Exhibit 1.26
There’s no denying that production print is a valid diversification opportunity, particularly for dealers with the appropriate financial resources. It’s also a great opportunity to capture clicks outside the traditional office. Not much change has occurred in the vendors with the broadest production lines, with Canon, Konica Minolta, Ricoh, and Xerox standing out ahead of the other vendors offering production print products by a wide margin. With the additions of Kyocera and Sharp, dealers now have more options, albeit not as many as the four leaders in the segment as both companies continue to build out their production print offerings.
This year, 44% of respondents offer production print, an increase of 6% over last year. We attribute this increase to fewer dealers participating in the lower revenue segments compared to last year’s Survey, where we saw a more significant percentage of smaller dealers without a production print offering. Note that when tabulating the number of dealers that sell production print, we eliminated dealers that claimed they sold production print but were actually selling light production, which we don’t consider production print. That’s been one of the challenges we’ve encountered in the Survey ever since we’ve been tracking the number of dealers that sell production print. Because of the confusion between production print and light production print machines, we’ve been strictly enforcing our rule that the dealers must be selling a machine that fits the definition of production print. This is how we define production print in our Survey form:
We define production print as the marketing of a digital press with a digital front-end such as a Fiery controller that enables variable data printing, at minimum. We do not consider light production devices or devices sold for print-for-pay as production print.
By asking dealers to identify the primary production print product they sell, we can provide a more realistic assessment of their performance in this segment.
Canon, Konica Minolta, and Ricoh remain firmly entrenched as the top three Big Six OEMs in the percentage of their dealers who offer production print. Each of these three manufacturers has extensive production print lines. Among Canon dealers, 92% sell production print, followed by Konica Minolta (81%) and Ricoh (57%). Rounding out this year’s list are Toshiba (26%), Sharp (20%), and Kyocera (18%). As we saw in last year’s Survey, even though Kyocera now offers production print, not one Kyocera dealer identified Kyocera as their production print provider. A limited offering in this segment seems to be a detriment, with other vendors offering multiple production print products. Since Sharp began shipping its first production print devices earlier this year, it’s too early to get a read on how Sharp will do in this segment, but we’ll closely watch Sharp in future Surveys.
Our Survey also tracks the percentage of revenues derived from this segment. As we noted last year, not all dealers separate their production print hardware sales from traditional A3 and A4 hardware sales. As a result, our revenue percentages are based on those dealers who provided us with this information. The percentage of revenues associated with production print for each of the Big Six is included in the last column of Exhibit 1.26. The average percentage of yearly revenues for all Big Six dealers offering production print is 8.6%, down from 9.8% in last year’s Survey. We attribute the decline to our closer scrutiny of respondents who legitimately offer production print.
For those dealers that sell production print, last year was a solid year with 47% reporting that revenues in that segment were up compared to 41% last year and 31.5% two years ago. Going back to our 36th Annual Dealer Survey, which reflected the challenges of the pandemic year, only 16% of dealers reported that their production print revenues were up over the previous year, which had been a robust 46%. The number of dealers reporting that their production print revenues were down this year rose slightly to 7.6% from 7% a year ago. Comparatively, the past two years reflect a significant improvement from 2021, when 32% of dealers participating in our Survey reported a decrease in production print revenues.
The jury is still out on the relevance of production print for most dealers despite our numbers revealing that 44% of those participating in our Survey offer production print. As long as a significant number of dealers with annual revenues of less than $5 million remain in business, we don’t see this percentage exceeding 50%.
