Riding the convergence wave

Riding
the convergence wave

The Printer
market is in the throes of change in more ways than one. When Inkjet Printing
technology star­ted making its presence felt in emerging markets like India, in
the early 1990s, the print techno­logy landscape slowly changed. Then came
laser printers and now MFDs. Over the years, prin­ters, from being just
peripheral document output devices, beca­me a key compo­nent of the enter­prise
IT spend-driven by escalated print costs due to ever-growing print and copy
volumes.

Convergence, from a buzz­word,
has now become a reality. It's happening across domains-through devices like
notebooks, mobile phones, et al. Printers too are riding the convergence wave
with the offering of Multi Func­tional Devices (MFDs). Popularly called
All-in-Ones (AIOs), the MFDs are ushering in a new print paradigm. This is so
because after ages of inattention enter­prises across the world are taking a
closer look at increasing print costs, and are grappling with ways to contain
them. It is a wake up call for CIOs who were so embroiled in larger IT issues
that they failed to keep tab on print management. However, that's changing
now. And a look at the scheme of things over the last one year shows the growing
stature of print management, as a result of which 'RoI on Print' is gaining
attention.

Market dynamics

MFDs have matured into a definite and hot segment in the peripherals space
in the last two years. When we look at the adoption of these converged output
devices by enterprises, it is Laser MFDs that rule the space. A closer look
reveals the market segmentation of Laser MFDs across four types of output
speeds, measured in 'pages per minute' (ppm): The entry-level Laser segment
is characterized by 1 to 20ppm; segment two starts with 21 to 30ppm speeds;
while the higher segments are MFDs that cater to 21 to 44 ppm and 44 to 60ppm. A
typical entry level Laser MFD starts from Rs 14k, and the high end models can go
up to Rs 2.5 lakh. On the technology side, vendors offer two kinds of products:
printer-based and copier-based (also called digital copiers).

The Indian printer market is
unique in many ways. For one, the technologies used are diverse and range from
Impact to Thermal printers. Though the impact printing market in the West has
become smaller over the years-it is on a growth path in India-thanks to
players like TVSE, Epson and WeP. Standal­one Inkjets are a volumes seg­ment,
and during 2004-05 India consumed around 689,391 Ink­jets and 258,512 Lasers,
against 226,508 Inkjet MFDs and 52,513 Laser MFDs. There is still a huge gap
between standalone and MFD device shipments. But MFD volumes are ramping up fast
and in the days ahead will make a dent into the standalone printer market.
However, some in the industry say it is too early to talk about this
cannibalization effect. According to Samir Shah, Country Category Manager,
shared printing and connectivity, HP India: “MFDs will play a bigger role in
the coming years and other technologies will also co-exist. MFDs have given more
freedom of choice in terms of technology and they are clearly value enablers in
an enterprise's output device management strategy.”

Kuldeep Malhotra, General
Manager, Volume Products, Xerox India, has some predictions: “The A4 MFDs,
which can be catego­rized as low end MFDs, are growing at a fast rate and are
expected to grow at more than 100 percent.  The mid range category is also
growing at 30-40 percent. The Inkjet market should see negative growth in the
future, and would evolve to stan­dalone Laser prin­ters and A4 MFDs.”
One company that set the MFD ball rolling was HP, domi­nating the Laser MFD
segment with a market share of over 55 percent.

The Enterprise edge

The fact that MFDs are rapidly ramping up indicates a positively reacting
market. And much of this action is polarized on Laser MFDs, on the enterprise
side. Let's look at some key drivers hastening MFD adoption: New buying is
happening from mid and large enterprises, which already have a good number of
standalone print devices. These are going in for print consoli­dation by making
way for MFDs, overhauling outdated and aged print devices. With this they are
cutting costs by scaling down the number of printers, without cut­ting down on
productivity. Fewer printers also means less consu­mables and AMC costs. Reflec­ting
on that Vikram Negi, Coun­try Product Manager, Multi Function Printers, Samsung
India says, “MFD is a product whose time has come. Its value propo­sition
over single function laser prin­ters is evident, and it is quickly gaining
acceptance. The conveni­ence aspect, which also saves time, will probably drive
the next surge in MFD purchases in SMBs and large enterprises.”

Experts believe that the
starting premise of a 'print management strategy' would be to study the
print demand patterns, on any given day, for a defined time-say a minimum of
three months.

The second part is to take
stock of the print devices used across the enterprise. Some would be over used
and some not so-and some never at all. The third study's premise is in
determining which print technology to imple­ment to contain costs.

A study of all the parameters
would help the CIO evolve a comprehensive print manage­ment strategy. Says Som
Gango­padhyay, Head, Office Systems and Solutions, Canon India, “The biggest
challenge the CIO faces today is in establishing, maintai­ning and upgrading
the IT infra­structure. At one side costs rela­ted to document manage­ment
are escalating and on the other, one needs to manage the fast obsolescence of
technology platforms.”

In the print paradigm, where
do MFDs create the value propo­sition for the CIO, and bring in cure to
document management challenges? A simple answer would be-wherever multitas­king
is required. A larger view would be, by studying the acquisition cost of
single-function devices. For instance, an entry level Laser printer will cost
around Rs 8k. Add to it an analog copier at Rs 30k, an entry level basic scanner
at Rs 4k. In all it adds up to Rs 48k. This, when contrasted to an A4 Laser MFD,
which costs around Rs 14k or less, clearly makes the MFD the winner on the TCO
front-and that would be the key in driving more volumes in this space.

Moving forward

At the enterprise level, the affordability factor will nudge CIOs to go in
for MFDs whenever there is a printer purchase re­quire­ment. Vendors also
believe that mid-size enterprises will drive much of the A4 MFDs. Large
enterprise will adopt higher speed MFDs-20ppm and higher. However, analysts
point out that despite the MFD value proposition, it does have its limitations.

MFDs, hence, are seen as a
complimentary print technology rather than a competition to stan­dalone
devices. Most ven­dors agree that volumes for copier-based MFDs will slow­down,
as A3, as a segment, becomes niche-given that the market is getting more
polari­zed towards A4 printer-based MFDs. That's more good news for the CIOs
as the A4 MFD market will become extre­mely competitive and vendors will resort
to more price cuts to push more feature-rich MFDs. Says Arun Gupta, CIO-Pfizer
India, “MFDs offer value for money, while saving the clutter in a compact
size. As the price point keeps dropping, they will end up cannibalizing low-end
Laser printer markets. Pfizer, in India, has deployed these devices for its
regional offices, some home users, and remote, clinical trail locations, which
need more than just a printer.”

At the end of the day, the
evolution of MFDs as a key area in printers can be correlated with enterprise
applications-MRP blossomed into ERP, which is a multifunctional solution; then
ERP got supplemented with SCM and CRM. In a similar fashion MFDs are ushering in
more con­verged options for the enterprise to consolidate and optimize on their
document needs.

Shrikanth G

(shrikanthg@cybermedia.co.in)