Trends, Companies, and People to Watch in 2020
As one year ends and another begins, we find ourselves embarking once again on another journey through the tangled jungle of the office imaging industry. Navigating the wild unknown is still an exciting exercise as we weave our way through the familiar and into the new. For the office technology dealer whose livelihood depends on how they respond to trends, the partners they select, and the individuals working within those companies they partner with, it can be equally exciting and sometimes treacherous.
So, let’s clear away the vines and the underbrush to get a clear sense of what 2020 will bring by examining the trends, companies, and people to watch in the new year.
Trends to Watch
A3 is still alive and kicking. Yes, print volumes in the office are on the decline. Yes, in some cases, an A4 device is all an office needs. But, as long as dealers and OEMs remain enamored with A3 margins and OEMs keep introducing new and improved A3 products, A3 isn’t going anywhere. Don’t be surprised if the definition of A3 changes as more A3 devices become conduits to the cloud, or as we heard at the recent Ricoh dealer meeting, it morphs into more of an “Edge Device.”
A4 is A-Okay. Dealers used to despise A4 because of low margins and the threat to their more lucrative A3 business. Times have changed. We are seeing more dealers, and even OEMs, take A4 seriously as they craft an A4 strategy. Many still view A4 as a foot in the door for selling more A3. As end-users become wiser and print less and realize an A4 is all they need, dealers who are prepared for a bigger A4 world will be in a better position to survive the A3 to A4 transition.
Acquisitions. This was a year of hot and cold months in terms of acquisitions. In some months we saw a half dozen or more, while in others, there were maybe two or three. Both dealers and vendors were busy acquiring, with the three biggest acquisitions of the year being Staples’ acquisition of DEX, Ricoh’s acquisition of DocuWare, and the acquisition of EFI by the private equity firm Siris Capital Group. We’ll also be watching to see what’s going to happen with Xerox and HP, a story that is still a hot one despite HP formally declining Xerox’s offer.
The Arc of the Arcdrive. Are dealers ready for a device that allows them to bring document management, print management, and scanning to SMBs with 10 printers or less? This new device, distributed by InkCycle, is perfectly positioned for a segment of the market that most dealers play in. There seem to be unlimited opportunities for this product. The caveat: Can a new company, even one whose device is distributed by a reputable partner, gain traction in the channel? We’ll find out in 2020.
Artificial intelligence makes systems smarter. That’s right, devices are smarter. Sharp has incorporated Amazon-Alexa artificial intelligence into its devices such as its Smart Office Suite of products and its MFPs. Other OEMs are doing the same, and it’s only a matter of time before we’ll be speaking commands to activate our devices, rather than pushing buttons or swiping a screen.
Cloud cover. More OEMs are positioning their MFPs as a conduit to the cloud and with the emergence of a never-ending array of cloud-based software and other technologies such as VoIP delivered through the cloud via a subscription model, “the cloud” is becoming less of a trend and more business as usual.
Compatibles industry in turmoil. This has been percolating for some time, and with the recent acquisition of Clover Imaging Group’s (CIG) by Norwest Equity Partners, and the death of LMI (acquired for less than $4 million by CIG), the compatibles business is ripe for change. Will we see more acquisitions and closures in 2020? It’s likely, according to supplies channel analyst Charlie Brewer of Actionable Intelligence. And with HP offering dealers pricing on OEM toner cartridges that rival compatibles’ pricing, not to mention less printing taking place in traditional offices, something’s got to give.
Consolidation in the MSP space. Was ConnectWise’s acquisition of Continuum the tip of the consolidation iceberg in the MSP segment? It’s predicted by analysts who closely follow the MSP space that more consolidation is likely in the wake of this bombshell. Many of the companies discussed as consolidation targets are not household names in the office technology world, so it’s unlikely that it will have much of an impact on the dealer channel. What will be interesting to watch is what type of momentum ConnectWise will achieve in the channel, considering Continuum was a known entity, more so in our world, than ConnectWise.
DaaS is it. With companies like HP and NEXERA touting DaaS (device-as-a-service) models, dealers have access to a new business model that can help them offset the threat of declining clicks. It’s not a radical change for an industry that has long been charging for clicks, but with clicks on the decline, the time is now for dealers to explore other models. At the Sharp dealer meeting in October, there was a lot of talk about bundling products and services together (maybe we should call these multiple devices as a service) to lock out the competition and capture more of an organization’s technology needs.
