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Lasering in on the printer market

Lasering in on the printer market

Tom Allen discusses the issues involved in selling high-end printers with some of the leading players and looks at some of the latest products available on the market.

There is a distinct sense of change occurring in the printer market and specifically in the way printers are being sold into the commercial sector. The IT channel is converging with the office technology channel, with the result that IT guys are talking about paper handling and pages of printing per month, and photocopy people are talking about network traffic and compatibility issues.

What has become clear is that there is now an opportunity for resellers to get smart about printer selling and offer solutions that meet the needs of customers rather than compete with the rest of the herd for replacement of what the customer already has.

For the purposes of this article, the high-end printer segment has been defined as printers with a printing speed of at least 24 pages per minute (ppm) and the focus is on laser printers used for text-based documents.

Both David Finn, managing director of Kyocera Electronics Australia, and Clare Tipler, Hewlett-Packard's market development manager for monochrome laser jets, agreed that there is difficulty in describing the high-end printer segment. As Finn put it: "We've got a few in our range, including an 18ppm, so wherever you draw the line, there's another one just near it. So our high end starts at 25ppm, as a basic entry-level machine, and we have 28 and 36ppm models, which is a big jump."

Tipler said that although it is not necessarily the most distinctive method, they also define the high end of the laser printer market by print speed, starting at 24ppm and ascending up to 40 or 50. "Even though we don't currently market a product at this speed, our first page out and our time to print is as quick as many 40ppm offerings," she claimed.

The extra utilities on these printers have added an extra chapter to the sales manual too. According to Finn: "These things can be so tailor-built to what you want. You can buy our base unit with just the printer engine and two 500-sheet feeders, and go from there." Finn described the basic 24ppm model as almost not in the high-end printer category, just a "grunty desktop printer that's going to spit it out". But he added that if you want the next level that includes features like stapling, collating, virtual mail boxes and pigeon holes, that's when the printer starts racking up, "and we do all those things".

The market for high-end laser printers in Australia is estimated to be at around 500 to 600 units per month. HP claims to have about two thirds of this, representing an estimated 10 per cent of its monochrome business.

But Tipler was conservative about the prospects for the high end. "I don't believe this segment of the market is growing as fast as it was predicted by IDC to grow. There's a good market for faster printers but not a huge demand," she said.

Convergence and growth of faster printersIn order to sell more of the high-end laser printers, resellers need to understand how they are being deployed, and in particular how printing and copying strategies are changing.

Tipler said that convergence is happening, but it's happening in a slightly different way than most channel people have expected. "There is evidence that people are using copy machines less, but people don't always want a big centralised machine, and there are down sides. Some departmental printing applications are creating so much network traffic that the benefits might be diminished."

But according to Tipler, there are now more and more product features that are designed to overcome the obstacles to selling bigger, faster printers. These include intelligent mailboxes for output handling and the use of hard disks with security software to hold documents in memory at the printer until the sender is standing by and has keyed in a password.

Finn claims Kyocera has achieved a 60 per cent increase in overall sales from May to June, and May was a 30 per cent increase on April, and while admitting the high end only accounts for about 20 per cent of sales, the growth has been across the board. "June 1998 to June 1999 saw a six-fold increase," he added.

"This gets back to my hobby-horse - channel strategy. Look after your dealers, look after your distributors, don't go direct, and focus on what you're good at. We're a vendor and manufacturer, not a direct sales force. Work through the channel, and if you get it all right and give good pricing - it works."

According to Finn, there is an emerging dichotomy in what constitutes a high-end printer. Just because a printer is sold to and used by the big end of town, it doesn't mean it is a high-end printer, although there is an expectation that it is at the high end of performance reliability.

"All of our printers are fully networkable, which means that our entry-level printer is quite often used in corporate networks, a manager's confidential printer. This is in addition to a higher speed network printer. Networking is becoming one of the key issues of printers." In the changing landscape of the office printer market, understanding network capabilities is clearly critical to selling. "Any vendor's offering that isn't network-capable, particularly in the 12 to 20ppm segment, is highly unlikely to be around next year," Finn warned.

According to Tipler though, the important thing is to look at the bigger picture; for example, to help the customer maximise their investment. "You need to find out what is most important to them. With costs, are you looking at the up-front acquisition cost [higher on a high-end printer] or are you looking at costs per page [lower] where the customer can recoup the additional acquisition cost through cost per page savings."

Distribution

The high-end segment does not appear to have made much impact on the distribution channel, with approximately 80 per cent going through direct dealing resellers. However, the opportunity to sell them is open to almost any reseller.

"Some of our high-end printers go through the [volume] distributors where it suits resellers to source all of their product requirements through them," Finn explained. So in this way, the products are available to the wider reseller base. "We tend to find that much of the high-end product is going into the legal and health profession markets."

Finn said that Kyocera doesn't define its distribution model for high-end products, letting the customers determine it. "We have programs for distribution, and we have programs for resellers. Quite often, some of our [direct] resellers will buy through our distributors, because it is a better deal, but for big tenders, the majority of our business goes through our VAR channel which is geared up for it."

He added that sometimes the smaller resellers pick up a "bluebird sale" of a big printer.

