Lyra Symposium Speakers Describe a High-stakes Situation
"Printing was like water. It came from somewhere, and no one knew who paid for it."
But the game has changed, David Bates, Xerox vice president of office marketing programs, recently told the audience at the 14th annual Lyra Imaging Symposium. Complacency has been replaced by customers' sharpening focus on reducing expenses, improving productivity and simplifying work processes. With that focus comes not just opportunity, but growing complexity for folks in the channels as they attempt to support clients with managed print services.
Speaking to a gathering of some 155 attendees at the "Navigating The Road To Profitability" symposium hosted by Lyra Research, Mr. Bates said today's customer base is not monolithic. During his keynote presentation, Mr. Bates graphed a continuum of seven channel segments that caters to a diverse customer base ranging from large enterprise and governmental users to users in the home.
"One size does not fit all," he stressed, and demonstrated how each channel segment offers customers a unique value proposition and set of attributes. While acknowledging that MPS plays an important role in today's office market, Mr. Bates concluded that "MPS is not for everyone."
I agree with Mr. Bates, wholeheartedly. When MPS first gained traction in the industry, it was heralded as some type of "killer app" that would change the entire industry. Well, that's simply not true. Some market segments will be transformed by MPS, but its impact on other segments will be more muted. And some, specifically SOHO, won't feel much impact from MPS at all.
Nonetheless, MPS received a lot of attention at the Lyra symposium held at Rancho Las Palmas Resort and Spa in Rancho Mirage, CA, at the end of January. Lyra staffers told me upwards to 60 percent of the sessions touched on some facet of managed print over the course of the day-and-a-half long event.
In one such session, Bill Melo, vice president of marketing and enterprise services and solutions for Toshiba America Business Solutions (TABS), detailed how his firm is addressing what I think is one of the most critical challenges in today's market—lower shipments of hardware and declining print volumes. According to Mr. Melo's data, during the three-year period between July 2007 and June 2010, pages printed with office multifunction monochrome machines dropped between 17 and 29 percent depending on the class of the device, while full-color output dropped between 14 and 19 percent. "This," Mr. Melo says, "is the new normal."
To make up for losses in hardware and supplies revenue, TABs is focusing on the service component and offering more solutions to end users. The company aims to be part of what Mr. Melo calls the "MPS land grab." He cited Gartner Research data that projects by next year 70 percent of business with more than 250 employees in North America and Western Europe will acquire their printers, copies, MFPs, and consumables through some type of MPS program. By offering more MPS solutions, TABs wants to allow its channel partners to make money when their customers print or when they are enabled not to print, thanks to the services provided through their managed document infrastructure. Mr. Melo insisted that today's winning growth strategy comes from managing pages and providing services that go beyond the page.
After the TABS presentation, a panel was convened of executives from firms marketing MPS solutions and technologies that support MPS programs. The companies included FMAudit, GreatAmerica Leasing, Preo Software, Supplies Network, and Xerox. Joel Mazza, director of Lyra's Managed Print Practice, moderated the panel. The panel further developed many of the points discussed by earlier speakers. Most panelists, for example, mentioned the need for flexibility and how end user demands differ from client to client. After taking questions from the floor, one attendee, Jim Lyons, a past HP exec who now blogs regularly about the industry, commented on how sophisticated conversations about MPS are growing. Rather than musing broadly about "opportunities," speakers and panels at the symposium are focused on concrete details of deploying, operating and managing programs so they can meet end user needs.
Mr. Mazza offered me his take on the MPS market. "Rather than being a new market, MPS—at its core—is a new and more efficient model of distribution for print-related equipment, supplies, and service," he explains. "As more consistent offerings permeate the market, and customers can more readily adopt that model of procuring print, the overall market from a supplier standpoint—across each revenue category for hardware, supplies and service—will consolidate." Looking at the competitive landscape, Mr. Mazza says there is mounting pressure for more consolidation within the industry. "MPS will increase that pressure and accelerate the pace in the coming years." By increasing productivity through "innovations that support highly efficient managed print engagements," he feels the most efficient suppliers, "will have greater leverage to maintain profit margins at lower and lower price points, forcing weaker players out of the market."
Most of Mr. Mazza's predictions are likely to play out, although when this will happen is unclear. For years, industry watchers have been saying the demise of various vendors is inevitable, yet it's been a long time since a hardware vendor has failed. Perhaps the time is at hand. Given the lower print volumes and demand for hardware, some changes have to occur in the markets for office machines. Those companies that can adapt and change to best meet the individual needs of a diverse customer base, of course, have the best chance of survival. From what I heard at the Lyra symposium, many vendors recognize this requirement. Whether they can execute remains to be seen. Clearly the stakes are high.
Posted by Charlie Brewer on 03/14/2011