Don’t hang up the phone. Telephone systems and VoIP are great incremental business opportunities, particularly for dealers offering managed services. Dealers like Chip Miceli at PULSE are seeing this segment of their business grow. At the BTA Grand Slam event in New York City in September, we met RingByName, a company that is looking to erase any hang-ups dealers have about expanding their business into telephone systems and VoIP.
Expanding the talent pool. OEMs such as Konica Minolta and Kyocera are touting their new HR hires and are looking beyond the imaging industry for talent to drive their companies into the future. While one can’t minimize a keen understanding of the industry and established relationships within the dealer channel, bringing in talent from outside to provide different perspectives will continue in 2020. It’s a strategy that shouldn’t be limited to the OEMs and could benefit dealers as well.
Getting social with security. Let’s give HP a standing ovation for raising awareness about device security through its marketing and advertising efforts. Now, let’s sit down and acknowledge all the other OEMs and vendors that have made security a priority, whether it’s an OEM such as Canon, Ricoh or Sharp, or a managed services provider such as All Covered, Collabrance, or Continuum, or any other segment of the industry that is rising to the forefront to combat these threats. This is an ongoing trend that everybody will continue to address in 2020. It’s also an opportunity for dealers to get closer to their customers by focusing on their security needs and concerns.
Interfaces get more personal. Customizable interfaces are all the rage. Every MFP OEM is looking at ways to make the control panel more user-friendly. Whether it is creating more iPad- and iPhone-like touch screens or allowing individual users to personalize the operations panel as with Toshiba’s Elevate platform, this is how today’s user interfaces rock. Next up, voice-activated control panels that will take personalization to a whole new level.
Is inkjet ready for primetime? Remember the late 1990s, early 2000s, when analysts were predicting that this would be the year of color? I can’t remember how many years they made that claim before it happened. We’re now at the same place with inkjet. Is this the year inkjet takes off in the channel? With companies such as Canon, Epson, Kyocera, and RISO, among others, touting inkjet’s benefits and the technology’s constant improvements, we’re getting closer. We don’t think 2020 will be the year, but we expect to see some upward mobility at least.
Latest new builds put compatibles and OEM cartridges on notice. Actionable Intelligence supplies guru Charlie Brewer has been telling us that a new generation of new-build cartridges is coming to market with the potential to shake up the supplies channel. Based on Actionable Intelligence research, these new-build cartridges have been reverse-engineered to avoid any patent infringement suits common in the compatibles industry.
Meet the smart office. We’ve written about the smart office and smart meeting rooms in the past with companies such as Konica Minolta, Ricoh, and Sharp leading the way. We expect to see these systems gain a higher profile in 2020. Will dealers embrace these systems with open arms? Some will while others will wait and see how the market develops before taking the plunge. Considering the amount of R&D the OEMs have put into these systems, this will be a formative year for laying the groundwork to create a market for smart offices and smart meeting rooms.
Sticky stuff. As dealers look to diversify beyond traditional imaging devices such as MFPs and printers, barcode and label printers offer a wealth of potential and can open the door to new vertical markets such as retail and any business creating a product that needs a label. Companies such as Epson, Konica Minolta, and Toshiba are leading the pack with these products and are out to win the hearts and minds of dealers in the channel.
There’s a new tariff in town. There’s a lot of concern with the tariffs being levied against products coming out of China. Some hardware OEMs have notified dealers they are raising prices, while others are saying just the opposite. Others are waiting to see if they need to adjust their prices. Ricoh has stopped manufacturing parts in China that are destined for the US and are now using other manufacturing facilities overseas not affected by the tariffs. It wouldn’t be a surprise if other OEMs implement that same strategy if a diplomatic solution isn’t reached. Meanwhile, consumables originating in China are also subject to tariffs. At press time, it wasn’t clear if the tariffs have impacted the prices of those consumables, but it’s a good bet they will in 2020.
