Our December-January WatchList issue is scheduled to launch next week, but in the meantime, we invite you to take a trip back to December 2018 and review the trends, companies, and people we were planning to watch in 2019. Last week we identified the trends, in this edition of The Way We Were we present the companies we were watching, some of whom are no longer with us. Click here to read last week’s installment on the trends we were watching in 2018.
ACDI – There’s a reason ACDI has been selected the best software company in our annual Survey for the past three years, even though this company is a distributor rather than a developer. Consider the company’s success in bringing PaperCut to the channel. ACDI has since expanded its offerings with the addition of PSIGEN. We’ll be watching to see if ACDI can replicate what it has achieved with PaperCut with PSIGEN.
Brother International Corp. – The announcement that the company was partnering with Toshiba to provide it with A4 MFPs was a big win for Brother. Considering Toshiba already had a relationship for A4 products with Lexmark, one might ask why, but from what we hear, it’s an opportunity for Toshiba to provide some of its smaller dealers who don’t have agreements with Lexmark because certain regions are already covered by other Lexmark dealers with access to an A4 line. The company is also looking to move upstream with its inkjet MFPs, which is another reason to monitor what Brother is doing.
Canon U.S.A. – Never count Canon out, and in 2018, we expect to see the company expand its A4 product line. Canon remains one of the top-tier players in the production and wide-format space and we didn’t see or hear anything during our visit with Canon at Print 18 this fall to make us think that’s going to change anytime soon. And with security such a hot topic in the imaging industry, we expect Canon will be one of the companies leading the way with some serious security initiatives in 2019.
Clover Imaging Group – The company remains a global consumables powerhouse despite its falling revenues. Moody’s Investor Services reported that Clover’s parent company, 4L Technologies, carries $825 million in debit, including a $760 million term loan and a $65 million revolver. There’s still chatter that Golden Gate Capital, the venture capital firm that acquired Clover 10 years ago, is looking to sell. That’s been the case since 2016, and with revenues down 30% since then, there’s probably more reason than ever to cut the losses and sell. Whatever happens, we don’t expect Clover to go away, especially since the company has shown that it is not banking exclusively on consumables. For example, it is actively promoting its Amplify social-marketing service to the dealer community, which is a completely different type of business for this or any other consumables company to delve into.
DocuWare – If it weren’t for the change in leadership announced on October 19, 2018, this document management company might not have earned a place on this list. But with the announcement that Co-Presidents Jà¼rgen Biffar and Thomas Schneck would be transitioning their leadership positions as of January 1, 2019, to Dr. Michael Berger, currently the company’s chief technology officer, and Max Ertl, currently the company’s chief revenue officer, we are watching to see what’s next for DocuWare.
ECi Software Solutions – The software giant keeps acquiring with the purchases of FMAudit, Print Audit, and Vineyardsoft, a maker of business activity monitory software in 2018. Those acquisitions add to the largest number of software solutions under one roof in the industry. ECi also has one of the more notable love-hate relationships with the dealer channel as a significant number of dealers can’t live with the company, and can’t live without it. With a relationship like that, how could we not continue to watch this company in 2019?
EFI – Now that Guy Gecht has stepped down after 17 years leading the company as its CEO, what’s next? We’re about to find out and should have a good indication when we attend EFI’s annual Connect conference the end of January.
Epson – Here’s another company with a strong line of inkjet products looking to secure a niche in the dealer channel. It has a compelling message built around long-life consumables that registers with SMBs, but if our annual Survey is any indication, we’re still not seeing dealers flock to Epson. Maybe this year will be different.
FlexPrint/Oval Partners – The name of the game for the investment group Oval Partners and Flexprint LLC CEO Frank Gaspari is bigger is better. Although the company didn’t make many acquisitions in 2018, you can’t count this company out as FlexPrint, thanks to Oval Partners, has the resources, a unique acquisitions model, and a prudent approach to acquisitions whereby quality, not quantity, rules.
