The Australian printer market is poised for a long period of upheaval, as increasingly IT-savvy organisations seek ways to lasso runaway print and imaging costs. While the low end of the market is delivering super cheap colour printers for home and small business users, vendors occupying the high end of the market are aggressively targeting those smart companies that see the benefit of future proofing themselves against the inexorable boom in office printing.
One of the greatest myths of the IT industry is that of the paperless office. To quote the Australian managing director of Kyocera David Finn, "when the paperless toilet is invented then we'll have the paperless office".
There is still no evidence that the emergence of e-mail, the Internet and other forms of electronic communication and documentation have shortened the paper trail, nor that they ever will. Many, however, argue that they have and will continue to force the opposite.
US-based consultancy firm Cap Ventures, which tracks patterns of office expenditure, recently reported results of a survey examining the cost of printing for US-based organisations. It found that the average American company spends a staggering $US3.6 million on printing and imaging every year. Even more alarming, it concluded that, on average, the mere handling of documentation accounted for 40 per cent of the labour costs for those companies surveyed and as much as 15 per cent of their total annual revenue. Not that many companies had any idea what was going on.
Another research company, Datamation, conducted a survey to gauge the level of awareness of print costs amongst US organisations. More than 70 per cent said they didn't know what they spent on imaging.
But this appears to be changing, at least in Australia where Kyocera's Finn believes that the purchasing decisions for printing solutions are moving away from the IS departments of many large companies to the finance department.
Finn claims that Kyocera's solutions can help organisations save millions of dollars a year by increasing the longevity of peripheral components such as the drum and developer. Kyocera now guarantees these products need not be replaced for about 30,000 pages, compared to the between 2000 and 10,000 it claims most of its competitors offer.
"We're positioning ourselves as a document management company," Finn said, and "that means we must deliver efficiencies".
These shifts in the dynamics of the market are driving a trend towards cost efficiency amongst the world's leading printer vendors. All are locking horns in a battle to deliver the best efficiencies in an environment where the bells and whistles approach still evident in the low end is becoming tired. This is good news for larger, more sophisticated resellers, but a wake up call for those with a "box-shipping" approach to doing business.
Fuji Xerox only established its Australian printing division three years ago, but already claims to have a commanding position in the low, mid-range and high-end markets here. Essentially the company was forced to undertake a massive re-education of its IT channel partners to operate in this new and changing market.
As Forest McGregor, Fuji's indirect channels manager points out, the transition from a supplier of multi-function office equipment to a more focused approach to the printer market has been rewarding but also challenging from a channel perspective.
Fuji rates itself as one of the world's largest suppliers of multi-function office equipment, but has typically shipped these products through the office equipment suppliers and not the traditional IT channel.
"The mopier market hasn't been successful for printer dealers because they come at it from a different angle," McGregor said.
While Fuji's IT dealers have had experience in forms-management technologies, it has been a process to get them truly up to speed to operate effectively in the printer market.
"The challenge was re-educating the channel on the networking and software aspects," he added.
While the recent emergence of dual-function office machines that print, fax, scan, photocopy and make coffee has been touted as a great step forward, the real news for the Australian IT channel has been the development of more sophisticated networking and software solutions, which include enhancements to the base print/hardware products themselves.
"In the channel today, there are companies that make things happen, companies that watch things happen and companies that are left asking what just happened?," said Kyocera's Finn.
Greater processor speeds and stored memory capacity, better networking smarts and workflow management software has quickly placed high-performance colour printers on the radars of large organisations, according to McGregor. "There is no doubt that the colour element is growing rapidly as companies look to bring in-house those small yet traditionally expensive print jobs they would normally have outsourced to a printing company," he said. "The software has improved, while hardware costs have fallen."
According to Anthony Reed, market development manager, laser jets, for Hewlett-Packard, 13 per cent of the company's revenue is derived from colour printers, with that figure expected to be somewhere near 50 per cent in the next three to four years.
"The whole driver for colour is the need to get printing operations back in-house," he said, citing internal HP research, which found that colour jobs under 1000 copies are now generally cheaper to do in-house rather than outsource to a printing company.
But vendors and the channel must be sensitive to the fact that companies generally have very high expectations of colour printers.
"The biggest complaint users have about colour is that it doesn't look the same on the page as it does on the screen," Reed said.
An important development in this area has been the emergence of Pantone colour printing. Pantone is the standards colour format for graphics professionals which is making possible dramatic improvements in colour production for non-graphics professionals.
"For those customers, using colour is a much more critical part of the finished product because they have invested the money in the first place," Reed said.
Jeremy DeSilva, marketing manager at global office equipment giant Oki, believes the high-end printer market will undoubtedly move towards colour.
"I think most companies will look at consolidating their printing needs and will look at doing their brochures and forms in-house," he said.
Coinciding with this development, users will also become more discerning about colour, increasingly demanding 1200 dots per inch (dpi) resolutions as opposed to today's standard of 600dpi.
"Usage of colour printers on the network will become more important, as network managers seek to track what is being printed and by whom," DeSilva added.
New industries for the printer channel that serve to highlight this point are areas such as medical and legal, he said, where there is "very little room for poor service or performance".
"Usability features are being added by the truckload but they are not a deciding issue for organisations," HP's Reed said, adding that the "key things are still the total cost of ownership".
Most major vendors agree that a chief concern amongst many large organisations now is workflow management software and networking smarts so that print jobs can be properly prioritised and managed document repositories, for example. Access to single-source documents has also been identified as chief concern for organisations looking to harness the convenience and efficiency of LAN environments and the Internet.
Virtually every mid- to high-end printer on the market at the moment offers some sort of networking solution. Analyst IDC estimates that some 60 per cent now offer 10/100 Ethernet connectivity. On the software side, many companies are also developing cluster technology designed to route print jobs to the closest available printer, a feature of greater value to network administrators, while also contributing to improvements in general office efficiency.
Accompanying these developments in network printing capabilities is of course the issue of network security, which many vendors are seeking to address at varying levels.
According to Oki's DeSilva, the company is currently marketing a security swipe card system to the Australian Defence Department as well as medical and legal organisations where security is a concern. As part of the system, users are able to place a code or password on their printers to ensure that documents are protected from unauthorised eyes - welcome to the new world of printing.
Wireless printing may also soon be on the radar, although vendors are yet to formulate a vision for this development. IT-oriented printer suppliers such as Lexmark and HP can be expected to lead the way in this field. Interestingly, Kyocera owns US-based company Qualcom, which was credited as having been one of the pioneers in the development of the wireless communications standard CDMA. Being able to send a print job from your mobile phone to your PC and vice-versa may not be such a wild concept in the not-too-distant future.