Canon and HP: A Response to Ricoh/IKON?

Are Canon and HP a good mix?

"Chatter" or the volume of transmitted communications, increases as a terrorist act nears - in our industry, the opposite occurs - silence before the storm.

I haven't heard a peep regarding ANY sort of arrangement or agreement between HP and Canon - and I have heard even less about Edgeline (isn't that like the Hawk back in 03?).

So we ask, what is going on?

Last year, I was able to review the Gartner's Magic Quadrant report.

Buried in the narrative are the strengths and weaknesses of Canon and HP.

The following is from Gartner:

Canon
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Strengths

* Canon has a solid office product portfolio in MFPs and printers, in A3 and A4 engines, and in monochrome and color that can satisfy the most discriminating needs of customers.

* Manufacturing strength and R&D investments have provided the company with a wide range of products to fit most customer needs. Canon's engineering and portfolio strengths (both monochrome and color) have kept the company at the top of the worldwide laser MFP market share for well over a decade.

* Canon supplies HP with enough LaserJet engines to make it the No. 1 provider of laser printing technology worldwide.

* Canon's leadership team has prudently led a well-financed organization with over $10 billion (cash on hand) to invest in growing its MFP/printing business.

Cautions

* Canon's largest distributor for its line of office and light-production products, IKON Office Solutions, was recently acquired by Ricoh, Canon's chief rival. In 2007, 30% to 40% of Canon's U.S. office/central reprographics department (CRD) shipments were distributed through IKON. This has caused a profound disruption in Canon's channel and has forced the provider to start investing heavily to realign its channel strategy.

* The company has also seen additional cracks in its distribution channel as Danka Office Imaging and GIS, both of which sold tens of millions of dollars of Canon products, were also acquired within the past 18 months.

* It has lost its leadership in the growing SMFP (open-architected MFP platform) market that it created more than five years ago.

* In recent months, smaller, providers have outperformed Canon in closing large deals — especially in the light-production and midproduction color space.

HP
--
Strengths

* HP is the undisputed leader in single-function page printers (with 53% of the worldwide market share) and has also eclipsed Canon for the most overall MFP placements (17.1% worldwide market share) in the four quarters we examined (the last two quarters of 2007 and the first two quarters of 2008).

* Like other leaders, HP has a global reach and a broad set of customer types that use both printers and MFPs in monochrome and color.

* Perhaps HP's greatest strength is its strong relationships with IT organizations and decision makers. As document management technology accelerates on MFPs, HP, with its HP Open Extensibility Platform, will be in an excellent position to leverage its IT connections to incorporate paper-based and other documents into enterprise and other software applications that make customers' processes more efficient.

Cautions

* HP customers tend to be leveraged from its IT connections and are usually buyers of mostly A4-centric MFPs with limited page volumes.

* HP's capabilities in A3 are limited to a couple of LaserJet products and the Edgeline (8050/8060) series of inkjet MFPs. This portfolio is not broad enough to meet the needs of the widest range of Gartner customers.
* HP's market share leadership with LaserJet — for which Canon manufactures the engines — could be undermined if Canon, as part of its recent strategic changes, decides to modify its contract with HP and begins to sell its engines under its own label through Canon Business Solutions.

Death of The Copier Analysis -

The last two points, emphasized in red, allude to some of the puzzle: HP's narrow portfolio of A3 and Canon's ability to undermine HP by selling laser engines under its own label through CBS.

There are many possible scenarios, but here are some of my guesses:

#1 - An agreement between HP and Canon allowing HP to resell a few Canon copier systems. This is a natural fit filling the holes in the product line to be filled with proven Canon hardware.

Perhaps these re-labeled Canon units would ship with HP JetDirect internal print servers and DSS.

The more troublesome part of this idea is the ability or lack of ability of HP's existing high-end, IPG VARs to service a real, honest copier, let a lone HP direct service capabilities.

One is painfully reminded of the "Hawk" - HP 9055's and 65's sold primarily through IKON. These were 55 and 65 page per minute Konica machines with DSS and JetDirect cards.

There are many reasons for the product's failure, too many to go into, but one lesson learned may be managing all the obstacles encountered when trying to work within an established copier sales model.


#2- HP acquires Canon Business Solutions.

This would be an acquisition of the North American Canon. HP would secure an instant IPG channel; $75 million in revenues, 2400 employees, 40 locations. Instant MIF. Instant service network for copiers.

Enhanced multi-vendor, MPS capabilities. HP OPS VARs certify on certain Canon units and add to their product portfolio.

This scenario seems unlikely.

#3 - HP and Canon enter into a joint agreement, much like the Fuji/Xerox venture. HP

A quote from 2005 by Vyomesh Joshi, Executive vice president of the imaging and printing group, "The relationship with Canon is strong. It's a win-win for both of us, so we see tremendous benefit," (regarding the importance the 21-year partnership with Canon)"
#3.1 - HP and Canon form a "Sales Alliance"
Similar to the recently announced Ricoh/IBM arrangement; an alliance of sales forces.