Wider and deeper with wide format. One strategy for entering the industrial print market is with wide format. We suggest reading the article about Atlantic, Tomorrow’s Office and EFI in our September issue to see how one dealer is making the move into wide format. We expect more dealers to take advantage of this program from EFI that gives them a certain amount of exclusivity when selling the company’s wide-format devices. We suspect this will be more of a micro-trend than a megatrend since the percentage of dealers who have the personnel and financial resources to invest in these products remains small. The other limiting factor is the market for these devices. If a dealer is going to make that investment, there must be viable prospects in the markets they serve.
Companies to Watch
ACDI. Why is it that a software distributor has been acknowledged for four consecutive years as Best Software Provider/Best Print Management Software Provider in our Annual Dealer Survey? Could it be their service and support in marketing PaperCut? That’s exactly what it is if you look at the comments of dealers responding to our Survey. Based on the number of dealers who rank ACDI so highly, they are going to be a hard company to displace.
All Covered. We know All Covered as the managed services division of Konica Minolta, and it seems to be humming along nicely. But what we’ll be scrutinizing in the coming year is what’s happening with MWA and its FORZA ERP as it moves through the All Covered channel. We understand more dealers are switching to MWA’s FORZA ERP and that the resources All Covered now provides to MWA have been a huge asset. That said, when we tracked which ERP dealers are using in our Annual Dealer Survey, few are using MWA’s FORZA. Will we see an uptick in 2020? Don’t be surprised if the deep pockets of Konica Minolta further bolster All Covered’s offerings via an acquisition. Maybe a VoIP company?
Brother. Just what the channel needs, another A4 supplier. Whether it does or not, ready or not, Brother is coming and looking to sign up dealers. At a Brother analyst event earlier this year, the company rolled out a bevy of new products and expressed its intent to become a serious A4 option for dealers. While company executives weren’t about to go on record as to how many dealers they were looking to sign up, they’ve got the products and partnerships (think Toshiba) that will help them gain traction in the channel.
Clover Imaging Group. Despite the financial issues, CIG still had money available to acquire the assets of LMI Solutions, in effect, paying for the company’s funeral earlier this year. There was plenty of talk circulating this past year that CIG might be acquired and in November it was acquired by Norwest Equity Partners. With new private equity ownership, and if some of the statements CEO Jim Cerkleski has made at industry events come to pass, we’ll likely see CIG make some more acquisitions.
DEX Imaging Systems. Or should we be watching Staples instead? The acquisition of DEX by Staples was the groundbreaking event of 2019. Since that acquisition, things have been quiet and we haven’t heard about anything happening at DEX. It’s unlikely that Staples is going to be satisfied with DEX alone, and it won’t be a surprise if it acquires another major dealership (perhaps a mega dealership?) in another market beyond the Southeast.
EFI. With the departures of CEO Guy Gecht last fall and his replacement Bill Muir in August, EFI is under new management with the addition of former Xerox CEO Jeff Jacobson as CEO. This is a positive move for EFI and we expect Jacobson to be the dynamic leader the company needs to follow Gecht and Muir. The big plus for EFI is that Jacobson knows the channel well and the market for EFI and its products.
Epson America. The company has Mark Mathews, former TABS president, serving as vice president, and in February, it hired Joe Contreras as commercial marketing executive, office solutions. With two brilliant individuals who understand the BTA channel in the fold, one would expect Epson to become more than just a blip on dealers’ radar screens in 2020.
Flex Technology Group (FTG). Never underestimate the deep pockets of private equity. By all accounts, Frank Gaspari and company made a wise decision when it aligned itself with Oval Partners in 2017. We continue to see acquisitions (four as of press time) this year and from what we hear from our sources at FTG, there are more to come. “We’ve got them lined up like bowling balls,” FTG President Tom Callinan told me back in September.
HP, Inc. Is the company making inroads into the channel? It depends on whom you ask. We are seeing more dealers take on the HP line per our Annual Dealer Survey, but are they having any success selling it? Another development that could impact HP is the recent layoff of some 9,000 workers globally, many of them, from what we understand, were regional managers. Without a doubt, what could impact HP most in 2020 is what happens with Xerox. We could be on the verge of the creation of one of the biggest companies in the imaging industry if a deal goes through regardless of who buys who.
