As we put the finishing touches on our December-January WatchList issue, which will be published later this month, we thought it would be fun to go back to December 2018 and review the trends, companies, and people we were planning to watch in 2019. In this week’s edition of The Way We Were we present the trends we were watching. Next Thursday’s installment looks at the companies we were watching, and the following week we’ll focus on the people we were watching.
3D Printing – Just as we were going to cross this off our list as a trend, HP announced the Metal Jet 3D printer, indicating its seriousness about the segment. To HP, we say good luck, but if the company decides to bring this product to the dealer channel, let’s hope HP has done its homework and discovered it is a rare breed of dealer that has found success selling 3D printers. The key is support, and if HP can provide dealers with the necessary support to sell and service this technology, it might not run up against the problems encountered by dealers that have been selling 3D devices from other 3D printer manufacturers.
Acquisitions – Who bought whom today? Acquisitions are taking place weekly, some publicized and some not. But, one thing is for sure, the money flowing into this industry from private equity and venture capital firms has made this the era of let’s make a deal! That won’t change in 2019.
Artificial Intelligence (AI) – All you need to look at is the popularity of the Amazon Echo and GPS technology to see how the public has embraced artificial intelligence, even if most people aren’t thinking “artificial intelligence” when asking Alexa questions or heading toward their next destination. During our May trip to Japan, AI was a frequent discussion point with most of the Big Six OEMs. Going forward, AI will be incorporated into more products, offering benefits in the workplace such as ease of use and enhanced productivity. It will soon be considered an essential feature of most devices or products, with the AI component becoming even more transparent as we further embrace this technological evolution.
Augmented Reality Adds Value to Print – Our visit to Print 18 in September included demonstrations of augmented reality from Konica Minolta, Ricoh, and Xerox. One might call augmented reality in a printed piece interactive print. It’s far from print as we used to know it, even though it’s been around for a few years. Here, QR codes allow users to hover their mobile phone over a printed page, and that page comes to life via a video, for example, that in some instances address the user directly.
The Cloud – It’s almost time to delete the cloud from our list of trends, as it has become ubiquitous within the computing and technology realm. However, we still consider it a trend worth watching, primarily because there’s still an opportunity for the dealer channel to leverage and profit from all the benefits the cloud offers. One doesn’t have to look far to find references to the cloud in some of this past year’s production announcements. Consider Lexmark’s emphasis on cloud services as one example.
Data Revolution – During our visit to Japan this past May, Konica Minolta told us it considers itself a “data company” more so than a copier company. No matter which of the Big Six OEMs we visited with in Japan, the emphasis was on data and dealing with it in its many shape and forms, even if one of the conduits for dealing with that data is still the MFP. Forget imaging, data is the new buzz word, and if data is the lifeblood of most every organization, there’s huge opportunities for OEMs, solutions providers, and services providers when it comes to managing that data.
Device-as-a-Service (DaaS) – Don’t look now, but this could be the model of the future for hardware placements, especially with HP touting it. (Read our interview with HP’s Grad Rosenbaum in this month’s issue.) DaaS has the potential to be a game changer in the dealer channel. Think of it as a subscription-based model. DaaS combines hardware leasing and end-to-end lifecycle services into a single, per-device, monthly contract. It includes full asset management, managed services, and technology updates. Based on that definition, it isn’t a completely radical change from what dealers are familiar with today and very well may become one of the ways technology is marketed in the future.
Diversification – Dealers and the OEMs can’t afford to live off the status quo if they want to be a relevant force in the future. We’re only scratching the surface on how this industry will diversify beyond traditional imaging hardware in the future. We’ve seen digital signage, production and industrial print, industrial print, managed IT, and security and cybersecurity, but there’s the potential as well for other opportunities driven by robotics, data, and artificial intelligence that will eventually be added to a dealer’s menu of services.