In my opinion, which is more like guess work in the dark, the first alternative seems more plausible - and the most likely is that nothing will happen. HP will stay the course and grow their channel organically.

How Does Your Copier, 30 Day Funnel Look?

Hank Moody fan.

Californication, is a punch in the face - if you know what I mean. Hank captures truisms about life in southern Cali - albeit exaggerated. A transplant for NYC, a writer of some notoriety, semi-eternally struggling with writer's block, we follow Hank's antics as he crisscrosses the landscape.

Hank is flawed.

He mistakenly assaults young women with his mouth, usually fighting off a bevy of drop-dead gorgeous, California Girls. Driving around L.A. in a dirty, beat-up, cyclopean Porsche.

His greatest misstep is an intimate encounter with a hottie, who unbeknown to him, is the 16-year-old daughter of his ex-girlfriend's current fiancee - yeah... it's confusing, it's California.

His life, his work, his character - damaged but not perverted  - his baggage may be significant, but he keeps going, keeps moving.  Laughing, smirking, and drinking his way along.

When I lived in Michigan, I thought that the people in California were nuts - I was right. Of course, all the "nuts" out here are originally from "back east". "Back east" means anyplace east of the state line.

Like it or not, California creates trends and the rest of the country follows - socially, politically, and economically.

It's the economic direction that should interest those not in the Golden State - the state of Regan and Nixon; of Boxer and Pelosi.

Today, I saw fear in the eyes of a prospect -

Across the desk, she sits. Piles of papers in front of, behind, and all around us - like a lot of people, she doesn't have To Do lists, she owns To Do Piles.

We are discussing her current print environment. A hodge-podge of single-function, multi-function laser and inkjet, HP devices - printing, faxing, copying, and scanning functions are performed daily and at times, in great volume.

She has been approached by the Canon rep for years. He told her that "one of my machines can replace all those expensive HP's - it's cheaper to print on my copier than their laser-based printer..."

She is suspicious, so we add up the numbers - the numbers only. I am concerned that if the volumes approach a higher level, say 20, 000 images a month or above, the copier guy may indeed be correct - of course, he quoted a machine well above what is needed - along with a monthly lease payment of nearly $500.00 - 60 month (3-hole punch, and 11x17 - neither of which my prospect has used in over 10 years).

After our elementary calculations, we both realize that my recommendation prices out significantly lower than the Canon - mine for TWO devices over 36 months with a CPC, all-inclusive, SA.

And yet, no "close" -

She goes on to tell me the state of California is thinking about paying her with an official I.O.U.

Her business is a medical testing lab and she bills Medi-Cal(the state) for a majority of her work; before she asks, I tell her I can not accept an IOU from her.

So she needed to hold off on getting 2 new machines, but will strongly consider an MPS engagement if she can save money.

The MPS is a no-brainer.

Her monthly supplies expenses are not that much, under one thousand a month, and our program may reduce that figure by 20% - offering up a $2,400 yearly saving - it will help, but won't save any job.

The conversation leads to how she came to this country 40 years ago. How her husband and she built this "small" business, put kids through college, provided good jobs for hundreds of families over the years, and how "...this recession looks nothing like the 70s - it is worse..." - she is scared.

Like any good entrepreneur she is planning for the worst and hoping for the best.

What is more intriguing, is how representative this micro-scenario is of the larger business segment - hardware sales had been flat and are now dropping.

Cost savings and reductions are the mantras, once again, of business - especially in the SMB market.

Who is Immune? No one.

We have been through some of this before; the layoffs, the economic plunge, international challenges, global society on the brink of annihilation - of course, I am referring to the "'70s"( could the summer of 2009 see a re-birth of Disco and Dance Fever?).

It's the state and local government budgets that are red flags to me. Of course, out here in California, the state budget never gets approved until 6 months after the year is over; because politicians like to be...political. But this time, the budget isn't being passed because there is no money - no taxes because most business has been taxed out of the state.

Property tax revenue has dropped because so many homes have gone to the foreclosure - it does not matter that those folks shouldn't have been approved in the first place - revenue is off, so the state is thinking about issuing IOUs - for STATE INCOME TAX REFUNDS.

Our state budget, last year's budget, has still not been approved and is facing lots of challenges - but - fear not. The wisdom of our elected officials is tackling much more important issues - digital billboards.

The base is shrinking and they want to raise taxes. The money supply is dropping, leasing is now swinging in the other direction, and people are scared.

Our economy is flawed, our business model is flawed, and we are flawed - and always have been.

But like Hank Moody, we who don't beat ourselves up for our shortcomings and can live in our own skin, keep going. 

Even if our biggest customer needs to write us IOUs and when we only have one headlight.

