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Scanning the horizon

Scanning the horizon

Scanner sales have seen some impressive growth over the past few years. As economies of scale kick in, margins start to drop and the channel is forced to take a new approach to marketing what has become very much a commodity item.

Despite a swathe of niche offerings, hand-held and high-speed scanners and so forth, the real growth is in the SOHO and consumer markets. While everyone agrees the market has really taken off in the last couple of years, no one seems sure why.

Mike Pleasants, marketing director of imaging hardware vendor Epson, attributes the growth to a decreasing price point and growing reassurance amongst end users.

"There is no doubt that price has had an effect - SOHO and entry-level scanners have come down from $2000 and $3000 to $200 and $300 in the space of about five years," Pleasants said.

He also believes other factors have contributed to the market growth in this area.

"In the past, scanners have been somewhat of a black art as far as end users are concerned - they have been fearful of it," he said.

According to Pleasants, the secret runes of resolution, colour control, CMYK, RGB, .jpg, .tif, .gif, file format, file size, alignment and cropping all make scanning too much for the novice user.

"All that has started to change over the last two years as we move more towards one-touch scanning," Pleasants said. "We are typically looking at a market of about 20 per cent growth over the last few years."

While lower price points drive up sales in consumer and SOHO markets, they also tend to drive margins down. As a result, resellers are left with the difficulties associated with finding a sales budget for volume items.

Frank Beverwijk, owner manager of Western Australian reseller Arrow Computers, is concerned that while sales growth has been significant, margins on scanners have fallen significantly over the past few years.

"Retailing is a very competitive business and in reality the margins are too tight on products like printers and scanners to spend the time to demo them these days," Beverwijk said.

He believes PC and scanner bundles are becoming increasingly popular thanks to the Internet and an improvement in the imaging software which generally comes with the scanners.

"The most important feature is the user-friendliness of the software," Beverwijk said. "But we don't get too carried away with making a scanner sale - they are really an ancillary product, a value add to the PC."

Printers are still the first choice when it comes to PC bundles. Commercial director of retail tracking research group GFK Mike Wilson said that despite increases, scanner sales still lag behind printer figures.

"You still can't compare scanner sales to printer sales, printers are way ahead because they are pretty much the standard peripherals that go along with the PC sale," Wilson said. "In September, 12,584 scanners were sold through the mass merchant channel, but 57,900 printers were sold in the same period."

Steve Brown, director of the Scanner and Printer Place, believes the scanner market is still in a growth phase. After building a successful channel company around the sale of imaging products, he is well positioned to defend the viability of the scanner market.

While Brown believes scanners are increasingly becoming a standard peripheral associated with a PC, he is also interested in the diversity of the market.

"The market is growing in all sorts of directions at once. There is a lot of interest in 35mm scanning for people who want to archive their old slides and things like that," he said.

Brown's major concern however, is a tendency toward what he believes to be misinformation in the market place, and a tendency toward selling cheaper scanner packages without sufficient back-up support.

"There has been a lot of marketing about the place bamboozling the customer, telling them they need really high resolution, when in reality the eye can only really see 300dpi, so there is no point going any higher," Brown said. "The difficulty with scanners is that people generally want something easy to use, they want drag and drop icons, and when they don't work people need a lot of backup."

Despite GFK figures showing flatbed scanners make up 99 per cent of scanner sales through the mass -merchant channel, Brown is paying close attention to developments in commercial scanner offerings.

"There are some fantastic developments in this area," he said. "We are working towards the concept of a paperless desktop - you only need to process information once, then you can manipulate it digitally."

The development of scanners as data input devices has lead to a boom in the mid-to-high end market. Although the sales are eclipsed by the volume market, higher margins make the corporate market an attractive option.

There can be no doubt that data input scanners, such as barcode scanners, play an important and very noticeable role in industries such as logistics and retail. Recent developments in the technology have lead to a diversification of the end uses of data-"scanning technology.

