writing skills I have looked at many, many sites - this one is a good one.

I really liked this post.

They are on my Role and can be found here.
Click to email me.