Global Imaging Systems – There’s something happening here. What it is isn’t exactly clear, or is it? Ever since Carl Icahn and his partners pulled off their coupe at Xerox, there’s been plenty of speculation as to what’s next for Xerox. We still believe Icahn will be parsing out portions of Xerox until nothing is left. One of the most profitable segments of the company is Global Imaging, which might be the first to go.
HP, Inc. – The company has been diligently making inroads in the A3 space, slowly but surely signing up U.S. dealers while enjoying even greater success adding dealers in other regions such as Europe and Asia. More significantly, we’ve been keeping a close eye on HP ever since it acquired Apogee, a large U.K.-based dealer. We wouldn’t be surprised to see a similar acquisition happen here in the U.S., especially after the August analyst briefing where HP executives noted the company is looking at acquisition opportunities in various global markets. (Ahem, did somebody say Global?) What we learned during a press briefing after the Apogee acquisition is that there are no plans currently to disrupt the product mix offered by that company, which means it will continue to sell other brands besides HP. We’ll be curious to see if further acquisitions ensue and how that model might evolve.
Kofax – Private equity money struck again in November with the announcement that Kofax, which was acquired from Lexmark in 2017 by the private equity firm Thoma Bravo, was acquiring Nuance Document Imaging. This was a huge acquisition and positions Kofax as one of the world’s largest providers of capture and print management solutions. This acquisition now begs the question, who else might Kofax and Thoma Bravo have their sights set on?
Konica Minolta Business Solutions U.S.A. – Two reasons to watch Konica Minolta in 2019–Workplace Hub (More on that in the Products to Watch section of this article.) and what’s next after the MWA acquisition, one of the most notable acquisitions of the year. With the MWA acquisition, Konica Minolta has entered the ERP business, and is now marketing MWA’s FORZA powered by SAP through All Covered. Can Konica Minolta dealers sell Workplace Hub and can the resources provided by All Covered help MWA scale and grow FORZA placements? Those questions will be answered in 2019.
LD Products – The company is still looking to secure a toehold in the dealer channel with its new-build products, which is, by and large, uncharted territory for a consumables supplier. Even though a couple of companies have done this, it is still not standard operating procedure in this segment. The company is heavily touting its Gold Line of OEM quality cartridges engineered for MPS applications, which they claim offer OEM quality for 20% less cost than remanufactured cartridges. Also, keep in mind, this is a company with a legacy in online marketing, which has only recently put together a direct sales force to pursue the office technology dealer channel.
LMI Solutions – After a wealth of rumors circulating about LMI’s future due to a host of financial issues, the company announced in August that it had been acquired by venture capital firm Turnspire Capital Partners. It still remains to be seen if LMI is in a better position than it had been for well over a year as a supplier of consumables, parts, MPS, and reconditioned printers, but the feeling within the company is positive””at least for those who haven’t been laid off as cost-cutting measures continue.
Lexmark International – This is a company that does an excellent job of engaging with its dealers, and dealers continue to think highly of Lexmark as a result. There’s still a lot of gray area in what the new owners (Ninestar Technologies) are bringing to the party well over a year after the acquisition, but we’ll be watching to see if there will be any radical changes or if it will remain business as usual. Considering the wealth of new product announcements Lexmark has made this year, most notably the enhancements to its A4 offerings and its cloud-services offering, its product line is stronger than ever. Cause for concern at press time was the resignation of Rich Geruson, president & CEO, for personal reasons, marking the second consecutive year a Lexmark president & CEO has departed for that reason.
Marco – This is one of the three largest dealerships in the country (Pacific Office Automation and DEX are the others) depending on what day we’re looking at the revenues. At press time, we suspect Marco is the largest dealership in the country in terms of revenue if we factor in the Phillips Office Solutions acquisition that extends Marco’s reach into Pennsylvania, Maryland, and Washington D.C. The company’s revenues are on a pace to exceed $400 million in 2019, which would firmly position Marco as the largest dealership in the U.S.