Kelley Imaging Systems. At press time, this was the most active acquirer from an independent dealer perspective in 2019 with eight acquisitions as of early December. Kelley also earns the distinction of being the industry’s most active acquirer when factoring in the private equity-backed entities. Something is going on in Kent, Washington, and we’ll be watching in 2020.
Konica Minolta. This is another company looking to define the office of the future with new product offerings, but it’s also a company that has shown it is at the top of its game in the production print and industrial print space. For dealers looking to play in those markets, they couldn’t find a better partner than Konica Minolta with its many high-end print products, as well as the labeling and packaging products that most of its competitors don’t offer. The company had a big presence and took up a significant amount of real estate at the PRINTING United show in October, as befits a leader in the production and industrial print space. Konica Minolta seems to be grabbing the attention of its top-tier dealers with these products, but will the company bring more of its mid-size dealers on board in the coming year and further stake out its claim in the production and industrial print segment?
LD Products. We’ve been watching this company chip away at the remanufactured toner and inkjet cartridge market the past two years, introducing new products to the channel and slowly winning over more dealers. With the departure of LMI from the compatibles landscape, we expect the company to gain even more traction in the channel in 2020.
LEAF Commercial Capital. Here’s a leasing company that continues to gain traction in our Annual Dealer Survey as more dealers list LEAF as a leasing partner. They received a 4.4 rating in our Annual Dealer Survey, which is a strong showing. We wouldn’t be surprised to see the number of dealers who partner with LEAF continue to grow in 2020.
Lexmark. This is a company that continues to receive high marks as an A4 supplier in our Annual Dealer Survey. But as Brother and HP amp up their presence in the channel and some of the Big Six OEMs that have overlooked A4 in the past get with the A4 program, there could be challenges ahead. We’ve spoken to some dealers who acknowledge they are selling fewer Lexmark devices than they have in the past. Is this a harbinger of things to come for Lexmark, or just a bump in the road?
Marco Technologies. Marco is one of the largest dealerships in our industry and it continues to grow. The addition of Doug Albregts, former Sharp president and CEO, as president is a huge plus for the dealership that is already established with strong leadership. It’s been four years since Marco was acquired by Norwest Equity Partners (NEP), and it may be time to discover what kind of return NEP can get on its investment. Is there an entity out there with the funds to buy a dealership the size of Marco? Did somebody say Staples?
NEXERA. The former BEI Services has a new name and has expanded its offerings with a new DaaS offering. After its acquisition of Business Systems Consulting in January 2019, an expanded services offering, and a name change, the company is poised to grow in 2020.
POA. Meet a mega dealer that is the poster child for organic growth. Yes, the company has grown some through acquisitions, including its last acquisition of Yost Business Systems in Idaho in 2018, but with revenues moving northward of $340 million, how much bigger can it get growing organically? We wouldn’t be surprised to see POA acquire in 2020.
Ricoh. The acquisition of DocuWare in early 2019 represented the biggest acquisition by an OEM in 2019. It will be interesting to see how this acquisition will affect DocuWare, and how other OEMs will respond. Will we see more acquisitions of software companies by other OEMs in 2020? Very likely in our estimation. Will Ricoh look to acquire more software companies? Based on its recent history, that seems highly likely too. Just as the big dealers keep getting bigger, the same thing is happening with the top three OEMs, Canon, Konica Minolta, and Ricoh. Why develop in house when you can acquire? Ricoh will also be worth watching to see what happens with the subscription model it was touting at its recent dealer meeting. This will be a radical change in how dealers and even Ricoh go to market, but it’s the wave of the future and the company is on the cutting edge of this movement.
RingByName. Is the channel ready for a cloud-based VoIP system? This is a company that is serious about entering the channel and has been showing up at industry events such as the BTA Grand Slam and Sharp’s national dealer meeting. If the number of dealers visiting the company’s booths at those two events are any indication, the channel appears to be ready for a product that is a viable managed service offering.
Sharp. It wasn’t all that long ago when imaging industry analysts were speculating about the future of Sharp. Truth be told, the company’s employees were doing the same thing. Now look where Sharp is: strong management, a deep bench, and a steady stream of new products and solutions that have the potential to transform the office imaging industry, and by extension, the Sharp dealer channel. With its Smart Office Suite, the Windows Collaboration Display, and its new Synappx platform, Sharp is preparing dealers to compete in a less print-centric world. The challenge facing Sharp is one faced by all OEMs who are introducing products outside of their dealers’ comfort zones, how to create excitement for this new generation of products.
