Bringing the print shop in house

Improved technology and declining prices have the printing and imaging industry seeing in technicolour.

Now, more than ever, the printing and copying industry has a tremendous chance to go after the burgeoning small and medium-business market – but vendors admit they can’t do it without their channel partners. That has partners seeing their relationships with vendors a little rosier too.

The advancement of the multi-function colour laser printer in the last couple of years has a lot to do with this shift in the print and imaging industry. The affordability of these machines has improved significantly, with boxes just over the $1,000 price point. To move those boxes in the SMB segment, vendors, including Hewlett-Packard Co., Xerox Corp., Canon Inc. and Brother International Ltd., are reaching out to channel partners with expertise and relationships in that space. Vendors are investing in revamping their channel programs to give their partners the tools to sell complete solutions and boost their profitability on sales.

HP Canada is quadrupling the resources that it has available to multi-function printer (MFP) channel partners. This is part of a larger, global initiative at HP, which will be launching an enhanced training portfolio in February. This investment is driven, in large part, by the way the printing and imaging market has evolved over the last several years, with MFP and colour coming together in one box. With consolidation in the office environment, as users upgrade their equipment from a single function device to one that prints, copies, scans, (and in some cases) faxes, the competitive landscape has changed too.

Copying and printing meet on the business battlefield

“HP has typically been strong in the single function and colour and monochrome markets. We’ve also had very strong business in MFP,” says Patrick Harrison, national sales manager, SMB, Imaging and Print Group, Hewlett-Packard (Canada) Co. “HP and our partners have been competing against non-traditional competitors, in particular, copier companies. A lot of our channel partners didn’t understand how to compete against those non-traditional partners.”

Harrison added that HP has already invested a significant amount in training partners how to compete against VARs in the copier space, and better understand the MFP colour laser market. The training focused on teaching partners where the opportunity is as well as how to make investments and compete for it. It’s key to compete in a cost-per-page environment, something copier VARs are more accustomed to than print VARs.

“A lot of the business in MFP is competed in cost-per-page,” says Harrison. “This course helps demystify the language of that sales cycle and helps (partners) understand how to compete in that space.”

The cost-per-page model, plus a managed print service, is what Brian Ridgway says gives his company a lead in the marketplace. Ridgway heads ShareNet Inc., and the president of the Toronto-based company, which works exclusively with HP, says the printer vendor is “the perfect partner” for ShareNet’s business model. ShareNet competes with traditional photocopier fleets such as Canon, Ricoh and Xerox.

“We go after those (companies) because there’s tremendous consolidation with both the device and vendor as people become comfortable with printing, copying, scanning and faxing on one device,” says Ridgway. “For many years, traditional printer providers existed with traditional copier providers but that is changing.”

Consolidation of multiple machines into one represents cost savings and improved workflow efficiency – business value that Ridgway says play well with customers in the 200 to 500 seat range. He added ShareNet sells these solutions to smaller and larger businesses as well.

Xerox Corp. is also bolstering its commitment to the channel with revisions to Peak Program, its channel program for VARs. For 2008, Xerox has outlined three goals it hopes to deliver to its partners through the program, based on the results of a survey of 1,500 key VARs.

“We asked (VARs) what do you like about our program and what do you not like,” says Paul Criswell, manager, Peak Programs (North America), Xerox. “The key takeaways are the three messages that we are going out to market with today.”

Sweetening partner rewards and incentives

Xerox wants to provide greater revenue and profit potential for partners. In tangible terms, this means front-end discounts and volume rebates. “We’re offering some of the MFPs with greater revenue and margin opportunity for (partners),” says Criswell. “We’re rewarding them for all the office products they sell.”

Xerox is also opening up its entire product portfolio to VARs, allowing them to sell higher-end items in exchange for completing certification courses on those machines. In the past, Criswell says Xerox didn’t give VARs a chance to sell low and high end products that were exclusive to Xerox’s direct and agent sales channels. “If partners take the training then they can go and sell those products and make greater revenue and margins,” he says.

Canon Canada is also offering its channel incentives, such as a manufacturer rebate on entry-level MFPs that it has extended from Q4 in 2007. The vendor also has a number of scanners where it offers ongoing instant rebates geared at smaller enterprises that are managing their documents.

Small businesses are seeing MFPs becoming more affordable and are also opting for another option that would have been too expensive in the past – colour. While colour gained a lot of ground in 2007 and will continue to do so in 2008 – one in four machines Canon Canada sold in 2007 were colour – it’s a message Canon’s partners are still trying to get out to the market.

Mark Phillips, assistant manager, product marketing, imaging systems group, Canon Canada, says Canon Canada is helping its partners to sell colour by providing them with collaterals to promote the idea to their customers that colour is now affordable. “We’ve seen more entry-level MFPs come out in the colour area,” says Phillips. “Because colour is now more affordable, it is common that customers are asking for colour. It’s why we’re targeting the lower end as well.”

Over at Brother, Marc Ruel, product marketing specialist, Brother Canada, echoes his competitors. “Colour laser MFP is a very small category but

has huge potential and it’s growing very quickly,” says Ruel.

He also points out that the MFP category is quickly outgrowing the printer category in terms of its speed of growth. Similar to HP, Xerox and Canon, Brother is also finding opportunity in a new business category with start ups and home offices.

It’s now about document management

Canon partner The O.T. Group, based in Belleville, Ont., has been in the MFP business a long time – it sold one of Canon’s first multi-functional connected (MFC) products in 1995. The O.T. Group now has 4,000 customers on contract for multi-functionals.

Peter Bailey, general sales manager, says over the last three years MFP sales have really started to ramp up. And previous owners of MFPs looking to upgrade are looking for document management solutions as opposed to scanning and distribution of documents, says Bailey. To that end, The O.T. Group has partnered with a document management software company called Liberty.

The software side of the MFP sale is also growing and increasingly important says Michelle Warren, senior analyst at Info-Tech Research Group. Warren adds software manageability is an important but not crucial area. “It’s an area customers are looking for but they take it for granted that there’s something useful in there,” says Warren. “When it’s not, that’s something that’s noticeable.”

Document management software is something that’s often bundled with the purchase of the s

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Jim Love, Chief Content Officer, IT World Canada

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