Toshiba TEC banks on its print and POS business, as well as a strong dedicated dealer channel to maintain stable profits.
Above: Toshiba rooftop signage in Tokyo
In our journeys to Japan over the last 40 years, we have stuck to a consistent travel schedule. We fly into Tokyo from the U.S. and hit the ground running. Coordinating visits with the six major Japanese MFP manufacturers to arrange meetings in three different cities over a 10-day period requires months of preparation before we nail down a schedule that logistically makes sense and works for everyone.
We met with four companies while in Tokyo, beginning with Konica Minolta, followed by Canon, Ricoh, and Toshiba. The way the schedule worked out, we ended our visit to Tokyo with Toshiba before leaving for Nara to meet with Sharp. However, due to a miscommunication on our part, we had to reschedule our visit with Toshiba. We cannot thank Takayuki Ikeda, president and CEO of Toshiba TEC, enough for his willingness to accommodate our revised schedule.
Our host for the Toshiba TEC meeting was Sachio Koyama, vice president and general manager, products, marketing and services division, for Toshiba TEC’s Printing Solutions Business Group. Joining us, from the Printing Solutions Business Group (PSBG) were Senior Manager Hiromichi Kato, Group Manager Kazushi Koike, and Senior Manager Shiro Shimikawa.
Their presentation included an overview of the company’s performance going back to 2016 and how Toshiba is positioning itself for the current fiscal year. One of the key goals for fiscal year (FY) 2017 was establishing profit stability through enhanced productivity in R&D and by improving operational efficiency and the quality of their service business. Looking further out, Toshiba TEC has ambitious financial goals for FY 2020, including 5% growth in operating income by FY 2020.
Toshiba TEC is also focusing on growing business opportunities through 2020 in the LMR (logistics, manufacturing, retail) markets by leveraging the company’s technology in POS (pointof-sale), BCP (barcode printer), RFID (radio-frequency identification), and print technologies. The intent is for Toshiba TEC to become a global onestop solutions company.
The catalyst for establishing value and its business positioning in Toshiba TEC’s PSBG in its mid-term business plan is leveraging Toshiba TEC’s uniqueness. That includes expanding and starting new businesses in managed IT services and by introducing a line of inline printers.
Total Office Solutions
MFPs remain a key element of the company’s plans going forward, as Toshiba TEC will continue to develop new MFP products with solution enhancements, even as we were told that intense competition by suppliers and the decline of print has created limited demand for hardware. Meanwhile, the rapid growth of electronic content is streamlining operational processes, particularly in vertical markets such as LMR. For Toshiba TEC, the opportunity here is by providing what they call “Total Office Solutions,” which encompasses device management, document filing, and services.
Print is still top of mind for much of our audience, and Toshiba TEC aims to respond to a variety of printing needs in the market by adding differentiated solutions to its traditional product and services offerings. Examples of this include the MFP 5 Series, built around a common platform design that makes the devices in the series easier to use and connect. An eco-print solution, which is more of a solution for reusing paper that’s been previously printed on, is not new, but it is a solution the company will continue to aggressively market. Toshiba also intends to leverage artificial intelligence (AI), initially with automatic content recognition technology in retail and supply chain management. Inkjet is also high on the agenda, and Toshiba claims to have the highest level of resolution in the industry via its ink circulation structure.
However, the printing segment of the business represents only half of the revenue produced by Toshiba TEC. The other half is derived from its retail (POS) business, a segment that includes digital signage, where Toshiba TEC enjoys a strong position in the Japanese domestic market.
What does this mean to Toshiba dealers? It is simple. The company is aiming to find true synergism between its retail and print businesses. By doing so, Toshiba can maximize the impact of its investments in R&D and application software. For example, there is a commonality between printing and retail. This can be found with the software, professional services, managed IT services, and field maintenance. Toshiba believes that the two areas best positioned to capitalize on this commonality are professional services and managed IT services. In the former, Toshiba can enhance and customize application software to satisfy customer demands. The latter facilitates remote monitoring of hardware and software, which offers the potential to significantly improve the functionality of Toshiba print devices.
Pumping Up the Dealer Channel
Toshiba TEC will devote special attention to its dealer channel with offerings for both dedicated (exclusive) and dual-line dealers. For the dedicated dealer, Toshiba will offer the lowest dealer pricing through an enhanced major account program. Additionally, the company will also offer acquisition support funding to facilitate expansion of the channel.
For the dual-line dealer, the aim is to increase shelf space and the plan requires providing some or all the assets offered to exclusive dealers. In our opinion, this will obviously be reviewed on a caseby-case basis. It is likely that the lowest pricing and other inducements will be offered to dealers who demonstrate the necessary commitment to increase their placements of Toshiba products.
Coming Soon
Some of what we heard during our visit will be on display at the forthcoming LEAD conference in Las Vegas, September 5″“6. This meeting will include new products and solutions, digital signage, and print products that we were told would be different, although we have no specifics at this point.
The overall MFP solution strategy is projected to be fully implemented by FY 2020 and will include e-BRIDGE Open Platform evolution, UI customization expansion, an embedded APL expansion by SDK, and an expansion of the company’s solution portfolio.
The plan for the e-BRIDGE platform is to introduce a 10.1 display panel and security certification this year, and to further enhance the platform with voice recognition and AI by 2020. All of these enhancements have the overall goal of making the platform easier to use and connect.
Toshiba presented a thorough program for us, and we are deeply appreciative for the time and effort made by the leaders of Toshiba TEC to explain their commitment to the print business. They have determined they need to make a substantial commitment to dealers, particularly in the U.S. and Europe, in order for the company to achieve its ambitious goals over the next two years.
Based on our annual dealer surveys, Toshiba has a very loyal U.S. dealer channel. The company seems to value highly what its channel partners have done for them. As a result, Toshiba TEC is responding in the best and quickest way they can. This was emphasized several times during the presentation by Toshiba TEC executives. We look forward to seeing firsthand what the dealers will learn at LEAD 2018.
What remains is our collective opinion about the prognosis for Toshiba within the world of print. The company has a reasonable expectation of increased profits. The challenge for Toshiba TEC is that it has a product line that lacks production print products. In our view, production print is essential for device manufacturers to balance the price erosion of the MFP.
Toshiba TEC also has an expectation of having dedicated dealers. The fact that the company has a strong dedicated dealer network does place them in good stead. However, the Toshiba dealer who has a second line with production print capabilities is going to perform better on a dealer-by-dealer basis, compared to those just dedicated to Toshiba. We are looking forward to assessing the results of our 33rd Annual Dealer Survey to illustrate how well Toshiba’s dealers are actually doing.
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