Square 9. Selected by dealers as Best ECM/Document Management Software Provider in our 2019 Annual Dealer Survey, Square 9 did not have a lot of competition in this category when the final votes were tallied. The company only had one significant competitor vying for the top spot in the Survey while every other competitor finished well behind the pack. Clearly, Square 9 is doing something right and we will be watching to see how the company performs in the channel in the coming year.
Toshiba. TABS just celebrated its 20th anniversary this past summer, and considering all the turmoil its parent company in Japan has gone through in the past few years, it looks like there’s smooth sailing ahead. However, you never know in the technology world. Things can change overnight. The company continues to invest in new technologies, including developing its own A4 line, so there is a plan for the future.
Visual Edge. Here’s an active acquirer from 2017 and 2018 that was M.I.A. in 2019 because of financial issues. If and when Visual Edge gets its financial house in order, it could be a factor once again in 2020. If not, well, it just might be the Boston Market of the office imaging channel, a company that tried to grow too fast too soon.
Xerox. After a tumultuous 2018 and early 2019 with the dismantling of the Global Imaging network and the creation of Xerox Business Systems, a calm seemed to have settled over Xerox in the following months. Then came November, and all hell broke loose. First, the company settled its lawsuit with FUJIFILM Holdings around Fuji Xerox. Then, a day later, the Wall Street Journal published a story that the Xerox Board of Directors was considering making an offer for HP. Soon after, that’s exactly what happened. It seems as if our past predictions that Xerox was being set up to be sold may prove to be premature and that the company will continue to be a presence in the imaging channel, whether it acquires HP or some other entity. That said, as one financial analyst speculated, there is still the possibility that HP may acquire Xerox, noting that this was Xerox’s strategy when making the offer. As crazy as that sounds, we aren’t taking anything off of the table as a possibility.
People to Watch
Doug Albregts, president, Marco. The former Sharp president and CEO is back in the industry as president of Marco. There’s a method to Marco’s madness in the hiring of Albregts, and it is focused on putting future leadership in place to take over for current CEO Jeff Gau when Norwest Equity Partners, the private equity firm that acquired Marco in 2015, decides to flip the company. At that time, it is expected that Jeff Gau will step down and Albregts will assume his role.
Joe Contreras, commercial marketing executive, Epson. Hiring Contreras away from TABS was a coupe for Epson, and we expect he will make a big difference now that he has been with his new employer for almost a full year. He tells us he’s been spending a lot of time in the field meeting with dealers, which is critical for building a distribution channel. Can he do it? Well, he certainly understands product development and marketing. Don’t be surprised if some of the dealers who take on the Epson line are Toshiba dealers.
Mimi Evenson, senior vice president, revenue, Clover Imaging Group. We got to know Evenson well during her tenure at HP. Now she’s back and closely involved in the channel after a recent stint at SYNNEX. In her new role at Clover it is expected that she will be leveraging her knowledge of the channel to increase Clover’s already significant penetration in the channel.
Jeff Jacobson, president & CEO, EFI. After a tumultuous tenure as president and CEO at Xerox, mainly due to conflicts with certain members of Xerox’s board of directors, Jacobson is back where he belongs leading one of the top companies in the print industry. His knowledge of the market is a huge asset to EFI.
Kevin Kern, senior vice president, business intelligence services and product planning, Konica Minolta Business Solutions U.S.A. For our money, he’s still one of the smartest and most cerebral people in the industry. There isn’t a product category he can’t talk knowledgeably about, which makes him a valuable resource not only to Konica Minolta, but to us when we need an industry thought leader to offer his opinion about trends, new product developments, or whatever topic we’re writing about. And he’s a damn fine guitar player as well.
Heather Loisel, senior vice president, chief marketing officer, Ricoh Americas. Earlier we noted the trend where some OEMs and dealers are recruiting personnel from outside of the traditional imaging technology channel. Loisel is a perfect example of this. Her marketing knowledge was on vivid display at Ricoh’s November ConvergX conference and based on her presentation and her comments during a press and analyst briefing at ConvergX, we believe she will be a huge asset to Ricoh going forward.