Originally, January 16, 2009

Managed Print Services - Saving Money And The Planet, Down Under

Hewlett-Packard (HP) has announced that Leighton Contractors has signed a Managed Print Services contract with HP.

As part of this contract, HP will manage and offset the carbon emissions generated by Leighton Contractors’ fleet of 700 HP LaserJet printers; total amount of carbon that will be offset from the printers will be 209 tons.

It is not mentioned if the Carbon footprint reduction was a specification of the contract or a benefit of going with HP.

“Leighton Contractors’ policies ensure that we manage our environmental footprint and minimise our environmental impact,” said Michael Herbert, Leighton Group IT, customer support manager.

“HP’s Managed Print Services offering together with the Carbon Offset program dovetails with the Leighton Contractors’ Group IT’s current “Green IT” Project.”

I first wrote about this program over the summer - 424 companies in Australia have signed up for HP’s Carbon Offset for LaserJet Printers program since its launch in February 2008.

“HP’s JetDirect and SecureJet solutions have allowed us to implement greater security for staff pool printing,” said Herbert.

“Our staff use proximity cards to print, the same cards they use to enter the building, which improves security and reduces wastage.”

According to Herbert, the disparate nature of its printing technology and the lack of a central equipment management function meant they didn’t understand the true cost of its printing infrastructure.

“HP’s managed print services provide visibility into the costs associated with our printing environment. HP looks after all billing, reporting and accounting, so that headache is taken away and taken care of by HP,” he added.

All HP printers rolled out at Leighton Contractors are HP Energy Star qualified. They produce less heat and reduce cooling loads by 15-30 percent.

They also use approximately half as much electricity.

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It is Now Officially "Bizzaro-World": Intel Net Profits DOWN 90%

Absolutely stunning. Banking, manufacturing, finance, home and now technology Giant - can't wait to hear Xerox's report.

IDG News Service

Agam Shah, IDG News Service 01.15.2009

Intel's fourth-quarter profit plunged 90 percent from a year earlier, as the chip maker battled a worsening economy and recorded a steep loss from investments.

The company recorded net profit of US$234 million for the quarter ended Dec. 27, compared to $2.27 billion in last year's fourth quarter. The net profit also fell short of the $257.22 million consensus expectation from analysts polled by Thomson Reuters.

The results included a loss of $1.1 billion from equity investments and interest, primarily due to a billion-dollar reduction in the value of Intel's investments in Clearwire, the company said.

The company's fourth-quarter revenue was in line with lowered expectations of $8.2 billion. Fourth-quarter revenue was down 23 percent year-over-year and 19 percent sequentially. Revenue from microprocessors and chipsets was lower compared to the third quarter.

The bright spot for Intel this quarter was the sales of Atom chips that go into netbooks, small laptops designed for Web surfing and productivity applications. Revenue from Atom microprocessors and chipsets was up 50 percent sequentially to $300 million.

Intel did not project revenue guidance for the first quarter of 2009, citing "economic uncertainty and limited visibility."

While the economic environment is uncertain, the company is adjusting its business plans to adapt to build for the future, said Paul Otellini, Intel president and CEO, in a statement. The company is entering new markets and has cut costs by around $3 billion since 2006, he said.

The restructuring yielded $800 million in savings in 2008, Otellini said during a conference call on Thursday. The company ended the year with approximately 84,000 employees, down 3 percent from a year ago.

"Intel has weathered difficult times in the past, and we know what needs to be done to drive our success moving forward. Our new technologies and new products will help us ignite market growth and thrive when the economy recovers," Otellini said.

The company hopes to ramp up to the 32-nanometer process technology to lower chip-manufacturing costs and increase production. It will then be able to make more chips at lower costs, which should add efficiencies to the production process, said Stacy Smith, Intel's chief financial officer, during the call.

"We are absolutely prioritizing the investment that it takes to get to 32-nm process technology ... we are going to get there as fast as we possibly can. That gives us a performance advantage, cost advantage and allows us to get to this higher level of integration that the future markets we want to serve requires," Smith said.
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Seven Deadly Sins… The Qualifications of a Copier Salesman…

Never mind that he is hundreds of miles north of the Gulf of Mexico, he lives on a boat, sells "big-iron" copiers...and has a blog. Introducing Pirate Mike. I received a "hit" today from one of my internet-search-spiders-thingies, and read the resulting post while waiting for the Rover to be washed - it was 86 degrees and sunny - as I scrolled along the post I literally laughed out loud. Upon further research, all good bloggers do this, research that is, the story of Pirate Mike unfolds. I will not steal his thunder. Instead I recommend you read his post here, then go to his site - all of four posts - I am sure with the eyes of the world upon him, he will blog with the best of them... I have copied, edited slightly, and pasted his post here on my site. Enjoy: ------------- Wednesday, January 14, 2009 Seven Deadly Sins… The qualifications of a copier salesman…