A look back at the changes that have helped define the document imaging industry and The Cannata Report.
As we celebrate our 40th anniversary, we thought it would be interesting to look back at the 40 most important trends, developments, product introductions, and events of the past 40 years in the document imaging industry.
To help us select The Cannata Report’s Top 40, we recruited notable industry leaders who span the spectrum-dealers, manufacturers, vendors, and leasing companies. Our panel of “contributors” reads like a who’s who of the industry (see the sidebar below).
The analog to digital transition (68.9%) – Without this, we’d have no networked copiers, no MFPs, no scanning to the cloud, and the beat goes on. “Imagine what the office technology industry would be today if that had never occurred,” observed one respondent. “That transformation forever changed the trajectory of the industry.”
Networked copiers/MFPs (66.7%) – Once digital copiers were connected to the network, everything changed for dealers and end-users. Dealers had to learn how to network these devices and end-users had to change their workflow. Instead of walking up to the device and copying, they could now initiate the process from their computers. As one survey respondent wrote, “The ability to network copiers forced a huge change on dealerships to enter the IT space. Without this milestone, you would not see managed IT, managed services, VoIP, security, and all the other diversification opportunities beyond office print.” And as another respondent wrote, “Connected copiers with scanning, which have become a killer app, and color in the office were game changers for the industry, and both have made the dealer more pertinent in the connected office.” Another observed, “On the product side, the digitization of the copier put us on the network and in the IT department. All other trends (industry growth, MPS, IT diversification) came from that single fundamental change.”
Diversification beyond traditional print (64.4%) – Diversification is not a new phenomenon. Think about typewriter dealers who diversified into word processors, fax machines, and copiers. Today, there’s a litany of diversification opportunities for dealers, and we won’t list them all here, but for dealers intent on future-proofing their business, the current trend is to sell more than print technology.
The impact of COVID-19 (64.4%) – After COVID-19 hit, many dealers reported declines of 25% to 40% in their businesses. While business is coming back, it’s not where it was pre-pandemic. The pandemic impacted dealers, but it also impacted their customers. Some dealers sold due to COVID or reduced the size of their business. COVID has accelerated many industry shifts like diversification of offerings, managed IT, the rise of A4, and the decline of print. “The changes that are happening and will continue to happen over the next several years will transform the business at a rate not seen since the shift from analog to digital,” added one respondent.
Private-equity acquisitions (62.2%) – Most of the mega dealers in this industry—DEX, Flex Technology Group, Marco, and the UBEO family of dealers—are driven by private equity money. PE investment will continue to have an impact on the dealer channel going forward.
Dealer acquisitions (57.8%) – This is a trend that has been going on for decades, accelerated by technology changes, an evolving product mix, age, recessions, and now a pandemic. “This has led to a permanent change, including how dealers value their businesses, created dealer/OEM conflict, and brought private equity into the industry,” observed one respondent. “Nothing has been the same since.”
Color copiers/color MFPs go mainstream (57.8%) – From late 1990s into the early 2000s, document imaging industry analysts consistently announced each year as “the year of color,” and predicted color devices would become commonplace within the traditional office. Although it can be debated exactly when “the year of color” finally happened, we’ll ballpark it somewhere between 2006 and 2010. Let’s face it, there aren’t too many offices that don’t have a color copier or printer today.
The decline of print (53.3%) – Nearly everyone in the document imaging industry acknowledges that print is on the decline. If it weren’t, would we be hearing as much about diversification from the analysts and even the legacy print OEMs? Print is not going away, but the pandemic accelerated its decline, and the continued drop will have a noticeable impact on A3 placements.
The rise and fall of the mega dealers, i.e., IKON, Danka, Global (48.9%) – One might say what comes around goes around as these monoliths swallowed up dozens of independent dealers in the late 1980s and throughout the 1990s, only to be acquired by the likes of Ricoh, Konica Minolta, and Xerox. None ever took over the industry to the extent many predicted. While the acquisitions they made helped make the owners of many of the acquired companies wealthy, those left behind in the IKON and Danka organizations, specifically, found an environment that was far from entrepreneurial and employee-friendly. No wonder they didn’t last.
