The rumor mill has risen to a fever pitch and it is time to douse it with a cold glass of water.
On April 1, the beginning of the new fiscal year for the Japanese OEMs, Konica Minolta announced it was “transferring” select sales offices to its independent dealer channel. Translation: Konica Minolta is selling some branches to a few dealers.
A few days later, exactly WHO these select dealers were became clear. Pacific Office Automation (POA) picked up 3 locations in Reno, Nevada, Salt Lake City, Utah, and Albuquerque, New Mexico. All Copy acquired 6 offices located in Fort Collins, Grand Junction and Colorado Springs, Colorado; Omaha and Lincoln, Nebraska; and Flagstaff, Arizona.
When I initially heard the news, Ricoh immediately came to mind. In 2017, when Ricoh was writing off massive amounts of debt, they sold off a large amount of their MIF in the SMB markets to their independent dealers. While there are some similarities, which center mostly around the SMB, this move by KM is different.
- This is not a mass sell-off, contrary to rampant speculation. So far, only two dealers are involved. Perhaps one or two more deals will come through, but it is hardly a deluge.
- It is strategic. Note the two dealers involved so far – POA and All Copy – are two of the largest independent dealers selling the KM brand, and both also sit on KM’s DAC.
- The branches were not “given away” – they were sold.
- It is not a ton of offices – note the limited locations. Most of these branches are still remnants of Konica’s pivotal $240 million acquisition of Danka in 2008.
For their direct operations, Konica Minolta wants to focus their time and energy on major markets. Yes – their branches are expensive. No, the branches overall are not losing money – they are making money. Lots of it. It just doesn’t make a ton of sense to be carrying an office in a tertiary market that is designed to sell and support major enterprise infrastructure. Larger cities are a better fit. This is not a fire sale. The actions Konica Minolta are taking now are solid strategic actions.
Isn’t some cold water from time to time refreshing? Still thirsty? Konica Minolta is NOT selling off All Covered. It’s kicking butt and represents part of the future vision for KM.