Exhibits 1.1-1.5
Starting with our 2014 Survey, we began separating the A3 and A4 MFP lines. From 2004 through 2013, the number of lines per dealer was impacted by the number of dealers that selected an A4 MFP provider as their second, third, or fourth line. By separating the two product lines we can better illustrate how A4 MFPs are impacting the dealer channel, and better reveal the strength or weakness of an A3 manufacturer’s distribution.
In this year’s Survey, a total of 699 A3 MFP lines were reported across respondents from the Big Six dealer universe, comprising dealers representing Canon, Konica Minolta, Kyocera, Ricoh, and Sharp. The average number of lines per dealer for that Big Six universe is now 2.03, up from 1.94 a year ago. With all the acquisitions of the past five years, we had expected lines per dealer to be higher, between 2.3 and 2.4. Still, if you look at Exhibit 1.1, the lines per dealer is trending upward, and we believe it’s not unrealistic to expect those numbers to reach 2.3 to 2.4 within the next year or two.
The challenge dealers who carry multiple lines continue to encounter is identifying a niche for these additional lines. At one time, an additional line may have filled a gap in the primary A3 manufacturer’s A3 offerings, but that argument is negligible today as most A3 product lines across the Big Six universe are on a par with each other.
Arguably, the biggest disrupter in the A3 universe is HP. The company has a major A3 initiative in place as it looks to expand its presence in the independent dealer channel. Nearly 17% of Big Six dealers participating in the Survey identified HP as one of their A3 suppliers. Last year, 12% identified HP as an A3 supplier. Five percent might not sound like a huge increase, but when one considers how long the Big Six have been entrenched in the A3 mindset of the dealer channel, HP is clearly chipping away at achieving its goal of penetrating the channel, even if the specifics of those goals are internal and not shared publicly.
Another interesting observation we made while tabulating the A3 lines per Big Six dealer was that Sharp had 12% of all the dedicated dealers and represented 20% of all responding dealers. This is the second year Sharp has reached these levels. Every manufacturer wants to see more of its dealers become dedicated. Sharp appears to have found the correct approach to achieving this plateau.
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