Digital transformation (46.7%) – The simplest definition describes digital transformation as the process of using digital technologies to create new or modify existing business processes, culture, and company experiences to meet changing business and market requirements. It’s also a big buzzword and gets bandied around often in document imaging circles. However, when you get to the core of the definition, many of the products, solutions, and services currently sold by the independent dealer channel help with an organization’s digital transformation. So, there’s that. As one respondent noted, “Digital transformation has had the biggest impact on print and will continue to do so. The impact is further exaggerated when combined with the effect of the pandemic on the office environment. The most disruptive milestone has yet to be played out until we see the real and long-term impact of WFH [work from home]. That could very well be a lot less measurable or even more measured than we know today.” Another wrote, “The pandemic accelerated digital workflow adoption, which decreased dependence on printed pages. This, in turn, increased the urgency for differentiation of products and services.”
Managing print and MPS (46.7%) – Despite an array of definitions and models for doing so, managing a customer’s printed output has been a thing since before the turn of the century and continues as a viable service offering even in a world of declining prints.
Dealers expand regionally (44.4%) – As the dealer channel contracted through acquisitions and mergers, dealerships that once focused on a local market grew by expanding their territorial reach, not only within a state but also within a region and even nationally. It may not be true across the board, but most dealerships with $50-plus million in annual revenues have expanded their reach dramatically in step with their revenue gains.
The rise of A4 (44.4%) –As the OEMs expand their A4 offerings, customers who are printing less are rethinking their A3 needs. It’s a crowded field with each of the Big Six OEMs (Canon, Konica Minolta, Kyocera, Ricoh, Sharp, Toshiba) offering A4 products, as well as Brother, Epson, HP, and Lexmark. Although supply-chain issues have forced some OEMs to focus their manufacturing on A3 of late at the expense of A4, that’s just a temporary situation. Once those supply chain issues are resolved, expect a bigger push for A4, driven largely by the decline of print and the hybrid workforce.
MFPs replace copiers (42.2%) – Although end-users may still call their MFPs copiers even if they are connected to a network, the emergence of devices in the 1990s that copied, printed, scanned, and faxed reinvented the concept of the standalone copy machine.
Xerox acquires Global Imaging Systems (42.2%) – In 2007, Xerox paid $1.5 billion to acquire Global Imaging Systems to capture a signficant share of the SMB document imaging market. A big deal at the time, current market-share numbers in the document imaging segment reveal how that worked out for Xerox.
“The Tom Johnson Model” (40%) – Tom Johnson created the benchmarking model for acquiring and integrating businesses with Global Imaging Systems. The company’s philosophy was “Think Globally, Act Locally.” It’s a model that many dealers continue to use today.
The growth of light production and production print (35.6%) – In the printing space, it’s all about speeds and feeds. Speeds have continued to rise, and OEMs have continued to develop products to meet the needs of commercial printers and in-plants, as well as traditional offices with high-volume printing needs. While not every OEM has a production print device, most offer light production, and for many dealers, these products will enable them to target customers outside the traditional office as A3 office printing continues to decline.
Competition from direct branches (31.1%) – Favorable pricing and willingness to close a deal at any cost (as some dealers see it) created animosity between dealers and their OEMs and ranked as the No. 1 dealer concern in our Annual Dealer Survey for many years. However, that has become less of a concern over the past five years as manufacturers such as Konica Minolta took steps to level the playing field. What’s also alleviated some of the issues are companies such as Ricoh and Konica Minolta selling SMB MIF to select dealers, a decision that actually benefited most of their dealers in the long run.
Consolidation among the OEMs (31.1%) – Before there was Konica Minolta and Kyocera, there was Konica, Minolta, Kyocera, and Mita. We could even add Gestetner and Lanier into the mix before they were acquired by Ricoh, as well as Muratec, which was acquired by Konica Minolta. The latter three acquisitions continued to market products under their original brand names for a time. Consolidation has certainly made a difference in the document imaging industry going back to the late 1990s/early 2000s. The most recent consolidation of print OEMs was HP and Samsung. And we’re only talking print, not acquisitions of non-print organizations such as Ricoh’s acquisition of DocuWare. This is a key trend that will continue. “Several items seemed to change things more than others for us, but as a 40-year-old company, there have been many that had at least some influence on our decisions and direction,” wrote one respondent. “None more than the constant consolidation, as it seems to change who the competitors are and who we buy from as OEMs consolidated and then a never-ending series of someone attempting to consolidate the independent dealers.”
Computers replace typewriters and word processors (28.9%) – Looking across the independent dealer channel, you won’t have to look too hard to find long-time dealers who originally sold typewriters decades ago. As recently as the early 1990s, you could attend a BTA show and find the likes of Olivetti, Royal, Brother, and Xerox showing their wares, which included the latest generation of electronic typewriters, a precursor to word processors. Once the personal computer hit the streets in the mid-1980s, it started to chip away at the installed base of typewriters and word processors, eventually supplanting it in businesses across the U.S. and forcing dealers to diversify their product offerings once again.