The Economy – The economy is in good shape as we write this. Unemployment was down in October to 3.7%, the lowest unemployment rate since 1969, according to the Bureau of Labor Statistics, even if wages aren’t necessarily keeping up with that growth. Similarly, a Manpower Employment Outlook Survey found that 93% of 11,500 U.S.-based companies plan to increase or maintain staffing levels in the fourth quarter. If that trend continues, then that growth could spell additional good news for the imaging industry in terms of new hardware sales and service offerings. But the looming concern is what impact the current administration’s trade tariffs will have on the technology and consumables that are the lifeblood of the dealer channel and much of which are sourced from China. Those tariffs could negatively impact certain segments of our industry and the economy in 2019.
Inkjet Looming – Toner-based devices still have their place and will for some time, but inkjet is knocking on the door. With companies like Canon, Epson, HP, and RISO offering inkjet devices that fit squarely into the office, as well as devices for production printing, it’s time to take inkjet much more seriously. Don’t be surprised if Brother moves upstream into the office space with its inkjet machines. After announcing its first inkjet production device earlier this year, Kyocera is making no secret about its intentions to eventually scale this technology down to its office products.
More Managed IT – Why not? With dealers and even entities such as Visual Edge buying Managed IT companies, and All Covered, Continuum, and GreatAmerica’s Collabrance assisting dealers in growing within this space, as well as the OEMs ramping up in this segment, we expect to see Managed IT expand even more across the dealer channel in 2019.
Mobility – Here’s another trend that has become less of a trend and more a way of life as workers and the technology they use become more mobile. Mobility is now a huge driver behind many companies’ R&D efforts, and it’s only a matter of time before it becomes a given and not a function, feature, or element of a product, solution, or service.
Will Online Ordering Shake Up the Supplies Space? – According to the market research firm Actionable Intelligence, the office supplies channel–think Staples, even though it still does a significant amount of business online–has lost considerable share to online merchants, and it’s likely to get worse now that Amazon has entered the fray and is selling consumables. So far, it’s been more of a consumer or home office phenomenon, and it’s unclear how much penetration Amazon has made into the SMB space, or if there’s an infrastructure in place to service large accounts as the dealer channel does. Marketing consumables online has the potential to change the way supplies flow to SMBs, and Amazon could be a force to be reckoned with.
Page Yields on the Rise – More has become more as inkjet and toner cartridges with high yields and lower cost per copy (CPC) reshape the value proposition of printers and MFPs targeting the SOHO and SMB markets. Epson is one of the manufacturers leading the way in improving the toner yields and CPC in the inkjet space, while HP is making similar inroads in the toner world.
Production and Industrial Print Still Looming as an Opportunity ““ This may not be a turn-on for a lot of dealers, but when one looks at the wealth of products aimed at production and industrial print applications from the likes of Canon, EFI, HP, Konica Minolta, Kyocera, Ricoh, RISO, Xerox, and others, how can a dealer not take these product categories seriously? Bigger may not necessarily always be better, but a dealer concerned about declining clicks in the office might want to take a closer look at devices that open new doors and provide additional clicks beyond the office.
Reign of Tariffs – There’s concern across the imaging industry about the impact the various tariffs the current administration has imposed, particularly on goods coming from China. With so many products manufactured in China, there’s a lot of concern and still a lot of unknowns as to how those tariffs are going to impact the cost of hardware and consumables such as ink and toner. If and when those increases occur, how will it impact manufacturers, dealers and end users? Somebody will have to pay for those increases unless manufacturers seek a one-year exclusion from products subject to tariffs, which could delay the impact, as those exemptions would likely apply to similar types of products, regardless of manufacturer.
The Reman versus New Build Debate – Any business in the imaging industry can’t ignore the debate going on over the merits of remanufactured cartridges versus new-build cartridges. This was the topic of a panel at the RemaxWorld Summit 2018, in Zhuhai, China, featuring six experts in the printing consumables industry who offered their views on which aftermarket cartridge model they believe will survive. Spoiler alert, the debate rages on. Meanwhile, market research firm Actionable Intelligence reports new-build cartridge makers are taking share from remanufacturers and will further shake things up with what they describe as “Premium” new builds, which offer higher quality performance at a price lower than remanufactured cartridges. Manufacturers of these cartridges are claiming those products don’t infringe on the OEMs’ original designs. Still, something tells us we’ll still be hearing the OEMs say, “See you in court.”
