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ANALYSIS
The print industry, like many
industries, is on the brink of
significant change. Market
disruption, characterised by intense
competition, more demanding
customers and a constantly
shifting technological landscape, is
threatening the legacy hardware-
driven business. As the print industry
struggles with declining print
volumes, hardware commoditisation,
lower margins and sustaining
growth, vendors are increasingly
re-examining the structure of their
businesses and looking for ways to
deliver better financial performance.
Consequently, the industry is poised for
a wave of acquisitions and restructuring
as vendors look to adapt to new market
demands and shed assets that no longer
meet strategic needs. Lexmark and Xerox
are the latest to declare that they are
exploring strategic options. While, typically,
hardware companies have relied on
earnings growth to deliver shareholder
value, shrinking legacy hardware markets
have impacted revenue, leading to
acquisitions in the software and services
space.
Lexmark’s bid to expand its enterprise
software presence began with its
acquisition of Perceptive Software in 2010.
It has since made 13 software-related
acquisitions, the most recent being Kofax
for $1Bn. Meanwhile Xerox acquired
ACS in 2010 to build its business process
outsourcing service capabilities. This has
paid off for Xerox, with services now
accounting for 57% of its revenue.
Speculation is rife as to whether
Lexmark’s hardware business will be
acquired and if and when Xerox will split
into two separate technology and services
businesses – in a similar way to HP’s
split into HP Inc. and Hewlett Packard
Enterprise.
Whatever the outcome, the market
is undoubtedly set for consolidation. All
vendors are navigating the same path
and trying to understand where the new
markets lie – the cloud, mobile, big data
and the Internet of Things. Some vendors,
such as HP and Ricoh, are working to
commercialise their 3D printing technology
– but this is still a relatively nascent
market.
The shifting business landscape may
be daunting, but there are some key
opportunities for print manufacturers to
maintain or even enhance their competitive
positions:
n
Adapting to the ‘as-a-service
economy’.
The consumer preference for
services over products and subscriptions
over purchases is permeating into
the business market. This is driven by
increasing customer demand for flexibility
that will allow them to take advantage of
new technologies. With an as-a-service
model, customers are not burdened by
significant upgrade costs and can more
accurately estimate the on-going cost
Digital Disruption:
Future Opportunities
for the Print Industry
of access to technology. Managed Print
Services (MPS) is already an established
service model in the market, offering a
lucrative recurring services revenue model,
along with increased customer retention
long after the printer hardware sale. While
the MPS market is relatively mature in
the enterprise space, there are further
opportunities to tap into the largely under-
penetrated SMB market. For the channel,
digital services around printer device
diagnostics and predictive/preventative
maintenance have significant untapped
potential. MPS vendors should drive further
innovation in their engagements around
cloud delivery, security and mobility.
These are key enablers, not only for the
as-a-service economy but also for digital
transformation.
n
Driving the digital transformation
journey.
Despite talk of its demise, paper
remains a key element of the connected
and collaborative office workplace and
still plays a critical role in the business
processes of many organisations.
However, paper bottlenecks can hinder
business productivity and efficiency.
Print vendors are uniquely positioned
to connect the paper and digital worlds
and are developing stronger expertise in
workflow solutions and services. In many
cases, leveraging investments in Smart
MFPs, which have evolved to become
sophisticated document processing
platforms, gives vendors an opportunity
to maximise the value of their hardware
offerings. Vendors need to change legacy
perceptions of their brand and be accepted
as ‘a trusted partner’ in the enterprise
digitisation journey. Business process
optimisation and workflow capabilities
will become a key point of differentiation
for vendors in the industry, requiring a
balanced hardware, software and service
portfolio.
n
Exploiting the Internet of Things
(IoT).
All printers are things and the
connected Smart MFP is part of the
IoT landscape. Vendors can exploit the
Louella Fernandes,
Associate Director
for Print Services
and Solutions,
Quocirca
Disruption
may not
come from
traditional
competitors,
but from
those outside
the print
industry.
Louella Fernandes looks at
what printer vendors are
doing to ensure their long-
term survival in a period of
disruption.
Continued...
