The office printing market is as competitive as it has ever been, and nowhere is this more evident than in the ever-growing SMB space. Nearly every vendor these days is rolling out full-blown marketing strategies aimed specifically at the SMB customer. No matter how you slice it, the overall opportunity for office document technology in the SMB segment is huge.
In a recent announcement, Xerox projected that small and medium-sized businesses would spend more than $40 billion on document-related technology and services this year in North America and Western Europe alone, with more than 75 percent of that revenue moving through indirect channels. Xerox also suggested that SMB customers would purchase 8 million new printers and print 1 trillion pages over that same period.
Is it any wonder that hard copy OEMs are focused so intently on the SMB space? Small- and medium-size businesses are dealing with changes occurring in IT infrastructure, workforce dynamics and information management. Many are struggling with the transition from paper to digital, and they need help formulating a strategy to deal with a mobilized workforce, security challenges and the promise of big data.
As a result, the landscape for office document technology in the SMB sector is changing rapidly. Vendors are driving hardware innovation in areas other than speeds and feeds, while pushing solutions across a broad spectrum of applications and vertical markets.
Not that long ago, advancements in hardware were measured primarily through improvements in price and performance. With each replacement cycle, you could count on new printer models that were faster and cheaper than their predecessors. Today, however, the office printing market has matured and products have reached such parity that hardware differentiation is very difficult to accomplish.
Vendors have pushed laser price/performance about as far as it can go. Introduced in 1984, HP’s first LaserJet printer featured a print speed of 8 ppm and sold for $3,495, or roughly $437 for each ppm. Today, HP’s 19-ppm LaserJet Pro P1102w sells for just $99.99 — only $5.26 per ppm. This demonstrates just how far laser printing technology has progressed over the past 30 years. At the same time, it underscores the challenge vendors face when it comes to driving more value into new printers and MFPs.
As technology has progressed, so has the office printing market itself. Office users today place much less emphasis on the hardware itself and more on the solutions, services and applications that surround the device. As a result, improving the user experience has become the number one criteria when it comes to designing new printing products. More than ever, printing hardware is being tailored to meet the demands of specific target customer segments.
In the SMB space, vendors are focused on delivering machines that address the concerns of a more fragmented, diverse and always mobile workforce. This has manifested itself in a variety of ways, but the focus is clearly on developing products that address issues such as environmental sustainability, space limitations, mobility and security.
The desire for smaller products is driven by the need to push devices closer to the application: remote offices, retail environments, public kiosks, technicians’ labs, and point of sale, for example. Space limitations have become a concern in virtually every office environment as businesses have downsized and the workforce has become more mobile. While users need machines that are compact in size, they are not necessarily willing to sacrifice in areas of performance or functionality.
Several vendors have made strides in this area. In March, HP rolled out four printer/MFP models based on its new JetIntelligence technology. Among other features, the new HP LaserJets consume up to 53 percent less energy and take up to 40 percent less space compared with previous products. HP has since introduced a variety of models that leverage the JetIntelligence technology aimed at both SMB and enterprise customers. Other vendors are pushing to drive greater functionality into smaller and smaller form factors.
Reducing the carbon footprint has become just as important as reducing the physical footprint. Sustainability and green initiatives are gaining momentum in the U.S. and it seems the printing market may have reached a tipping point in 2015. Almost every vendor is promoting green strategies these days. From a hardware perspective, vendors are designing products that are much more energy efficient, with intelligence to move in and out of sleep mode more efficiently and provide for faster wake-up times. Vendors are also increasing cartridge yields and offering long-life supplies to improve environmental impact and reduce waste.
Solutions strategies are evolving just as rapidly as hardware strategies. In the past, vendors viewed document solutions more as a means for pulling through hardware sales. In today’s market, solutions take the lead, and hardware is often positioned as the vehicle to enable the software needed to address specific customer requirements.
The number of embedded solutions continues to grow, particularly as it relates to device security. Today’s smart printer or MFP is just as susceptible to a data breach as any other device on the network. As a result, more vendors are embedding security features to help protect the device from outside intrusion.
HP recently rolled out a series of embedded device protection features for its latest LaserJet machines. With its Sure Start technology, HP validates the integrity of the BIOS code upon startup. If the BIOS is compromised, the technology can revert back to the original state by rebooting the device and reloading the previous, safe “golden copy” of the BIOS. HP also added whitelisting technology to ensure that the device only loads good firmware. Lastly, Run-Time Intrusion Detection is a feature that performs continuous in-memory scanning to search for anomalies and ongoing malicious attacks. Again, if any attack is detected the technology will reboot to put the system back in a known good state.
Mobile print and pull-print functionality have become quite popular this year. Secure printing technologies such as pull printing provide an extra layer of security by holding print jobs in the cloud until they are released at the printer or MFP, either with a PIN or card swipe. Samsung recently announced that it has embedded its PrinterOn solution into the firmware of certain printers. The firm offers a new PrinterOn app, which is available through the Samsung app store, so that users can locate compatible devices through a location-based map service.
Vendors are also taking steps to enable simpler and faster workflow automation tools that can be enabled at the device itself. Most of these solutions are built around three core elements: print management, advanced document capture, and intelligent document workflow. By combining scanning software and intelligent workflow tools, SMB customers can more easily convert paper to digital format and begin to automate certain paper-based processes.
Many of these solutions have been around for quite some time and are enabled through the open system architecture that runs on the device. Samsung recently showcased several new solutions running on its XOA-enabled products using its Smart UX interface. By utilizing the Android-based tablet interface, customers and dealers can quickly deploy solutions ranging from smart widgets designed to improve the user experience to full-blown process automation apps.
There has been no shortage of hype surrounding the MPS opportunity in the SMB market. Most market research firms are predicting double-digit growth for MPS among small- and medium-size businesses. Research suggests that 75 percent of SMBs do not currently have a managed print service contract in place. Given the saturation of MPS in the enterprise sector, vendors and channel partners alike are eager to move MPS further down market.
The challenge, of course, is that SMB customers require a much higher level of channel engagement. Several vendors have begun to deliver packaged MPS solutions designed to make it simpler for channel partners to deploy MPS programs. These solutions range from basic supplies fulfillment to assessments and workflow optimization tools. Vendors are not only equipping the channel with tools and programs to deliver MPS, but also the training and education to adequately address SMB customer needs.
To increase penetration in the SMB, it will be necessary to reshape the MPS value proposition. For many SMBs, printing does not represent a significant portion of the overall IT budget, so reducing print costs could have limited appeal. Instead, these customers are looking for ways to increase productivity, automate workflows, reduce the burden on IT staff, and consolidate vendors. Instead of leading with reduction in print costs, it is likely more effective to lead with services and solutions that can deliver greater productivity, drive process efficiencies, and save time.
It is interesting to see how the attack on the SMB market is changing the landscape for printing and print-related services. It is expected vendors will continue to innovate in areas that cater specifically to this segment of the market. From what we have already witnessed, one could expect to see continued consumerization of hardware, with an emphasis on tablet-based interfaces and embedded solutions.
This article originally appeared in the October 2015 issue of The Imaging Channel.
Robert Palmer is Research Vice President with IDC's Imaging, Printing and Document Solutions team. He is responsible for written research, forecasts, and analysis in multiple practice areas covering managed print services, document solutions, business workflow automation and optimization, and hard copy transformation. Palmer's research also includes a particular emphasis on the office imaging channel and transformational strategies and technologies impacting the future of the office imaging market.