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Cutting A Fine Print

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DQW Bureau
New Update





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Print RoI-a new trend likely to gain momentum in the days ahead

Ten years ago peripheral devices were "just an output device". True

to their name, they remained in the periphery of things and found it difficult

to break into the perimeter of its bigger cousins like software, and storage.

Well, that step-motherly treatment is now history, going by the peripherals

market during FY 2004-05. According to an IDC Global report on peripheral

devices, "Just as enterprises spend much time studying, optimizing, and

managing many elements of their IT infrastructure like network bandwidth,

servers etc, they have begun to pay similar attention to their imaging, printing

and document distribution environments. After years of inattention and lack of

coordinated management, the imaging and output infrastructure in most

enterprises are now fraught with high costs. These include the high cost of

maintenance, expensive spare parts, and supplies associated with aged models and

employee productivity costs due to frequent device downtime and inefficient

document workflows."

This in a way sums up the evolution of peripheral devices, such as printers,

over the years and the critical dimensions they have achieved in the last two

years. Most of the trends the industry has been talking about in the past has in

fact become a reality. For one, the all-in-ones (AIO) or MFD market saw good

escalation in the print value chain. Similarly, on a much lower scale though,

digital cameras, with their falling prices, pumped the photo inkjet category

volumes and kick-started a trend-shoot and print. In all, FY 2004-05 saw the

peripherals market further entrenching itself firmly in the IT hardware space.

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DMPs: Going Strong



The Dot Matrix Printers (DMP), a niche category in the printer space, is

dominated by vendors like TVS Electronics, WeP Peripherals, and Epson. All of

them had another good year. At the higher end of the spectrum is Lipi. DMP

printer products over the years have developed and manifested themselves in

different products. For instance, apart from the conventional DMPs today, one

can find their applications in point of sale counters, passbook printing in

banks, etc. While in the West DMP has faded in favor of inkjets and lasers, the

Indian market is showing continued traction for the DMP products. The biggest

driver that kept the DMP market going year after year was the issue of TCO and

costs in running the printers. In both these parameters, DMPs consistently score

higher against non-impact printers. As an industry expert puts it,

"Choosing a printer is not simply a matter of picking the first available

machine and forgetting about it. It is important to select one that will provide

the optimum, most cost-effective service over its lifespan, significantly

reducing printing costs and the amount of user intervention required to keep it

running."

The key verticals that drove the DMP numbers during FY 2004-05 were banking,

government, and retail. Industry experts said that for printing

transaction-related documents like bills, receipts and invoices, dot matrix

printers found many takers during the year.

A closer look at the vendors shows the dominance of Chennai-based TVSE,

seeing good growth for its DMP products, which contributed Rs 188 crore. The

company attributes the growth to its three-pronged strategy adopted over the

years: emphasis on high quality printers and consumables, low running cost

of consumables, and quick, efficient and wide support network. Product

ruggedness is also one major USP for TVSE printers.

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At the other end of the competition is WeP, which also has a slew of products

in the DMP space. WeP continues to dominate in the 24-pin DMP segment and during

the year it pitched hard its LQ DSI range, which the company claims is the only

Unicode ready printer. Meanwhile, it also witnessed good growth in the 80-column

category with its LX 800 DX offerings. Epson also saw good movement of its

impact offerings. During FY 2004-05 Epson decided to change its focus from a

volume to value strategy. The company says the value is not just for the company

but for its business partners and customers as well. This move paid rich

dividends as Epson saw its turnover and profitability increase substantially, as

did its service levels and dealer loyalty.

On the impact side, the year demonstrated the changing needs of the

enterprise and a specific print solution satisfying the need. Hence, vendors

talked about various technologies and its dividends. For instance, if an

enterprise intends to opt for an impact printer it has various options like 9

pin to 24 pin technologies to choose from. Retail verticals should ideally

choose the 9 pin narrow model, and government, the 24 pin. Companies like WeP,

TVSE, and Epson have made many innovations in impact printer technology over the

years. Given that, the earlier noisy and bulky impact machines have been

replaced by sleek and silent ones.

Inkjets: More Blues than Pink



Inkjets in the single-function category did not see much traction during FY

2004-05. HP took on the mantle, with other players following suit. Though the

vendors were able to sustain the volumes, in value terms the market is growing

thinner by the day, with decline in end-user price points: the entry-level

inkjet offerings retailed at an average price point of Rs 2,800 during the year.

