by Charles Brewer, Actionable Intelligence
It’s becoming abundantly clear that Samsung is serious about taking some share of the office equipment market away from more established players like Canon, Ricoh, Xerox and others. This summer, Samsung expanded its A3 portfolio by adding five new entry-level machines to its MultiXpress line, which hitherto had only two A3 units. In addition to broadening its selection of hardware, Samsung is investing to better support its channel partners in their efforts to add more enterprise clients and further penetrate small to medium-size businesses.
Including the recent hardware releases, this year has witnessed some of Samsung’s biggest steps to date in its assault on the office equipment market. In March the firm rolled out Samsung PrintIQ, a new managed print service (MPS) offering featuring a comprehensive suite of tools and services. Adding an MPS program was essential if Samsung was to gain any traction in the market. To oversee its push into the office markets, in April Samsung brought in an industry veteran who helped two of its largest competitors, Canon and Xerox, build their respective copier businesses. Tod Pike spent nearly 20 years at Canon after starting his career at Xerox. In total, he has more than 35 years in the industry. As senior vice president of Samsung’s Enterprise Business Division, Pike is responsible for strengthening channel relationships and developing the division’s overall growth strategy.
Moving beyond retail
About 10 years ago, Samsung began to articulate a rather audacious goal: It planned to become the top brand in the desktop printer space. A long-time supplier of print engines but without its own branded printer, Samsung set out to leverage its technical expertise along with its credentials as a consumer electronics powerhouse to take on the likes of Hewlett-Packard, Lexmark and other printer manufacturers. While the firm did not reach its stated goal of becoming No. 1— at least not yet — it continues to do well in the printer market and consistently ranks among the top five vendors in terms of shipments. But Samsung doesn’t seem satisfied with its gains in the printer market.
Samsung’s success thus far has been due in large part to its ability to gain share at the low end of the consumer market. Like other OEMs such as Lexmark, it was able to grow its low-end market share by competing almost solely on price. While this may be an effective strategy for growing share and top-line numbers, competing on price is rarely an avenue to achieving sustainable profits. Samsung knew this years ago and began to look upmarket for more profitable business. In 2004 representatives for the firm said they were looking for ways to add value to Samsung machines in an attempt to move the firm beyond its reputation as being a so-called price leader.
As it grew its position in the market, Samsung released certain workgroup devices with value-added feature sets that business users would find attractive. The company found it difficult, however, to penetrate the market for office machines because it was ensconced in retail and other channels that cater to SOHO buyers. The firm lacked the direct sales organization and other channel partners required to pursue SMB and enterprise customers with higher-end, value-added devices. Moreover, by selling on price alone, it was unlikely the company could offer the margin opportunities required to attract copier dealers, resellers and other traditional business equipment channel partners.
In 2006 Samsung launched the CLP-650N and demonstrated its willingness to offer the incentives demanded by the office equipment channel. Aside from a few enhancements, the CLP-650N was nearly the same device as the CLP-600, which was aimed at SOHO consumers. To better meet the demands of business users, the CLP-650N offered enhancements like a faster processor and more memory than its SOHO sibling. The CLP-650N’s most remarkable attribute, however, wasn’t its feature set; it was its price tag. Samsung hiked the price of the machine to $799 compared to the $499 asking price for the SOHO unit. Adding the 60 percent premium sent the signal that Samsung was ready to slough off its price-leader title and meet the margin demands that partners from other channels required.
After the release of the CLP-650N, Samsung made a series of incremental steps to move beyond SOHO channels. In 2007 it released the SCX-6345N, the first Samsung machine brought to market exclusively for the dealer channel. The 45-page-per-minute A4 monochrome MFP was Samsung’s top-tier device at the time. Next, in early 2008, Samsung unveiled its high-end MultiXpress MFP line, which was also sold exclusively through the dealer channel. Initially, the line consisted of two A4 MFPs: the monochrome MultiXpress SCX-6555N and the color MultiXpress CLX-8380ND. Early last year the firm expanded the line to include A3 machines with the introduction of four new MultiXpress devices: the color CLX-9250ND and CLX-9350ND and the monochrome SCX-8030ND and SCX-8040ND. This year the line was further expanded.
