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Paper to pixels

Whether it's holiday snaps or a company's annual reports, the value of scanners is their ability to convert hard copy into movable, storable bytes; from whence they can be recalled in a word search and sent across the globe on the tail-end of an e-mail. Agnes King looks at the latest from both ends of the market.

All scanners have something in common. Whether it's a $160,000 monster chewing through 160 pages per minute or a $200 flatbed struggling to digest four pages per minute, both have become the tools of consumers who want to do more with their hard-copy material.

For a market that 12 to 18 months ago was thought to have run its course into commodified dullness, scanners have made something of a comeback, thanks largely to some slick software and the popularity of digital cameras. Scanners now are but a link in the digital-imaging food chain. An input device, as Epson's Mike Pleasants calls them.

Somewhere in the midst of becoming trendy again, scanner manufacturers took different turns on the development road. So, where once there was little distinction between one brand and another, these days, manufacturers - Canon, Hewlett-Packard, and Epson being the dominant ones - have marked out their territory quite distinctly.

A new user type

In a recent advertising campaign entitled "Capture your masterpieces", run in the Sydney Morning Herald's Good Weekend magazine and the Sun Herald's Sunday Life, Epson effectively rejuvenated the life of the common flatbed scanner by ensnaring a new market, senior citizens. "We touched a gold spot in the older generation, the people who generally have the inclination and the time to retouch their store of photographs," says Pleasants, Epson's marketing director.

According to Pleasants, the tapping of this new market has been aided not only by the price, which sits in the vicinity of $200-$600 for the bulk of scanner sales, but also by the simplicity of installation and use. The other factor that has spurred sales, and that is again very much driven by personal photos, is the desire to exchange images, a process made easy and almost instantaneous with Web hosting and e-mail.

However, many dealers have not yet negotiated the mind shift to value-add for scanners, while others feel it simply isn't worth the effort. "Dealers that have the most success selling scanners are able to both display and demonstrate products," says David Bevan, product manager at Canon Australia. "Product training and knowledge are essential to ensure consumers' needs are being met."

However, few independent retailers or services firms have the resources to pay such intensive attention to customers. "We keep them on the shelf for the odd customer that wants one," says a PC dealer based in Sydney's outer suburbs. "It is more a protective mechanism to ensure that customers don't go looking elsewhere than a real money earner."

Similarly, Garry Pickering, owner of 3D Computer Services in Queensland, says low-end scanners have reached a level of commodification and ease of use that drives many of his more cost-conscious clients to buy from Harvey Norman. "For IT solutions that they really need help with, they'll come to me," says Pickering, "but for a parent that just wants something for their kid's school work, they'll buy from somewhere they consider cheap and convenient."

And here lies the crux of it: there is very little to add value to at the low end of the scanner market. The scanner comes with a basic pre-installed software package, which will "get the user going", and the next stop after that is $1,000-plus for an OmniPage-type application or an Adobe Photoshop or Illustrator, not to mention the three-inch user manual that typically comes with it.

The rise of multifunction devices

While Epson believes there is still a lot of mileage left in the home user market, other vendors, such as Lexmark and HP, are ramping up their investments in the multifunction arena. Despite the fact that they account for only a miniscule section of the market, Lexmark says that at $399 retail, multifunction devices are starting to compete in both the single-function inkjet and the scanner markets, due to their added capabilities and affordability - the colour copy function is proving particularly attractive to consumers.

According to Lexmark, all-in-one devices also have significant side benefits for dealers. For starters, Lexmark says the margins are double that on a single-function printer or scanner and, more importantly, dealers can pull greater ongoing revenue from consumables sales because scanning begets printing, and vice versa. Like digital cameras, which were once thought to be a threat to scanners, the existence of imaging devices is complementary. As people become more familiar with using their PCs for imaging, it also acts as a terrific sales generator.

According to research published by Lyra, a US-based agency that specialises in examining the printer and hard-copy industry, users with an inkjet printer and a scanner consume 32 per cent more ink than they would if they owned just a printer. Customers with all-in-one machines, however, consumed a further 27 per cent more ink than those users with individual printers and scanners.

Lexmark suggests that this additional revenue stream would provide a massive windfall for dealers. On the other hand, Kevin Hutton, proprietor of Aldinga Computing Enterprises on the rural fringe of Adelaide, says he wouldn't consider jeopardising his relationships with customers by selling them a machine that wasn't suitable or cost-effective for their purpose.

What's more, Hutton says from a profit point of view the individual sale of a printer and scanner is more likely to reap a greater margin than a multifunction device. He is also dubious about a printing veteran like Lexmark taking on scanning technology, which suggests the manufacturer may have a tough time convincing dealers that its multifunction products are hardy enough to warrant preference over HP, Canon and Epson stock. After all, it is the dealers who end up bearing much of the expense to support the customer through technical sagas.

Meanwhile, the debate for and against multifunction devices continues. According to Epson's Pleasants, they are something of a double-edged sword for consumers because, although they possess the combined functionality of the various devices, they are always at least half a generation, sometimes a full generation, behind in technology advances.

Scanners in the workplace

While Canon is not scaling back in the consumer imaging sector (flatbeds), it is focusing its energy on pushing its commercially oriented document scanners. Typically sold to the financial services, manufacturing, transportation, healthcare and government sectors, Canon wants to see them spread into the general office as part of a solution.

At this level, George Giatris, sales manager, business intelligence and imaging division at ACA Pacific, says it is all about managing intellectual property. The value of the sale for resellers also increases dramatically; the scanners themselves range from $6,000 to $160,000 while the management software is sold on a per-user basis at between $360 and $1755, plus upgrades for a Canon package. Moving up into the more sophisticated software, created by independent vendors such as Redmap Networks (formerly Doctrieve) or Readsoft, the price increases to $3000-$40,000.

Giatris says there is profit to be made in this sector for channel players that know their imaging products. "We wouldn't be in the business for over 10 years if [the effort wasn't worth the eventual spend by the customer]. Document scanners are one of the technologies left with true ROI."

He says one of the growing aspects of ACA's business is repeat purchases of scanning solutions. "We find that once [a scanning solution] has been implemented in one division, other divisions want to implement it once they have seen the benefits."


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