Market growth

With almost all vendors reporting increased laser printer sales, if not market share, it is worth identifying from where the business is coming.

"We've grown our channel and there has been significant growth in the market," Finn said. "With high-end printers, it's the photocopier dealers that are doing the most work. With the exception of the bluebird that comes in, very few of the smaller IT resellers know how to sell a high-end machine."

And in a none-too-disguised warning for the IT channel, he added: "Unless they have some of the major clients [in the markets such as legal and health] on their customer list, it's mostly a right-place-at-the-right-time sale. Finn added that approximately half of the 20 direct-dealing resellers of Kyocera printers are from the office automation channel.

"The decision to bring on the office network group of business equipment specialists into our channel was made before my time, and of the 80 to 90 resellers in this category, around 20 of them are selling 80 per cent of our big printers."

Tipler said that there are between 50 to 100 resellers selling HP's high-end printers, with most of them dealing directly with HP. And there's opportunity for the IT channel to make money in the high-end printer market.

According to Tipler, the initial cost can be off-putting for some people, because it's more expensive than other printers, which is why it's important to look at TCO.

"But in terms of the marketplace, prices are much of a muchness. I think that actual performance is very important, what the first-page-out time is, what the real print speed is rather than quoted print speed. We've found that this tends to vary."

Finn concurs that there is definitely profit to be made in this market segment.

However, "You've got to sell it correctly and know what you're doing, because a lot of people have tried and failed. They've lost the business and don't even know what happened. Half the time the customer gets so confused they just give up."

Finn said that the factors to focus on in qualifying a prospect include the printer load balancing, the redundancy risk and what the customer really wants to achieve with the printer.

Tipler agreed that there is perhaps more profit in selling high-end printing solutions, not only because of better margins, but because of add-ons such as paper-handling options.

"There are also lots of solutions that we often partner with other people to sell such as electronics for barcoding, which can also add to profitability," she added.

Finn claimed that when Kyocera gets involved with a sale, it trys to educate the dealer and identify the best option. "We recently had a reseller looking to sell twenty 12ppm printers to a client, which they felt was a good sale. The required work rate was horrendous though and the smaller printers would have been blown in six months. So we recommended the customer buy ten 7000 (28ppm) printers with two spares and rotate them. Each unit was to be running at 150,000 pages per month. The value of the sale increased astronomically, but the net result to the end user was that they saved a fortune. And it was a bluebird sale!"

Understanding customers' needs

It's not that difficult for a reseller to get into high-end printer sales. Finn said that a major part of selling big printers is understanding network topology, because they are all going on networks. "Resellers must understand what is required, and the trick is to make sure that the MIS manager has the requirements right. The number of printers might be right but the model might be wrong in terms of total cost of ownership," he warned.

"The key advantages we sell on relate to speed for high print volumes, lower cost-per-page than any of our lower-end printers and most of our competitors. Confidentiality is also offered by the hard drive option and the paper-handling features, all to offer a complete on-demand printing system," Tipler said. Finn added that IT resellers interested in selling network printers will need to understand the NT and Novell environments, as well as paper flow and document management. For any office products sales consultant, the first question they ask is how many pages per month does the prospect print.

According to Finn: "Sometimes you just sell the highest duty cycle machine you've got, other times you are replacing photocopiers, so the need is for fast throughput. Other times, the changing needs of the user may allow a fast, high-duty printer to replace a series of desktop units, with consequential efficiencies and savings in maintenance."

Tipler emphasised that it's really important that the channel understands the implications of TCO, for instance, as it relates to volumes of printing. She said that to this end, HP has produced an analysis of its own product range to identify the most optimal printer according to monthly printing volumes. It is therefore a matter of matching the customer's needs to the appropriate model.

"With the 8100, because it's a slightly more complex sale, we've provided training for resellers to cover a lot more questions that can be asked compared to a desktop printer, she said.

Sell up, not down

According to Tipler, an awful lot of printers are sold simply because people ring up and ask for them, and she doesn't think there is a lot of proactive high-end printer selling going on. Finn said that it is common practice by resellers of all brands to sell down to a price, even if in terms of TCO, the better solution is a higher specification. "If six of your competitors are all pushing a $500 printer and you're pushing a $1200 printer, you'll stand out alright. And if you back it up with an argument why it's better for the customer, you get the deal, and you get more revenue and more profit." It's a concept that is worthwhile understanding, and selling the right (high-duty, faster) printer in a consultative way represents one of the best opportunities in the channel.

The problem is that the market for high-end printers is not big enough and most, if not all, printer vendors are only selling this high-end gospel direct to the IT managers. Perhaps their channel partners will read this and get the hint.

Multifunction market on the rise

Demand for peripherals that combine a variety of functions, such as photocopying, printing and faxing, is growing rapidly, according to Toshiba officials.

Multifunction peripherals (MFPs) can be connected to a PC or a network and can perform at least two of these four functions: printing, faxing, scanning and copying, according to market research company International Data Corp (IDC).