The Great Recession of 2008/2009 (28.9%) – This event was a disruptor, impacting the channel’s bottom line. As one respondent wrote, “The event that had the most impact on print was the economic recession of 2009. It was not the event itself, but that it came when mobile technology came into its own. The iPhone was introduced in 2007, and the process that ran the business was never the same. Documents could be reviewed, approved, and even signed remotely, and the importance of the paper transportation of instructed data began to lose its significance. This event forever changed the value of print and how print was used. Page volume has declined steadily since.”
Copier service goes remote (20%) – Thanks to the analog to digital transition, which led to the development of software that allows dealers to monitor, update, and perform certain equipment fixes remotely, copier service has changed dramatically. Onsite service may never go away completely, but as artificial intelligence and predictive analytics become even more sophisticated, remote service will be even more viable than it is now.
Apps added to MFPs (17.8%) – The control panel of the MFP has come a long way from the early days when the options were copy, print, scan, and fax, as well as identifying the number of pages to copy, reduction and enlargement, and duplexing. Now, we have apps that allow you to scan to the cloud and scan to specific folders, as well as apps designed specifically for vertical markets. Yes, MFPs have become smarter and more functional.
Konica Minolta acquires Danka Office Imaging (17.8%) – For a short period of time, it seemed as if the mega dealers would completely take over the independent dealer channel. But a funny thing happened on the way to distribution domination, cracks started to appear in the facades of IKON and Danka, and it was clear that their business models were not in sync with the entrepreneurs whose businesses they acquired. In 2008, Konica Minolta acquired the struggling company for $240 million. The move provided Konica Minolta with access to Danka’s 45,000 customers in the U.S., as well as its services and production-print expertise. Many Danka locations were already selling Konica Minolta products, which was a plus, but Danka also had significant partnerships with Canon and Toshiba. The organization that got hurt the most with this acquisition was Canon which decided to stop supplying products to Danka dealers after the acquisition, resulting in a significant downturn in business for Canon.
Foxconn acquires Sharp (15.6%) – In 2015 and 2016, the future of Sharp was seriously in doubt. Rumors abounded that the company was heading toward financial disaster. In 2016, the Taiwan-based technology company Foxconn Technology Group purchased Sharp for $3.8 billion. As far as we can tell, the acquisition has worked out well for both companies, as Sharp continues to innovate and capture market share, thanks in large part to the deep pockets of Foxconn.
Xerox breaks up the Global network (13.3%) – In 2019, Global was rebranded as Xerox Business Solutions. Prior to that, many of the dealers and their employees who remained with the organization after selling to Global were jettisoned in a series of cost-cutting measures and location consolidations that underscored how the old Global philosophy of “Think Globally, Act Locally,” did not matter to Xerox’s current board of directors and management team.
The economic impact of 9/11 (11.1%) – Business took a downturn in the aftermath of the events of this tragic day. Although it did not have the same economic effect as the Great Recession and the COVID-19 pandemic on the independent dealer channel, it did shake things up for a while.
The introduction of plain-paper fax machines (8.9%) – Actually, the introduction of fax technology had a huge impact on the channel, and if we had broadened this option to include coated-paper fax, the percentages may have doubled. Regardless, fax machines were one of the hottest office technologies of the 1980s and well into the 1990s prior to the emergence of the internet and email communications. In its heyday, there were dozens of fax machine manufacturers competing for market share, and as the office technology industry inched toward the turn of the century, the smaller players started to disappear until less than a dozen remained. Today, fax is a seldom-used MFP function.
Kyocera acquires Mita (6.7%) – At the time of the acquisition between Kyocera Group and Mita Industrial Company in January 2000, Kyocera was known primarily as a printer company, while Mita was one of many OEMs struggling for market share in the crowded copier segment. At that time, Mita was in bankruptcy and declining rapidly. The acquisition resulted in the creation of Kyocera Mita Corporation, a company that sold printers known for their low cost-per-page, as well as copiers. As acquisitions go, this turned into a winner.
HP acquires Samsung (6.7%) – It was always a mystery to industry observers why Samsung decided to get into the document imaging business, competing with so many established players. That initiative didn’t last all that long, as HP acquired Samsung in 2017 for $1.03 billion to accelerate HP’s growth in A3. Although HP’s A3 business is growing, it’s been more a slog than a jog.