Suzannah Donnelly, product manager of document management solutions for imaging vendor Canon Australia, believes the traditional markets for corporate automatic document feed (ADF) and other data scanners are banking, finance and insurance. However, she believes the scanner market is quickly diversifying.

"Data scanners can provide huge gains in terms of productivity, companies can process vast amounts of data very quickly and make it available either internally or externally via the Internet," Donnelly said.

Donnelly believes the immediacy of the Internet is driving sales in this market, with companies under pressure to quickly process data and make it available to consumers or staff members.

She identified reseller opportunities in this high-end corporate market and said that imaging technology provided the channel with the opportunity to significantly increase the value of resellers' sales.

"The scanner market requires knowledge of data processing, archives and storage. It is all about document management, only now the documents are digital," she said. "There is a very important role for VARs that are aware of the sorts of productivity gains to be made through imaging technologies. A total information processing solution is largely incomplete without an imaging component."

According to Donnelly, the channel's role is fundamental to the high-level market, as scanner-based solutions require a high level of understanding of the client's needs and business processors.

"In the Internet age we need our resellers to be able to identify customer requirements and how to supply them with increases in business efficiency."

Despite Donnelly's apparent enthusiasm for the participation of the channel in this level of the market, Cannon predominantly uses a direct sales model for its corporate sales.

Chris Jefferies, national manager of imaging software developer Axis Communications, said an understanding of the processes associated with scanning is the key to growth in the imaging market.

"When you are talking about improvements in efficiency, you need to understand about opportunities for sharing resources," Jefferies said. "A scanner attached to every PC is a waste of space and resources."

He believes the opportunities for Internet and networkable scanning technology has vast applications, especially in the realm of remote offices.

"Eliminating fax means limiting call costs, and networkable scanning options take the place of a fax machine," Jefferies said. "Sending 10 pages of a fax to Melbourne is significantly more expensive than scanning it in Sydney and opening the file to the company Internet."

The ultimate goal of scanning technology in the corporate space is perfecting the notion of the paperless office designed to save time and resources by transporting data digitally.

One major proponent of this idea is Seamus McGuinness, managing director of distributor of imaging storage management products Dicom.

McGuinness believes the paperless office is still a long way off. He is nonetheless an enthusiastic evangelist of the possible benefits of the demise of organisational dependence on multiple hard copies of the one document.

"The basic skill set required to sell corporate scanners is an understanding of the work-flow of a business," McGuinness said. "In order to be processed, the same piece of paper often moves through a series of different areas of a business and could be duplicated more than 10 times."

McGuinness touts the importance of the development of intelligent character recognition (ICR). Like optical character recognition (OCR), ICR scanners capture information from a document. However, rather than interpreting letters of the alphabet, ICR technology allows information to be scanned and automatically processed.

"There are huge savings to be made in terms of manpower," he said. "It is a whole process, the documents need to be scanned in a way that can be easily read by the machine in the first place."

McGuinness identifies industries such as transportation, health care and education as ideally suited to ICR technology. This is because documents with set variables, such as multiple choice examinations, are easy to scan into databases.

He believes recent improvements in the corporate market can be attributed to an increasingly informed group of end users.

"There are at least 300 or 400 different applications in terms of imaging and a lot of time has been spent over the last couple of years educating the end user about these uses."

According to McGuinness, the channel has gained from an increase in end-user awareness. He believes the fundamental change which has led to increases in scanner sales at all levels is price decreases across all levels of the market.

The scanner market is significantly dominated by A4 flatbed scanners, which have come down in price five-fold in the past few years.

Despite the drop in margins that comes with commoditisation, distributor Tech Pacific's category manager of printers supplies and imaging, Lorraine Cowan, believes the SOHO/consumer scanner market is still a winner for resellers.

"At the lower end, price is definately driving the market - scanners have become a real impulse buy for consumers, which makes it an easier sale," Cowan said.


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