Our OEM panel addresses the impact of acquisitions along with the trends they see shaping the present and future of the imaging industry and their organizations.
This month the second of our four virtual panel series continues in our March issue with conversations with the OEMs. In that virtual panel discussion, they address their company’s most recent performance, declining print volumes, their product roadmap for the next 12 months, what has them excited about this business, and the questions at the top of dealer’s minds. Read the article.
Because we could not fit all of the questions we asked the panel into that issue, we’re providing complementary digital coverage with the panel addressing the impact of acquisitions on their business and the trends shaping their business and the industry.
Participants include Doug Albregts, president & CEO, Sharp Electronics Corp. of America; Jim Coriddi, vice president, Dealer Division, Ricoh Americas Corp.; Mike Feldman, president, North America Operations, Xerox; Yukio Ikeda, president & CEO, KYOCERA Document Solutions America; David Laing, general manager, HP OfficeJet Enterprise, Bill Melo, chief marketing executive, Toshiba America Business Solutions/Toshiba Global Commerce Solutions, Mason Olds, senior vice president and general manager, sales, Business Imaging Solutions Group, Canon U.S.A., Inc.; and Rick Taylor, president & CEO, Konica Minolta Business Solutions USA.
CR: Acquisitions are an ongoing trend in our industry. How have those acquisitions impacted your distribution channel and is it cause for concern when these acquisitions occur, particularly if one of your dealers is acquired by a dealer who doesn’t represent your line?
Albregts: This trend presents a significant challenge because Sharp has built its reputation on having the cleanest channel among all other manufacturers. This is evident in the fact Sharp has the most dedicated single-line dealers in the industry. When dealers acquire dealers, it challenges us to preserve our reputation by making sure we honor the commitments we’ve made in authorizing territories. When an acquiring dealer doesn’t carry our line, we believe it represents a great opportunity for us to expand our business. It’s tricky, but as markets evolve, change and slow-down, it’s imperative that we have a proactive plan to adapt to the new market dynamics. Our competitors seem to be reacting to this trend by getting much more competitive with their direct operations to protect business. I would encourage dealers to reward those manufacturers that have declined to use that strategy.
Coriddi: Acquisitions have become a major trend in this industry, and they’re not stopping any time soon. While acquisitions going on everywhere can make for uncertain times, we see this as an outstanding opportunity. Yes, losing a dealer to a competitor can sting. But this is a fantastic opportunity for our dealers that have the means to augment and accelerate their growth, too. We’ve been able to work with our dealers to help make sure their acquisitions translate to greater gains. We do that in a couple of ways. For example, at our most recent dealer conference, we held workshops and provided extensive information about how this trend is affecting Ricoh, our dealers and the industry at large. The feedback from that event was hugely positive. Some dealers are already reporting results based on those tips.
Feldman: As you know, Xerox is also acquiring dealers through our Global Imaging Systems (GIS) company. That will continue. In some cases when a multi-brand dealer acquires one of our channel partners, we not only keep the Xerox share but expand to the acquiring dealer and increase the Xerox share. This recently happened when Usherwood purchased a Xerox partner.
Ikeda: At Kyocera, we closely track trends as it relates to our national distribution. We certainly recognized there are continued acquisitions in the dealer business. This is a natural evolution and one we have to embrace. The decision is being made by dealers as to how they grow their business most effectively and it’s our responsibility to understand these opportunities and support them anyway we can. We want to use this trend as an opportunity to strengthen the relationship with our dealers and that’s why we maintain close communication and play the role of trusted advisor to our dealers.
Laing: We’re a new entrance to the market so we don’t have a big installed base of A3 dealers where we have downside risk of them getting acquired and losing our sales through those dealers. What we see is an upside opportunity because as we’re out recruiting dealers we’re going after the dealers who are doing the acquiring. We’re going after the ones growing and getting bigger and acquiring the smaller dealers so that trend toward consolidation has been a net positive for us because the ones we’re targeting are going to get bigger over time and we feel good about that growth opportunity.
Melo: It’s a mixed bag. In most cases, it’s status quo, meaning they switched ownership, but are still selling the brand, and are selling it as enthusiastically as before with an equal amount of success. We’ve had some that have been bought by competitors and we lose those. On the other hand, we’ve had some that have grown by acquisition, presumably by capital infusion by their new owner, which makes them a stronger equity.
Olds: While Canon has been impacted by the loss of IKON, Danka, and some of our independent dealers, we know what it takes to be a resilient company. We’ve adjusted with strategic decisions like the acquisition and merger with Océ, which has proven to be a success, allowing us to expand our reach to new customers in production and wide format markets. Thanks to the American entrepreneurial spirit, many of our dealers see the value in joining our family of channel partners, helping to recoup losses.
