Canon is suffering from delayed entry barrier

For a company, which is started direct operations in India just about three years back, gunning for 20 percent market share in the inkjet segment is big news in itself. From a copier company to now keeping its focus clear on printers, has been an interesting journey for Canon. The main focus of Canon India right now is on the infrastructure. Asim Raina and Preety Raheja of the DQ Week caught up with Ravi Bhatia, GM (Marketing & Sales), Canon India to get further insight into the company's focus in the coming months.

Has the general market slowdown affected your business of printers and scanners?

We have been here for last two years and I agree we are nowhere. So in order to get from nowhere to having some market share, we need good infrastructure. Accordingly, priority on the list is channel expansion. Currently we have 30 partners and we believe that right number would be 300 and till last year we were running this organization with three people, compared to 22 now. Secondly, it was service infrastructure. Improving on that, we have tied up with Redington for 15 service centers across the country in addition to eight of our exclusive centers. We aim to expand this to around 100 service centers. So my reach is a limiting factor. So I don't think I would blame slowdown for the numbers. 

Is that why your market share is stagnating below 10 percent in printers?

We had a good month in December, when we achieved 12 percent share and we reached the number two position. Till July last year our business was controlled from Singapore and hence Canon India was not so focused. But in July we got the FIPB permission to control our Indian operations. We can now import the boxes and sell on back-to-back basis. It has really made us more focused.

We are more popularly known as a copier and a camera company. So if you have seen our latest banners, we have tried to change the focus from copier to a printer company. In addition, we have used radio as a medium to extensively market that with a lot of success. The third was taking the show to the road.

You recently had road shows focussed at the home segment...

We at Canon believe that home system would become a center around which people would spend money. Digital camera, scanner and a good quality printer would come in here. This would probably give rise to home photo lab in future as well. Again as CD writer penetration goes up, we would print our CDs. Printer is merely a vehicle to deliver ink. But what goes inside that cartridge is a key. 

Canon because of its chemical legacy has done a lot of work in the last two-three years. When you want to deliver photo kind of images, you need an ink which is much smaller. Secondly we have introduced bright color ink for the photographs. Third attribute is that as the market would go into photograph, what will become key is the fading of ink.

Today most of the available inks are fade-oriented. So we would be introducing the fade-resistance ink in the market. So the home system would become a photo lab for the person and people would do these kinds of things.

Don't you think that in the process of focus on the home and the SOHO segment you might ignore the corporate segment?

About 90 percent of the printer market is driven by SOHO or home segment. More than 50 percent of the color print is done on Canon machine. We have sold almost 200 color printers in India, which do copies upto 40 pages per minute. And the run rate on those machines is more than 40,000 prints per month. So that is where the corporate user goes. Managing color is a complex thing, so you tend to outsource it. You would either go to DTP shop or print shop. That is where we have more than 55 percent of this market. Canon, too some extent, is also suffering from delayed entry barrier, which is not so worldwide. We are a major player. It shall definitely take us some time here.

In terms of home segment PC drives everything. Would you not like to piggyback on maybe a PC vendor?

A5: If you want to sell that way, margins fall very badly. We had tried doing that. Compaq was one story, which was quite successful and then with Vintron also we did pretty well. But yes, we do not have the full bundling strategy and we are conscious of it. Secondly, the products which are developed by Canon, are not PC centric. What we did this time was that during photo exhibition we worked with Mahatta. We have high-end DTP printers that are inkjet printers, which we demonstrated along with a digital camera and a high-speed scanner, which will become something like pro photo lab. 

Channels would ideally like to take on the pull product rather than the push product. For HP, they don't have to push the product but in the case of Canon they still have to do that...

The day your channel is ready then throwing money on advertising to create a pull is a worthwhile investment. There is no use of advertising if I don't have channels in place. We would not like to advertise heavily before we have proper channels to supply.

Not getting into details it was a record profitable last year for us. To sustain that this year, company has three priorities. Number one status would be given to digital camera, printers and stepper motors. And the sum allocated for R&D is $ 10 billion in three years. Normally we spend our 10 percent of revenue in R&D. But that has been escalated this year.

Apart from HP and Epson, you also to contend with Sharp now?

Well, beyond top three there is nothing to worry about. Sharp is not amongst the global leaders as neither is it a printer-focused company nor it is among top five. The total market size addressable by Sharp is about 5,000 units per month. So they have to play in the market which is 60,000 annually. We will wait for them to ramp up there products. 

Is there any particular reason why Canon has not introduced laser printers here in India?

Laser is a bit interesting one where we have a lot of relationships to watch. Worldwide we have certain contracts and agreements. In the meanwhile, some product launch as far as lasers are concerned would happen before June at low end. We shall be coming out with two-three models--maybe 8 PPM, 10 PPM. Channel partners would certainly be different for this. Pricing for the same is yet to be determined.