Total cost of ownership (TCO) is a common catchcry, especially in the IT hardware industry. In the printing market it is especially strong, given the ongoing consumable requirements of hard copy production.
What's more, different market segments are also sharply divided over the exact definition of TCO. Jason Dell, workshop supervisor at Centre State Computer Maintenance and Services in Rockhampton, has seen his fair share of price wars. He believes the market is still coming to terms with the new dynamic created when the bottom fell out of the low-end colour inkjet printers about two years ago.
"Across the board, ink cartridges for the smaller printers cost up to one third of the price of the original machine. The money isn't there to repair them, and most of the vendors have implemented a replacement warranty," Dell said. "The market is totally price-driven, you can't get away from high TCO offerings until you get up to the $600 mark."
Dell points out that there is a distinct division between the mid-, high- and low-end markets, and TCO requirements work in different ways in each sector.
"In the low end it is all price focused. In the business community, they will forgo price for quality of service because they know if they put something on price they will find out it is more trouble than it is worth," Dell said.
Andres Caire, manager at Computer Imaging and Business Solutions in Port Elliot, South Australia, said that, even in the consumer segment, poorly managed TCO had only led to an increase in the cartridge refill phenomena that printer vendors love to hate.
"The refill companies are really popular because of how expensive the consumables are, and they offer their own warranties on the refills," Caire said. "You can get four or five refills out of the same drum, whereas some of the vendors just want you to throw it away and get a new one."
However, Caire conceded that the vendor offerings were gradually improving as the overall design of the machines became more oriented towards TCO.
"A TCO-based sale is not all that difficult, as long as the printer actually provides the customers with real value," Caire said. "I basically have all of the options hanging up in the shop so, when a customer is deciding which machine to buy, they can also compare the prices of the consumables and find out what they will really end up spending."
Lorraine Cowan, category manager for printer supplies and imaging at distributor Tech Pacific, believes consumers are now much more aware of the relative costs of the printer itself and the consumables associated with it. However, she believes that in a generally flat market, resellers should be using this to their advantage.
"Sales are definitely down at the moment. When it comes to moving product, the major focus needs to be on the already installed base. The challenge for resellers lies in convincing people to upgrade what they already have," Cowan said.
The printing paradox
The great paradox of TCO is that marketing and development divisions of printing vendors across the world are busily trying to figure out how to make their offerings last longer and print less. On the surface, it would appear as an affront to the replacement cycles on which this industry has based its success. However, the ploy to make printers hardier, more flexible and lest wasteful seems the only way forward in a cash-strapped market.
It is a paradox of which Tim Champion, product and applications marketing manager for Lexmark, is well aware.
"We are even moving away from the whole TCO approach, towards the idea of TCP which is total cost of production," Champion said. "We are focusing on the processors that surround printing and enabling companies to identify where they can make savings on printing. We are telling people to print less and providing them with the opportunity to do so through technological innovations."
The technological innovations to which Champion refers are based on the digital transfer of documents. As printers become more sophisticated and increasingly integrated with different imaging technology, the market is shifting toward all-in-one imaging stations, which scan, copy, print, e-mail, fax, process, paginate, store documents, staple, collate and even self-diagnose.
David Finn, managing director of Kyocera Mita, presides over a virtual stable of state-of-the-art imaging devices. In the North Ryde showroom, Finn demonstrates the latest functionality of the company's offerings, and invites resellers to make use of the centre as a sales resource in an attempt to overcome the printing market's undue "unsexy sale" status.
"If you ask resellers why they are not doing more in the printer area, they look at you like you are carrying some dreadful disease," Finn said. "We virtually invented the term TCO and all our devices fit into the low overall TCO mode, and we want to help resellers make the best of the opportunities in that area."
Ben Gardem, channel marketing manager for Fuji Xerox Phaser Printing, believes TCO strategies need to be integrated into the initial printer sales process. To this end, Fuji Xerox provides resellers with TCO software which enables sales people to demonstrate how to make long-term savings on a printer purchase.
"Our resellers can do an audit of the customer's business and show them exactly what their long-term costs are, and [this] allows them to work on an appropriate print strategy," Gardem said. "TCO can be quite complex; there are different ways to keep TCO down on different machines."
Gardem believes savings on TCO can only be realised if the printer is ideally suited to the purposes for which it was bought.
"When it comes down to it, the resellers need to know exactly how the printer will be used and then select the most appropriate model," Gardem said. "Costs can skyrocket if a low-volume machine is being used too much, or even if a high-end machine is being underutilised."
With every vendor on the imaging block claiming low TCO offerings and reseller sales support, it is little wonder there isn't more hype in the channel itself. George Nawa, marketing manager at Brother, cautions against an excessive emphasis on TCO figures.
"TCO has been around in the industry for a long time, and each of the different vendors have their own way of calculating it," Nawa said. "There aren't just paper and ink costs, there are also service and maintenance, power usage and spare parts. Some vendors include these things and some don't."
Like Champion and Finn, Nawa believes much of the improvements in TCO stem from the printers themselves and the extent to which the end users are appropriately shown how to use them.
"Something as simple as duplexing can save literally thousands on printing, provided the end users realise how to implement it in their printing requirements," Nawa said.