Robotics – The robots are coming! The robots are coming! Canon, Konica Minolta, Ricoh, Sharp, and other manufacturers are the most prominent companies in the imaging industry that have exhibited robotic technology at their dealer meetings or in conversation. Drop into the Ricoh showroom in New York City, and you’re greeted by a robot. Sharp has developed a robotic security vehicle for exterior security. Konica Minolta has shown its robotic technology at its dealer meetings, and Canon is investing in this technology as well. It seems there might not be a lot of pushback from the general population as robots descend on the office. In a survey conducted by Y Soft Corporation, an enterprise office solutions provider that assessed employees’ attitudes of working alongside robots, robots would be welcomed in the workplace by most workers if they added value and were used for repetitive and menial tasks.
Rolling with the Workflow – If the imaging industry is transforming into a data-oriented industry, understanding, analyzing, and managing workflow will become even more important for marketing products and solutions. Manufacturers and software developers are thinking about workflow around their product offerings, and it is only natural the dealer channel should be paying closer attention to their customers’ workflows in the coming year if they aren’t doing so already.
Security Alert! – With an increasing number of cyberthreats as well as physical threats within the workplace and in public places, security is a hot topic these days. No one in the imaging industry is taking security lightly, and that’s a key element of most new product introductions and a focus of many companies’ R&D efforts. HP has done an excellent job of drawing attention to cybersecurity threats with its “Wolf” videos, while other vendors such as Canon and Xerox have also placed security front and center. We’ve seen that at Canon’s service road shows and at Xerox’s analyst briefing this past fall in New York City. For dealers, this is a trend that spells opportunity, even though the challenge, as one dealer told us, is trying to figure out a recurring revenue stream around security offerings.
Smart Conferences, Smart Meetings, and Smart Offices – Yes, this is all about making people and meetings and the workplace more efficient. With companies such as Konica Minolta, Ricoh, and Sharp leading the way, we’ll be seeing more offerings that revolutionize how meetings are conducted. Sharp is betting on its Smart Office Suite, Ricoh has its intelligent conference room, and Konica Minolta is playing up the Smart Office concept. We’ve seen demos of some of these products and concepts and have been impressed by what we’ve seen. That said, we expect the dealer channel to walk, not run, to these new opportunities initially. But once the OEMs provide them with the scripts to be successful, it’s only a matter of time before these products are embraced by the dealer channel.
Social Marketing Kicks into High Gear – Social marketing may not be new, but for much of the dealer channel, it is. Dealerships such as Impact Networking and Marco set the gold standard for social marketing in the dealer channel, and Clover Imaging Group with its Amplify Program is taking that social marketing message down the street and helping dealers amp up their social marketing efforts. From what we understand, Clover’s program continues to attract new dealer clients, but most importantly, that program and others like it, as well as presentations at dealer groups by The Cannata Report’s own CJ Cannata on branding and marketing, are raising awareness of social marketing in the channel to new heights.
Standalone Scanning Strives for Respect – If you listen to scanner manufacturers such as Panasonic, companies that do huge volumes of scans would be better served by a standalone scanner designed to handle large volumes compared to the scanner on an MFP which is not built for high-volume scanning. It’s a message with merit, but one that scanner manufacturers will readily admit is not easily embraced by the dealer channel. Should dealers buy into this message, this is a product category that could gain some traction, particularly as more businesses look to digitize years and years of paper documents.
Third-Party Supplies Industry Consolidates – According to the latest research from Actionable Intelligence, less than one-tenth of the number of North American remanufacturers remain in business compared to the year 2000. Of those that do remain in business, a significant portion outsource some percentage of their production. What Actionable Intelligence is seeing is an industry that is becoming more international and one where foreign firms–the majority from China–are making investments. The acquisition of Lexmark by NineStar and acquisition of Katun by General Plastic Industrial are two examples of those investments.
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