PSIGEN – As a document management company, and a valued supporter of The Cannata Report, PSIGEN has only been a blip on dealer’s radar when we look at the results of the software providers meeting the needs of the channel in our annual Survey. The new distribution agreement with ACDI could change all that. Consider the impact ACDI has had with PaperCut. Lightening could indeed strike twice and if it does, expect to see PSIGEN benefit.
Ricoh Americas Corporation – Ricoh experienced some unfortunate financial struggles in 2017, but all signs indicate there will be some improvement financially in 2018, despite a decline in A3 and printer shipments. After our visit to Japan in May and the unveiling of its “Resurgent Plan” and new go-to-market strategies, as well as some compelling new products, we believe Ricoh is taking the necessary strides to ensure future profitability. Let’s not overlook the positive impact moving a significant portion of its MIF here in the U.S. has had to not only the dealers who acquired that MIF, but also to those dealers that are no longer competing with Ricoh direct. After some initial concern in the channel, optimism seems to have returned, optimism which was on vivid display in the comments of Ricoh dealers in our annual Survey.
RISO – This is a company that deserves a lot more respect than it has received to date because of its inkjet product line, particularly for the office. The company has no illusions about where it fits into the office and views its products as complements to toner-based devices. If it can successfully relay that message to more dealers, the company should gain even more traction in making its message a reality in 2019.
Sharp Imaging and Information Systems of America – Considering how highly dealers rated Sharp in our 33rd Annual Survey, there’s plenty of good reasons to watch the company in 2019. Last year, Sharp secured a place on our “Companies to Watch” list because there was still a lot of uncertainty after the Foxconn acquisition and dealers weren’t shy about expressing their concern. Even with the departures of Doug Albregts and Laura Blackmer, the company is well positioned to move forward under Mike Marusic and leverage the technology, R&D, and other benefits that Foxconn provides. In the meantime, we’ll be watching to see what’s happening in Japan as Foxconn has already shifted some manufacturing jobs from Japan to Taiwan.
Toshiba America Business Solutions – Compared to past years, 2018 has been a quiet year for Toshiba with all the financial maneuverings taking place in Japan with its parent company. Now that the turmoil seems to have settled down, TABS CEO Scott Maccabe and the rest of his executive team have hopefully returned to focusing on business as usual. Now, we’ll see if that continues in 2019. One trend that we expect to see continue is Toshiba’s investment in its A4 line. Lexmark, which already provides the company with A4 product, is now supplying engines to Toshiba’s A4 mono and color laser MFPs such as the eSTUDIO 389Cx and eSTUDIO 479c. And once again, we must mention the partnership with Brother, which will provide Toshiba dealers with access to the company’s Workhorse series A4 line.
Visual Edge – Meet the organization that keeps on buying. Visual Edge is like the Will Rogers of acquisitions in that it has never met a company it didn’t want to buy. Admittedly, that’s an exaggeration, and Visual Edge has a vetting process and not every dealer looking to sell or who it approaches is a good fit. With acquisitions in the double digits in 2018, there’s no reason to believe we won’t see Visual Edge on a similar acquisitions pace in 2019. We’ve also seen the company on a hiring spree of late, adding personnel at its North Canton, Ohio headquarters, which is the sign of a thriving organization.
Xerox – Will Carl Icahn and his gang of investors dismantle Xerox in the coming year? It’s not beyond the realm of possibility. Xerox has some solid technology, talented people in the organization, world-class R&D at PARC, its Palo Alto research center, and a strong dealer channel with Global Imaging. Even though it seems that Fujifilm is down and out of the equation, as we saw throughout the first half of 2018, it isn’t over until it’s over with anything related to Xerox, so even with all the acrimony between the two companies, that acquisition could still happen. In the meantime, news of layoffs in Rochester continues.
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