Taylor: We have worked for a while now with our dealers to acquire other companies so we’re the opposite. We’ve worked with our medium sized and large dealers to invest in and give targets to dealers to acquire. It’s absolutely beneficial to our business to acquire dealers who don’t sell our product line and convert [it] to ours. It’s been very good for us and we keep acquiring ourselves in all areas, especially new areas we’re trying to grow in””ECM and IT services. We’re also buying traditional dealers. It’s a strategy we have used in the past to grow and continue to use, and more importantly, we continue to help our dealers do it. There’s an opportunity out there for dealers to grow. You’ve seen several large Konica Minolta dealers buy a lot of companies and we’re [involved in] a lot of that.
CR: Besides acquisitions and declining print volumes, what other trends do you see as having the biggest impact on our industry in 2017?
Albregts: “The Smart Office” will emerge as a big trend in 2017. Managing and facilitating seamless information and data flow with easy access between devices will be an opportunity to expand business for both dealers and manufacturers.
Coriddi: We touched on it a little bit a moment ago, but the idea of expanding portfolios. It’s sort of part-and-parcel with the print volumes, but dealers are looking for new ways to help customers. Sometimes, that’s adding services. Sometimes, it’s software. Sometimes, it’s production. Often, it’s a mix of those. As print volumes decline and dealers expand into other areas, the strength of those customer relationships is going to be crucial. Customers want to know they can rely on you, as a dealer, to make their lives easier, their businesses more efficient. That’s why we put so much emphasis into helping our dealers grow their portfolios and really dig in to a customer-centric, services-led, consultative approach.
Feldman: The move to digital is certainly a factor and an opportunity. Dealers should see our ConnectKey devices as more than just an off-ramp (printer), they should see it as an on-ramp to digitizing paper-based documents to digital documents and offering workflow automation solutions.
Ikeda: Our traditional business is changing. The document is still critical, but there is a shift towards the broader concept of data. You see a change in the way our end customers do business, and we must adjust our solutions offerings to fit customer’s more advanced workflow requirements. At Kyocera, we see not only yearly shifts, but also the longer term outlook. And the document management industry’s evolution is moving toward Business Process Improvement (BPI) initiatives, areas that we closely track. On a global basis, Kyocera has already made strides toward expanding services offerings into Enterprise Content Management (ECM), BPI and IT Services through both partnerships and acquisitions. As a global organization we have our eye on the ball and ever-changing trends.
Laing: The Internet of Things””the combination of intelligent Internet appliances sharing data real time to Big Data systems where you have smart technology doing predictive analytics. We’re seeing that in everything from thermostats to automobiles. We’re trying to lead with that with our Smart Device Services and the additional sensing we’re putting in our machines. We think this is where the market is going to evolve quickly in the next several years.
IT managers are very much concerned about security. We think the industry, number one, is going to have to create awareness among the IT community that it’s not just about protecting your PCs, servers, and network, it’s also about being concerned about those endpoint devices like printers and MFPs. They have a lot of the same protocols and access points as a PC. Hackers go where there’s the least resistance. The first step for us as an industry is to raise that awareness. The second step is to show the technologies we use to protect customers from those threats.
[Another] trend is cloud-based SaaS technology. We think the cloud is going to change a lot of things [on the service and management side] and dealers who can take advantage of that and use it to go down market will be able to differentiate themselves over time.
The last trend is we think is that ink is at the beginning of an important upward trend where it’s going to cannibalize both mono and color laser machines. Ink allows you to change your cost structure with the amount of coverage whereas color laser wears the drums and developers equally regardless of how much ink you put down. We believe ink will create opportunities for moving mono pages to color.
Melo: For us specifically, it’s the ongoing integration of our retail business with our print business””making a stronger overall company out of those two pieces. We’ve been pretty successful moving for example, signage and barcodes into those retail accounts [on the] TBS side and also partnering with some of our friends like Lexmark who have a good retail [footprint] for print in bringing their products into those environments too.
Olds: Now more than ever we need good sales people, specifically those who see the human aspect in selling and servicing solutions. There’s always talk about the technology that affects the industry, but at the end of the day it’s still a people-to-people business that we’re in, and the winners will be those dealers who can retain great sales people.
Taylor: We’ve been focused for quite some time on production print””the industrial print opportunity as we call it. It continues to be very strong and we’ll continue to add products and capabilities there, and make acquisitions and investments. The MGI products are doing great, the inkjet product is doing great, the label business is really strong. That’s mostly all new frontiers for us and our dealers.
When you talk about print growing or not growing, that usually refers to the office, but if you look at certain areas of industrial print where the convergence of jobs that were done on press are now being done digitally, it’s a huge opportunity. Again, we’ve tried to bring that to our dealers and put the support systems in place and to help our growth in the past several years, and it’s going to be a big driver going forward. The fact that we have focused on that area for quite some time and continue to invest in that area will serve us well. We’re not doing anything here we can’t support in the dealer channel. In some cases it’s difficult for dealers to support that business themselves, but we’ll put the infrastructure in and provide the expertise [to help them grow their business]. We couldn’t have done as well as we have without the dealer channel. It’s almost the opposite of some other approaches that have been taken to the market.
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