The latest A3 MultiXpress units
The latest additions to the MultiXpress line include the color CLX-9201NA, CLX-9251NA and CLX-9301NA along with two new monochrome units, the SCX-8123NA and SCX-8128NA. All five machines are based on a new Samsung A3 print engine and provide print, copy, scan and fax functionality. The machines share many of the same basic features, such as standard support for duplex printing, a 1 GHz processor and the capacity to accommodate up to 2,180 sheets of paper.
Samsung says the consumables in the new machines break new ground and provide enhanced performance. They use Samsung’s polymerized toner, which features smaller and more uniform particles than conventional toner to render crisper lines and more vivid colors. According to a Samsung representative, the toner also eliminates paper curling, and its higher wax content adds “a rich glossiness to images, while preventing fading.” The imaging system is set up such that the toner and drums are in separate units, which helps to control costs. “You don’t have to change both when only one part wears out,” a Samsung representative explained. “Additionally, the OPC drums are interchangeable for each color, so you can keep a smaller inventory on hand. The developer unit provides a yield of 300,000 pages for even further reduced maintenance.”
In terms of speed and price, Samsung’s new MultiXpress devices sit below the units released last year. The CLX-9201NA is a 20-ppm MFP, while the CLX-9251NA and CLX-9301NA print at 25 ppm and 30 ppm, respectively. Samsung’s MSRP for each unit is $6,310, $7,330 and $8,270. The higher-end MultiXpress CLX-9250ND and CLX-9350ND units released in 2011 offer output speeds of 25 ppm and 35 ppm, respectively, with introductory MSRPs of $10,802 and $11,374.
The new monochrome MultiXpress are also cheaper and slower than last year’s models. The SCX-8123NA and SCX-8128NA have top print speeds of 23 and 28 ppm, respectively, compared to the 30-ppm MultiXpress SCX-8030ND and 40-ppm SCX-8040ND. Samsung quotes an MSRP of $3,900 for the SCX-8123NA and $5,540 for the SCX-8128NA. When introduced last year, the MSRPs for the MultiXpress SCX-8030ND and SCX-8040ND were $9,196 and $11,374, respectively.
Because the MultiXpress line will be placed primarily through leases and PrintIQ contracts, it’s difficult to gauge how competitive the new machines will be based on MSRP alone. At first glance, however, the machines look like they should do well. While they have a limited feature set, the entry-level machines offer some nice standard goodies like a 7-inch touch-screen user interface and fax functionality, which is often optional on A3 MFPs. To improve the feature set, Samsung markets optional items such as the job separator output tray to keep jobs separate and a 50-sheet internal finisher that collates and stacks jobs.
Overall, Samsung is clearly intent on offering a wide enough range of products to cover all the various subsegments. In addition to A3 machines, Samsung also released a bevy of A4 machines this summer, although most of those will move through its SOHO channels.
The move upmarket
Samsung’s new machines are bound to encounter tough competition as the firm attempts to widen its toehold in the A3 space. The market for A3 monochrome devices may be declining, but it is well established, and plenty of new devices hit the street each year. Moreover, the market for A3 color is currently red hot. Some predict it will experience high single-digit compound annual growth over the next few years, making it one of the industry’s few remaining bright spots. Samsung’s competitors are already active in this market, however, and they will not sit by idly and let Samsung grab the growth color offers.
But Samsung seems to be prepared for a street fight and has shown its willingness to invest in the A3 space. It will be interesting to learn more about Samsung’s overall strategy. The new entry-level MultiXpress units look competitive in terms of features, but without consumables pricing, there’s no way to know how competitive the operating costs are relative to the competition. In the past Samsung was willing to sell its machines at low price points in the SOHO space to gain share. The operating costs associated with these machines, on the other hand, were among the highest in the industry. It is possible that the firm may employ the same tactic with its A3 units, but unlikely. With the launch of its own MPS program, it’s more probable the firm will keep operating cost low so its channel partners can make some margin.
You can expect to hear more from Samsung in the office space. With the SOHO market in decline, it is important that the firm succeed in its move upmarket, and Samsung knows it.