Currently, the market for MFPs is still new, but it has tremendous growth potential, said Shunki Yatsunami, vice president and director of Toshiba Tec, formed by a merger of Toshiba and Tec in January this year. The company is a member of the Toshiba Group with its primary business in retail information systems and equipment, information and telecommunication systems equipment, and electric appliances.

Toshiba currently offers a lineup of both digital and analog office automation products, of which over 30 per cent are digital products.

With this trend of an increasing ratio of digital products to analog, Toshiba expects the competitive market for office automation products to shift in that direction, said Isao Sugehara, senior manager of the electronic imaging department, Toshiba Singapore. Cost-effective MFPs also pose a threat to the popular laser printers and fax machines, said Sugehara. "In Singapore, faxes are 10 times more costly than copier prints, and four to five times cheaper than laser print-outs," he said.

Toshiba currently owns 15 per cent of the office equipment marketshare pie, and intends to achieve 20 per cent by 2000. This figure is derived from market surveys conducted by the company.

Toshiba introduced multifunctional copier/printers at varying speeds. The DP2570, DP3580, DP5570, and DP6570 come with Toshiba's original image processing technology, "Digiart" (Digital Image Advanced Reproduction Technology), with print resolutions of 600x600dpi (dots per inch) for the DP2570 and DP3580, and 600x2400 dpi for DP5570 and DP6570.

The DP5570 and DP6570 also incorporate Toshiba's new technologies like high-speed image processing and a 4-beam laser unit, for better quality image processing.

Toshiba is also working towards MFPs with colour and scanning capabilities.

By Tao Ai Lei

What's new from . . . Hewlett-Packard

As a leader in inkjet colour printing, Hewlett-Packard has waded through the waters of colour network printing with the confidence of a connoisseur. Its range of colour printers was designed to address a wide scope of business community needs, from enterprise networked colour laser printers to next-generation inkjets for smaller business networks, with HP Colour LaserJet 4500 workgroup printer and Colour LaserJet 8500 departmental printer spearheading the attack on the high end. HP claims its two LaserJets are armed with "sophisticated media handling capabilities, network connectivity and Web-centred features", allowing businesses to print a wide range of documents, such as datasheets, brochures, flyers and newsletters, on a variety of print media and delivering cost savings "for short-run colour printing jobs".

HP Colour LaserJet 8500 highlights

Print speed black 24 pages per minute (ppm)Print speed colour 6ppm133MHz processor600 dots per inch resolutionMonthly volume 60,000 pagesInput capacity of 1100 per three standard traysOutput capacity 600 sheets32MB standard memory expandableSupports plain, copier and recyle paper, transparencies, soft gloss paper, labels and envelopesOne-year on-site warranty and other optionsPriced from $13,519Hewlett-Packard13 1347What's new from . . . LexmarkFormerly IBM Information Products Corporation, Lexmark's eight years in the printer solutions market have been lined with success. Specialising in business printers, Lexmark was the first company to introduce 600 and 1200 dots per inch (dpi) technology, as well as the first to bring event-driven graphical network printer manager software to the market.

Lexmark's range of network laser printers, Optra, consists of a number of monochrome printers that support up to 30 different network environments and boast several paper and toner saving functions that are claimed to significantly reduce the total cost of printing in any high-volume, network printing-dependent organisation.

Last year, Lexmark announced its new 18 and 24ppm laser printers ahead of competition, promising to sell it for the same price as competitors' 16ppm offerings. As part of Lexmark's Optra S range, the 1855 and 2455 printers offer versatile paper handling options, a variety of mix-and-match configurations for specific customer needs, in-bound fax capability and a TIFF SIMM option for direct printing of image-format files.

Optra S 2455 Network Laser Printer highlightsNEC 32-bit RISC 133MHz processor8MB and 16MB expandable memory1200 Image Quality at 24ppm in three standard data streams14 seconds time to first print250 sheet input tray500 sheet output binDuplexer for two-sided printingMaximum duty cycle of 100,000 pages per monthMarkVision printing and network printer management software75 scalable fontsOne-year on-site warranty and other optionsRRP $4651Lexmark1800 674 484What's new from . . . KyoceraWith its 40 years of experience in developing and manufacturing a wide range of products, it is not surprising Kyocera has pioneered many technologies, including cartridge-free printing. Realising a promise of ecologically sound technology while delivering significant cost savings, cartridge-free printing is a key feature of Kyocera's ECOSYS range, whose latest high-tech printing offspring, the FS-7000 and FS-9000, are claimed to deliver "ultra low cost of ownership and exceptional paper handling" and performance. Combining fast PowerPC processor and high engine speed with raster image processing (RIP) technology, Kyocera aims to deliver "record-breaking performance" both with its 28ppm FS-7000 and 36ppm FS-9000 printers.

ECOSYS FS-9000 Printer highlights

36 pages per minute for A4 paper

20 pages per minute for A3 paper

600 dots per inch resolution (2400 dpi with edge enhancement)233MHz PowerPC processor16MB RAM expandable to 64MBFull SNMP network connectivityPrints and collates multiple originalsThree-year, 1,400,000 page on-site warrantyclaimed to be 70 per cent cheaper to run than competitors' printersRRP $5920KYOCERA1300 364 429


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