HP enters the A3 space (4.4%) – Remember the Mopier, HP’s failed attempt to enter the A3 space in 1998? There was a lot of fanfare, and the product fizzled instead of sizzled. HP went back to the drawing board, and for nearly 20 years, it wasn’t much of a factor in the A3 space. As noted earlier, the Samsung acquisition helped a little with HP’s A3 momentum, and if you look at our Annual Dealer Survey, more dealers are selling HP A3 than ever before. Still, it’s a small percentage of the overall A3 market, but it is a percentage of the market, and we expect HP to continue to chip away at other OEMs’ market share in the segment.
The introduction of the plain-paper copier (2.2%) – We’re cheating on this one since it’s been more than 60 years since Xerox introduced the first plain-paper copier. Other manufacturers followed, distributing their products through the dealer channel. As one respondent commented, “I entered this industry in 1961 selling coated-paper transfer-diffusion copiers that were later replaced by electrostatic copiers also with coated paper. Our sales volume was modest (very high margin on the paper by the way). With the advent of plain-paper copiers, dealer sales volume exploded, and today’s lucrative copier industry was born.”
The workforce shortage (2.2%) – There’s always been a revolving door in sales, but thanks to the pandemic and the Great Resignation, the document imaging industry faces a historic challenge filling positions across the board, not just in sales. Round and round and round it goes, when it will stop, nobody knows.
The hybrid workforce (2.2%) – This is a technology-driven shift that accelerated during COVID-19, leading to, as one survey respondent pointed out, document-management improvements to assist in this new mobile workforce.
The decline of the annual BTA/NOMDA conference (2.2%) – For many years, if you were only going to attend one industry event, this was the one. It was a one-stop-shop that featured all the OEMs and every company doing business with or interested in doing business with the independent dealer channel. As the OEMs started hosting their own events, focusing on a more captive audience for their products and message, the number of dealers attending the BTA conference slipped. Not even consolidating with the annual NOPA (National Office Products Association) conference saved it. It has since been replaced by BTA regional events and a smaller BTA national event, but for those who were there back in the 1980s, this event was one of the best.
The emergence of OEM dealer meetings (2.2%) – When the major OEMs decided to host their own dealer meetings beginning in the late 1980s, that spelled doom for the annual BTA/NOMDA conference. Now, OEMs could preach to the choir and not contend with competitive dealers and competitors dropping by their booths and kicking the tires. Many of these meetings were spectacles with all the pomp, circumstance, and entertainment once seen at the BTA/NOMDA conference. Lately, we’ve seen, going back to pre-COVID days, these meetings become much more economical from a time perspective. In the past, these could go on for three or four days, including a half-day of leisure activities. Contrast that with the most recent Konica Minolta dealer meeting. The first evening was the opening reception, and the second day was condensed into a general session and various breakout sessions, followed by a dinner and entertainment to close out the event. The third day was the departure day. For many, shorter events are a welcome evolution.
The hybrid workforce (2.2%) – Accentuated by COVID-19, the hybrid workforce can’t be ignored, which means employers will need to accommodate some of these workers, whether it’s providing them with technology, supplies, consumables, or even more importantly, ensuring their network and data security.
The shift from a hardware-centric business model to a services-centric model (2.2%) – Think managed services and MPS for starters. As one respondent told us, “This has been the biggest shift that has impacted the industry.” This is a shift that has been more than 20 years in the making, and it is a model that will keep the independent dealer channel relevant and profitable well into the future.
The emergence of industrial print (2.2%) – This may represent an opportunity for a small percentage of dealers, but as companies such as Canon, Konica Minolta, and Ricoh introduce more products for this space, larger dealers that have moved upstream to production print are moving upstream once again.
The growth of dealer peer groups (2.2%) – Dealer peer groups such as CDA, SDG, BPCA, and others have provided a social and educational environment free of competition and the influence of manufacturers where dealers could share best practices and growth strategies.
A Few More Trends
Survey respondents also identified the following trends:
- Growing relationships between suppliers and dealers.
- The shift from a reactive break-fix hardware model to a proactive services model was what defined the players more clearly.
- The categorization of manufacturers and dealers based on their diversified portfolio offerings. Are they a “copier” manufacturer/dealer, or are they are “services” organization? That will ultimately define the future landscape of our industry.