With SMB moving towards lasers, SOHO was the market that saw volumes-where

home PC consumers went in for a peripheral device as part of their PC buying

decision. Meanwhile, on the enterprise side, the mid-end inkjets came in

wherever there was need for a standalone printer requirement. In the inkjet

space, Epson's market share showed a marginal decline, hovering in the high

tens, down from the low twenties in the previous year. The company blames this

dip in market share to its channel revamp exercise undertaken in 2004. In line

with the revamp, Epson changed its inkjet channel from a national to a regional

distributor model.

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A look at the emerging players in the fray puts Lexmark in the pole position.

It was a good fiscal for Lexmark in India, which secured market traction through

some key inkjet models it launched during the year. The company unveiled four

cutting-edge photo printers that it claims will change the home photo printing

experience as well as cater to the SMB segment.

The MFD Juggernaut



The shift is impressive, driven hard by HP. Printers and scanners are giving

way to all-in-one (AIO) devices, also called multi-function devices (MFD)-which

combine printer, scanner and copier into a single device, for little more than

the cost of a traditional printer.

The vendors' enthusiasm is understandable. In the initial run-up, the

difference in cost itself means better margins. But that becomes less

significant as competition drives prices and margins down. What's more

interesting is that the MFD increases utilization. Sitting by the desk, it's

used for prints and copies rather frequently, especially the latter, which means

more printouts per month...and more consumables (ink cartridges and special

papers). Remember, consumables are where printer makers like HP make their

margins, and not the printer hardware.

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On one hand, competition forced the inkjet-based MFDs down below the 5K

pricepoint. On the other hand, the top end of the market saw some different

dynamics. Over the course of the past two years, copies have gone digital, and

have added a network interface, and printing capability, making them MFDs too.

However, at the high end they're still usually called digital copiers,

distinguished by a separate drum and refillable toner, while the lower-end

"laser MFD" uses an integrated disposable cartridge, a la laser

printers. So you now have inkjet MFDs, laser MFDs, and digital copiers-all of

them different forms of multifunction device.

IDC says the global MFD market could grow 82 percent a year between 2004 and

2006 with laser-MFDs taking the larger value share.

Lasers: Value for Money



HP continues to dominate the laser printer space with 75 percent market

share. But in this fiscal it will face greater competition as many new players

enter this segment. Xerox forayed into this space towards the end of last

fiscal. Interestingly, Epson, which was not present in the laser printer

segment, came in with a slew of products. Epson is the only printer company

operating in all three segments: Inkjet, DMP, and Laser and is aiming for a 20

percent market share in the color-laser segment with its Aculaser brand, for FY

2005-06.

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In terms of competition, Brother entered the market with a slew of models.

Meanwhile, Lexmark's new laser printer models aimed at the small workgroups in

large enterprises also impacted the market positively. On the entry-level space,

Lexmark attacked the market with its E230 laser printer. Further escalating the

competition in the laser space was Xerox, which until now had a negligible share

in the laser space. It announced its intention to capture the potential of the

laser printer segment through its Phaser range of products. Though the Phaser

range has been there for sometime, last fiscal Xerox appointed Ingram Micro and

Redington as distributors for its Laser offerings, in a significant move.

If one takes a macroscopic view of the laser printer market, the bigger

market out there currently is in the mono lasers, but color is gaining momentum

in niche areas.

The Road Ahead



Up ahead looms mixed fortunes for the printer industry in India. The impact

and the non-impact space face different challenges. Inkjet MFDs will escalate in

volumes, cannibalizing on single-function Inkjets. At the same time, Inkjet

photo printers will gain more market credence during the ongoing year. However,

some industry watchers foresee competition from within the MFD segment, with

Laser MFDs challenging Inkjet MFDs and single-function lasers. A look at the

year that went also showed huge shift in vendor strategies.

During FY 2004-05, vendors took to the CIOs concepts like evolving an output

device management strategy for getting peak RoI out of print investments, and

choosing the right printer. Print outsourcing also became a big business with

players like WeP and Xerox Global Services ushering in new ways of cutting down

on print costs and optimizing productivity. Similarly, HP went aggressively on

their balanced deployment strategy and Canon came out with industry's first

RoI calculator. As the current fiscal progresses, the battle for greater market

share will further intensify-with focused marketing campaigns and product

offerings.

Shrikanth G

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