Enrique Lores, president & CEO, HP, Inc. It wasn’t a surprise when Lores was named the successor to Dion Weisler who stepped down in August due to personal reasons. Lores has been a highly visible executive in his previous role as president of HP’s Imaging, Printing, and Solutions business. He’s already made some tough decisions, laying off over 9,000 workers in a move to return HP to profitability. What else does Lores have up his sleeve? We should find out in 2020. And if HP is acquired by Xerox, it will be interesting to see whether Lores remains in his current position, his role changes, or he becomes 9,001.
West McDonald, vice president of business development, Tigerpaw Software. After the acquisition of Print Audit by ECi Solutions earlier this year, McDonald’s position as vice president of business development became redundant. What isn’t redundant is his knowledge of the channel and his advocacy for MPS and seat-based billing. It didn’t take long for another vendor to recognize those talents and he’s now preaching the gospel of the Australia-based print management software company Tigerpaw Software. He remains one of the most knowledgeable people in the industry about MPS and that knowledge was recognized recently when he was named president of the Managed Print Services Association.
Dino Pagliarello, vice president, product management and planning, Konica Minolta Business Solutions U.S.A.. Looking for someone at Konica Minolta who can speak knowledgeably about its high-end printing technology, most people might start with Kevin Kern, but we were impressed by Pagliarello’s knowledge of the company’s production and industrial print line during our visit to PRINTING United in October. He’s a key player within Konica Minolta and one we expect will continue to have an expanded role in the organization.
Suzanne Payer, vice president channel and field marketing communications, Ricoh Americas. Up until Ricoh ConvergX in November, Payer, in our estimation, was Ricoh’s best-kept secret. She had a central role on stage at ConvergX, and has an equally central role with her focus on channel and field marketing communications. And she’s been with the company for 20 years, counting her tenure with IKON. Ricoh and its dealers are fortunate to have her in their marketing corner.
Oscar Sanchez, president, Kyocera. He made our list last year and makes it again this year. He’s making changes, discarding dead wood, and looking to hire from outside the industry. These are bold moves, and it will be interesting to see what the long-term impact is on Kyocera.
John Sheehan, senior vice president of B2B channel sales, Sharp. He had big shoes to fill when he took over his position more than a year ago. He’s filled them well, which explains this latest promotion from his previous position of vice president of channel sales. As Sharp expands its product line beyond A3 and A4, it will be Sheehan’s job to convince dealers that Sharp has the products to diversify their product offerings and bring in additional revenues. After witnessing his performance at Sharp’s recent dealer meeting, it’s clear that Sheehan has no place to go but up at Sharp.
Joji Tokunaga, President & CEO, Ricoh Americas. The office technology industry has been blessed with many fine Japanese executives over the years, but one of the most engaging, candid, humble, and knowledgeable is Tokunaga. We appreciate his willingness to mingle with dealers, press, and analysts at industry events such as Ricoh’s ConvergX conference, which is not usually standard operating procedure for top-level Japanese executives. Ricoh employees, dealers, and those of us in the analyst community are fortunate to have him in our industry.
John Visentin, vice chairman and CEO, Xerox. Visentin, who was apparently handpicked by Carl Icahn to succeed Jeff Jacobson, has only been with Xerox since May 2018. It’s still too soon to tell if he’s moving the company in the right direction, some positive recent financial results and the dismantling of Global Imaging Systems notwithstanding. If the company acquires HP, or if HP acquires Xerox, could determine how much longer his tenure with the company will last. Based on his track record of moving around over the course of his career, we’d be surprised if this is a long-term play.
Gary Willert, former president, LMI. Willert used to be a familiar face at industry events and was flying high just a few years ago with LMI. But with its demise, will Willert or other members of the Willert family who were running the show at LMI resurface elsewhere in the channel? Right now he’s serving as a consultant for Static Controls, so he hasn’t ventured far from the supplies side of the business.
Kerstin Woods, vice president of product and solutions marketing, Toshiba America Business Solutions. A nine-year product marketing background at Oracle should come in handy at TABS. Woods may be new to this channel, but we will be watching to see how she applies her skills and knowledge.
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