- More groundbreaking advancements than the prior 100 years. Groundbreaking must include the introduction of Amazon, e-commerce, data mining, analytics, and mobility. The impact ultimately is the dramatic change in buying patterns, accelerated by the unprecedented impact of WFH thanks to the pandemic.
- The ongoing impact of generational change we are living in has created the most interesting and dramatic times I have ever seen. Consider the metaverse—augmented and virtual reality blends our physical and digital worlds. NFTs are digital assets traded on blockchain. Our industry is being impacted by these and many others but not yet visible by most!
- The evolution of the product offering that provides greater reliability.
- One of the seminal events of our industry occurred 40 years ago with the introduction of The Cannata Report. (Editor’s note: I almost decided to cut this comment since it comes across as self-serving, but this is our 40th anniversary and it’s nice to be appreciated. Plus, we agree!)
An Alarming Trend
Paul Schwartz, president of Copier Careers, a recruiting firm for the document imaging industry, shared his insightful perspective on the most notable events and how current trends may shape the future of the industry.
The rise and fall of IKON, Danka, and even Global mirror the industry as it has changed over the last 30 years. The fate of these companies has created great opportunities for the independent dealer and has been a road map for the consolidation the investment banking groups are destined to follow.
These milestones have led us to the industry’s current challenge: an acute workforce shortage. Innovation, competition, and economic pressure have pushed the OEMs to merge or downsize, and independent dealers to run increasingly lean. During the Great Recession and its aftermath, that was O.K. because there were always more qualified candidates desperate for work. But over the past decade, we’ve been seeing the candidate pool get smaller and smaller.
We’ve been sounding the alarm for years but haven’t seen much movement from industry players. We think the reason for this is simple: The industry has lost focus on the human element. All the acquisitions, new products and services, and expanded territories won’t mean anything if you don’t have the people to keep it all going. Experienced professionals at all levels are exploring opportunities in other industries or retiring. Not enough young people are coming in at entry levels.
With the pipeline nearly empty, who will sell, service, and administer your products and solutions tomorrow, let alone next year or in the next decade? The next milestone for the industry will be defined by the people who answer that question.
The Selection Process
We provided panelists a list of more than 45 trends, developments, product introductions, and events to select from, asking them to select up to 20, as well as identify “other” trends that weren’t included on our list. The trends are listed in order of popularity; however, many items at the end of the list fell into the “other” category, but they are equally significant for their impact on the document imaging industry over the past 40 years. As you read through the list, you will likely see a common thread among many of the trends on the list, as some trends are closely connected to others.
Top 40 Panel
Keith Allison, Systel Business Equipment
Eric Auman, Hytec Dealer Services
AJ Baggott, RJ Young
Ray Belanger, Bay Copy
Jerry Blaine, LDI Connect
Jim Cerkleski, Clover Imaging Group
Barry Clark, Perry ProTech
Shane Coffey, Sharp Imaging and Information Company of America
Jim Coriddi, Ricoh USA
Frank Cucco, Impact Networking
Jim D’Emidio, formerly with Muratec America Inc., a Konica Minolta Business Solutions U.S.A. Company
Deb Dellaposta, Doing Better Business
Jeff Elkin, Advance Business Systems
Sam Errigo, Konica Minolta Business Solutions U.S.A.
Patrick Flesch, Gordon Flesch Company
Tom Flesch, Gordon Flesch Company
Bill Fraser, Fraser Advanced Information Systems
Frank Gaspari, Flex Technology Group
Jim George, Donnellon McCarthy Enterprises
Bob Goldberg, BTA
Dave Greene, EO Johnson
Brent Hoskins, BTA
Jim Kreikemeier, Capital Business Systems
Frank Mallozzi, EFI
Mark Mathews, Epson America
Wes McArtor, NEXERA
Ed McLaughlin, Predictive InSight
Kathryn Murph, ABR Digital Office Solutions
Troy Olson, Les Olson Company
Jim Oricchio, Coordinated Business Systems
Mike Pietrunti, Xerox
Joe Reeves, Smile Business Products
Tim Renegar, Kelly Office Solutions
Oscar Sanchez, Kyocera Document Solutions America
Steve Schloss, LDI Connect
Paul Schwartz, Copier Careers
Barry Simon, Datamax
Mike Stramaglio, Stramaglio Consulting
Raj Thadani, Mars International
Richard Van Dyke, Advanced Office
Larry White, Toshiba America Business Solutions
Danielle Wolowitz, Shore Business Solutions
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