5 min read

Putting the puzzle together

The networked printer market picture is changing. New trends include colour laser MFPs for the office and wireless for homes

When the notion of the paperless office was introduced in a 1975 magazine article, pundits were quick to sound the death knell for the printer market. After all, with electronic documents who needs printers?

But offices today still have mountains of paper, much of it generated from networked printers.

Networked printers have gone from being expensive, cranky, hard-to-configure beasts to virtually plug -and-play devices that may cost less than a PC. A new printer can often be deployed on a network in less than half an hour, with no vendor or VAR intervention.

Now there’s another change in the cards, one that provides opportunities for resellers to add lucrative services to the mix. Organizations are moving away from networked printers and towards networked multi-function printers (MFPs).

According to IDC Canada, about 290,000 MFPs will hit the Canadian market this year, almost 50 per cent more than the 205,000 sold last year. The networked printer market, in contrast, will grow from about 500,000 in 2005 to 622,000 in 2006.

MFPs, which combine printer functionality with that of a copier, scanner and sometimes fax, have been lurking in the home, small and medium office realms for several years as standalone machines, usually inkjet-based, aimed at the space-challenged. However, Jean-Paul Desmarais, HP Canada’s Imaging and Printing Group business customer marketing manager, says the biggest trend he’s seeing is the adoption of laser MFPs by IT departments.

“It’s changed the types of printer IT departments buy from resellers,” he said. “Network printers have become multi-function printers.”

Subhas Seelochand, senior manager, product marketing in the Imaging Systems Group at Canon Canada, agrees. “We have seen a definite migration of technology,” he said. “We’ve seen printer dealers going to multifunction devices including copier and fax, and we’ve seen copier dealers do the same thing.”

As well, said Vishnu Gobin, office manager at Scarborough, Ont.-based reseller Profax, “everyone wants to get a colour laser right now.” The sum of the parts – colour laser plus MFP – makes a hot device.

According to IDC analyst Bradley Hughes, colour laser MFPs experienced more than 100 per cent growth last year, and are expected to achieve 75 per cent this year.

And while he agrees the absolute numbers are still relatively small, with the colour laser MFPs representing 30 per cent of the estimated 106,000 colour lasers sold this year, he noted that the growth in the MFP market this year is mainly driven by colour.

Demand for wireless

Network printing is also spreading beyond the enterprise, said Andrew Kiss, manager of marketing communications at Lexmark Canada. “We’re seeing a great increase in networking in the SOHO environment,” he said. “In the past, it was a six-of-one, half-dozen-of -another whether or not they just had a parallel attach, but now they’re looking for the networking capabilities. If they bring a device, be it MFP or single function laser, into their house, they don’t necessarily want to string wire through the house so two PCs can share that one device. So wireless networking is perhaps even more important to them because the design of their work environment – their home – may not be wired to Ethernet standard.”

John Robertson, Brother Canada’s national commerical sales manager, also sees wireless as an important technology for the SOHO market. But, he admits, it’s usually not suitable for larger enterprises because of the impact on wireless performance for PC users. Small operations with relatively few wireless users are better candidates for the technology.

“The types of (wireless) printers we’re talking about are going into businesses where bandwidth is not an issue,” he said. “Those businesses are in growth and change mode, and it’s nice not to have to think about wires.”

Those businesses do think about functionality, however. Both Kiss and Robertson agree that colour MFPs are becoming as big in the SOHO and SMB as they are in the enterprise. “We’re seeing more colour and more multi-function devices than we were a year ago,” Kiss observed, “but we’re also seeing more single function monochrome printers, because of the price. In a monochrome multi-function device with a sub-$400 price, you have the performance of a fairly robust entry level small workgroup printer, plus copy, fax and scan.”

There is, however, the problem of operating cost, and with colour that can be a killer. “Most people complain about the cost of colour supplies,” said Gobin. “You buy a $300 printer now, and you have to buy $700 in supplies. That has to go through the natural evolution (to lower prices).”

Seelochand said Canon faces this problem, too. “A lot of customers know they need colour but perceive it to be more expensive,” he said. To address this, Canon offers what he calls a “hybrid” machine that allows the customer to control what’s printed in colour, and to closely monitor their costs.

The company also teaches VARs how to explain colour and its use to customers.

Despite the higher consumables cost, HP’s Desmarais thinks colour can still be cost-effective when companies bring outsourced printing back in-house, adding that print on demand has been enabled by the falling price and increasing speed of colour lasers. “(Companies) would rather do 50 customized runs than one run of 5,000,” he said, “And the cost of printing in-house can be less than sending to a print house for shorter runs. For the channel, every dollar that moves back from the copy shop means increased revenue for the industry. And resellers selling higher-priced printers can also sell services.”

Consumable expensive

Still, he admits, the cost of consumables over time can exceed the cost of the printer. But, he said, “future technology developments will further decrease the gap (between a colour and a monochrome page), and further increase the adoption of colour printers. Looking into the future, colour multi-function is a capability that everyone wants to have if the ease-of-use and cost are right. It’s up to the manufacturers to develop this.”

“Resellers need to provide the vision for the customer,” said Kiss. “Help them choose the technology to ensure they get the greatest benefit in the long run. It’s easy to sell to meet the customer’s needs today. But do they know what’s available? You can’t just load a new application to add colour (to a printer), you have to buy a new device.”

He said features such as wireless, gigabit Ethernet, encryption between PC and printer, and secured printing are features customers may not need today but that may become valuable during the printer’s lifespan.

“From a sheer opportunity standpoint,” he said, “it’s SOHO, SMB, multi-function and colour. That’s where marrying the network and the printer have the greatest growth and the greatest benefit to the customer.”

“The big thing is (for resellers) to make sure to bring in products appropriate for the market they’re after,” added Robertson. “The nice thing for resellers focusing on MFPs is that there is a lot more opportunity (for revenue) than just from selling the product. The reseller can go in and offer services like setting up network scanning, or earn margin on the integration of third-party software. And more and more conversations with our support are around customers asking ‘How do I set up my network?’ A lot of resellers are not tapping into that.”

“There’s also the annuity sale,” he said. “The residual supply business has good margins.”

Customer resistance

There may be good margins, but Gobin said that resellers sometimes face customer resistance over the price of supplies. He prefers vendors whose products’ consumables are also available from compatibles manufacturers. “You pay ha