Canon Solutions America is making strides in production and industrial print, but is it blind to the dealer channel?
(Pictured above: Francis McMahon, executive vice president, Canon Solutions America, talks about Canon’s production print solutions at the company’s annual media and analyst event in Boca Raton.)
Canon U.S.A.’s annual media and analyst event last month provided an update on Canon Solutions America. The tight agenda provided valuable information as Canon executives presented 2018’s numbers and performance.
This year, Scott, CJ and I attended. We all felt it was well worth it for all three of us to be there. In my new capacity as editor-at-large I get my assignments from Scott who asked me to focus on production print.
Canon’s initiatives in the high-volume segment—which includes industrial and production print—is something I truly enjoy writing about. As dealer advocates, we stress the importance of high volume as the best weapon to counter the erosion of clicks in the office and the overall decline of the imaging business. Add wide and large format coupled with graphics and you have a proposition for success.
The Océ Influence
When Canon acquired Océ in 2009 we wondered if the Canon culture would suffocate this Dutch company that knows how to make “Big Iron.”
I started following Océ in 1982 when I attended the Hannover Fair in Hannover, Germany for the first time. During my trips to the fair over the years, I was always impressed by the Océ people who were patient with my numerous questions about their technology and view of the market.
Normally we spent a week in Germany and often had dinner with Germans from the various companies attending the Fair. All had a high opinion of Océ’s engineering capabilities and the quality of its products. Océ had it all except for color technology. They could not quite get it right. So, they started privately labeling Canon’s mid-volume color products. Together the marriage of Canon’s color graphics and Océ’s engineering represented a formidable combination.
Initially, we were concerned about the integration of these two companies, but we underestimated Fujio Mitarai, CEO of Canon Inc., who instructed his leading executives that Océ would become Canon’s production print leader wherever they had a presence.
Océ had no distribution in Japan and as a result Canon acquired a domestic production print company to lead in that space in Japan. Mitarai did the same thing with Océ that Anne Mulcahy did after Xerox acquired Tektronix when she told her staff, “Let Tektronix be Tektronix.” It worked beautifully and she repeated that approach when Xerox acquired Global Imaging Systems in 2006.
We have a high regard for Océ and its capabilities in production print. Canon has invested heavily in R&D in Venlo, Holland (home of Océ) and the products coming out of Europe have been absolutely first class.
Canon Solutions America’s Blind Spot
Unfortunately, Canon Solutions America has a blind spot and it is the dealer channel. It continues to underestimate many of the finest dealers in the U.S.
Why would we make that statement? Canon Solutions America embodies traditional cut sheet production print and large format. Each is led by a different vice president. Robert Reddy, SVP, Large Format Solutions Operations, and Francis McMahon, EVP of Production Printing.
Oce’ personnel play a lead role in Canon Solutions America and as such have influence in the policies that are being adapted to introduce new product. Specifically, the Colorado Series also known as the 1640 large format printer which is led by Reddy and the Niagara Series i300 by McMahon. The introduction of both of those products have been eerily similar. The i300 has been severely restricted (in our opinion) and Canon dealers have been more than frustrated by that unfathomable strategy.
Canon has given dealers a very limited opportunity to sell the i300 and has curtailed the distribution of the 1640. Canon does this by telling dealers they could sell the machine but must turn over service for one year to Canon. They maintain that dealers have asked for that arrangement. We disagree and firmly believe that it was a condition for obtaining the 1640 and dealers had no choice but to accept it. However, it is clear to me that policy is no longer in effect. Dealers are selling it and in fact are doing quite well.
Rather than getting into a dispute with Canon, we would rather say this company continues to drag its feet specifically with newly introduced (high-volume or specialty) production print products when it comes to dealers.
In one case they maintained that the dealer asked for that arrangement. We disagree and firmly believe that it was a condition for obtaining the 1640 and dealers accepted it.
We do not pick these opinions out of the air. We contacted 10 of the leading Canon dealers in the United States. The policy governing the release of the i300 remains a thorn in Canon’s largest dealer’s sides. Allow me to share some of the emails we received in response to our request.
“We wish we could be authorized to sell the [i300]. We have tried many times to get it worked out for us [the dealers] to get control of the sales process while providing compensation to Canon for sales assistance and service. We fundamentally disagree with the way Canon has decided to bring this product to the market.”
The second email was from a dealer who was not interested in selling the i300 but has successfully launched a campaign to sell the 1640. He had no problem with how Canon handled the release of the 1640.
“We have been selling the Colorado since March ’18 and became service trained right away in March also. And regarding the giant OCE’ i300, I personally feel that the broker arrangement with Canon/OCE’ is OK. It is such a huge investment to sell so few, it is not worth it to most dealers…”
The second sender sent us a followup email.
“Just because I said we would not service it (i300) does not mean some other dealers with larger markets should not have opportunity if they want to sell and service it.”
To be fair, there are dealers who agree with the way products like the i300 are being rolled out to the channel.
“I personally feel that the broker arrangement with Canon/Océ is OK,” said another dealer. “It is such a huge investment to sell so few. It is not worth it to the vast majority of dealers”
We want to thank Sal Sheikh, vice president marketing, Océ North America, for the courtesy and the time he took to explain the current 1640 policy with dealers. This group has nothing to do with the i300. He is confident that dealers who can support the implementation of the Colorado series currently are able to buy, sell and service that product. He pointed out the arrangement for Canon Solutions America to service the product for one year was only during the early period, after the introduction.
What they should be doing is a simultaneous release of these products and include dealers in their beta testing. We seriously doubt if that will ever happen with Canon Solutions America in charge, but we continue to believe that if Canon utilized their dealers to their fullest potential they would do even better.
Canon is proud and rightfully so of the success of the i300 having sold 40 units of this series as of December 2018. As I told Toyo Kuwamura in 2018 when Canon reported selling 33 through 2017, they would have sold 50 had they incorporated their leading dealers into the program.
Greg Martin, president of Ray Morgan Company, a guest panelist at the Canon event, seems to be in agreement. As he was leaving the stage he said, “Sell us the i300.”
There is no question Canon Solutions America is doing an excellent job in the production print space. Globally, it represents 29% of Canon, Inc. revenue. No other manufacturer in Japan can make that statement, including Fujifilm.
Canon delivered its best performance in production print in 2018 with 102% revenue growth year over year. It is doing well in every category. We just continue to believe, if Canon would take its blinders off regarding their dealer’s true capabilities, it would be doing better. At the same time, it would be strengthening its independent dealer channel by accelerating the adoption of production print products.
Industrial print is projected to grow 28% in 2019 and Canon has an excellent product with its Arizona series. We know of one dealer who has placed 15 Arizona Series printers in the Midwest. There is also another dealer enjoying success with the Arizona Series in the Northwest.
Canon Solutions America shares many dealers with Ricoh who is in general committed to the future of industrial and production print. It would have no one else to blame except itself if dealers move away from the Canon production print products to Ricoh, a manufacturer has demonstrated great confidence in its independent dealer distribution.
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