BRIDGING THE GLOBAL IMAGING CONSUMABLES INDUSTRY

LATEST BUZZ:

Voices of the Industry (Part One)

 

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For the digital hard copy industry, 2013 was a year of modest recovery. Hardware sales improved for many OEMs, which provided a certain degree of top-line growth. This was particularly true for Japanese hardware manufacturers, thanks to the weaker yen. Although demand for hard copy remained well below pre-recessionary levels in established markets, it did grow in 2013 along with demand in emerging markets. I expect to see the recovery last into 2014 as the economies in Europe and the United States continue to improve, which should fuel growth in regions like China and others with strong trading ties to Western markets. As more people return to work, print volumes will grow along with cartridge consumption. Hardware and consumables sales will stay well below where they were in 2008, however, so OEM’s will continue to protect their business aggressively. I expect to see more lawsuits and other legal actions in 2014. - Charles Brewer, President, Actionable Intelligence

 



Complacency is the largest deterrent to success.  The best time to format plans for change is when everything is running smoothly and the profits are rolling in. This is when business owners and senior managers have the time, energy, foresight and money to make effective business decisions. When radical changes must be planned and implemented during times of business downturns, diminishing profits and fear of bankruptcy panic, rather than rational thinking, often takes over.    

The remanufacturing world must be both reactive (responding to the OEM products being offered, legal maneuvering) and proactive (providing unique products and services). All too often the center of the business plan is built around being the provider of the low price offering. This creates a downward spiral of guaranteed diminishing return.   

Creative businesses are continually pushing the envelope by offering new products and services to increase the profitability of those who are currently buying their products. The secret of their success is to offer a product that not only provides added value, but that actually has a customized/fluctuating price that can’t be undercut by the competition. - Ronelle Ingram, VP of Technical Support for Steven Enterprises



Having recharged the batteries over the holiday period, we now face the new year with renewed enthusiasm and optimism.

2014 is going to be interesting. I hope it is going to be the year the aftermarket starts winning color cartridge market share now that higher quality toners are available and TAB on the PCR is a thing of the past. It should enable the industry to make higher performance color cartridges and win over the discerning color cartridge end-user.  2014 will see a continuation of “MPS” type strategies, with the OEM’s spending more on their programs to retain their positions. Taking control of the toner or ink cartridge in any imaging device is the main target and the market will get even hotter in 2014.  The problem is how to make money out of it. The customer only wants to save money and there is always someone who will do the job cheaper. Additionally, lawsuits will take center stage in Europe in 2014, but will the OEM’s be successful in getting a European ban on clone cartridge imports?  We shall wait and see. - Steve Weedon, President, Discover Imaging



From MSE’s perspective, 2013 was a continued validation of our commitment to quality, innovation, dealer support and our ability to provide the market’s truest alternative to OEM consumables. In 2013, MSE added significant layers of management while also bolstering our engineering ranks with 5 additional degreed engineers. We also introduced a very powerful cloud-based marketing tool called Brainshark™ that we provide to our MSE dealers at NO COST. Once again, we strive to have the market’s most highly differentiated product, backed by world-leading sales tools.


Additionally, we are proud to affirm our commitment to homegrown, US-born innovation, as MSE surpassed the 1000 employee mark in the USA.

MSE’s ongoing investment in technology led to us being awarded multiple patents in 2013, including the SCS (secondary cleaning system), which is a watershed accomplishment and marked the first time an aftermarket remanufacturer pioneered the development of a new critical component not present in the original cartridge. This innovation and MSE’s other patented and proprietary technologies allowed us to capture further color market share by virtually eliminating industry-wide print quality challenges with tab (toner additive buildup) and gave our dealers an invaluable tool to grow their businesses and thrive.

We want to thank our customers, employees, and suppliers for another great year in 2013. Our success is further proof of the growth potential and possibilities that exist when quality, innovation, and service serve as cornerstones of your business.


MARKET OVERVIEW

It seems that negativity and fear will be the norm in the industry for yet another year as the experts continue to portend the obsolescence of print and hardware. I, for one, have always believed that print has a bright future IF -- and only IF -- we focus on an OEM conversion strategy using high-quality remanufactured consumables as a cornerstone of our business. We even saw some signs of life in the world of print hardware as Q3 witnessed solid growth in the printer installed base. Meanwhile, consumers are still spending over $80 billion per year on ink and toner -- $25+ billion of it on color laser where the market still has less than 10 percent share. Again, these are all facts that show we have HUGE growth opportunities.


2013 also showed very positive trends that lay the groundwork for cooperation between the legitimate aftermarket and print OEMs. Global trade associations worked with OEMs to create clearer definitions between remans and new compatibles, and HP even printed studies showing remanufactured quality as being superior to that of new clones. We hope that this newly-found common ground propels growth of the remanufactured segment versus new clones, which have been so pernicious in causing prices to spiral into the ground while also hurting the overall credibility of the imaging aftermarket from a quality and intellectual property standpoint.


The bottom line is that printing is still alive as evidenced by the over 120,000,000 printers sold in 2013 and the nearly 3 trillion printed pages. Consumers demand fair alternatives and choice when they print these pages, and whether or not they are printing them in a transactional or managed environment, their choice should be rewarded with quality output, green benefits, and cost savings. Our industry can still deliver these values with a renewed focus on fair competition with OEMS, quality and, of course, a little optimism.  - Luke Goldberg, SVP, MSE

 

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2013 has, as seems usual in recent years, been a challenging year.  I think it is beyond question that we have already seen the peak of “office and home” pages printed (ink and toner consumed) in the United States and other developed economies around the world and that the total demand for printing supplies will continue a steady decline.  But who is this good news for and who is it bad news for? 

The market for home and office printing is mature and historically, as markets mature, the balance between OEM and aftermarket shifts toward the aftermarket.  This is potentially good news for the aftermarket and potentially bad news for the OEMs.  Of course there are many nuances to this simple “black and white” statement and I believe the OEMs remain in a dominant position for marketing their supplies in the near term.  However, I believe the state of the market today represents a growth opportunity for the aftermarket suppliers as technology, ecommerce and market acceptance for OEM alternatives continues to trend favorably toward aftermarket solutions and products.

The legitimate aftermarket industry continues to be squeezed both from above by fierce competition from the OEM’s and from below by manufacturers with key products of questionable IP status.  From above, the price competition is not the issue and from below, it clearly is.  Anyone in the industry that expected any relief from these challenging market conditions as a result of the litigation in front of the ITC and the resulting General Exclusion Order issued to protect Canon’s intellectual property must surely be disappointed nearly six-months after the event. 

Many predictions of major changes (mostly positive) for our industry have yet to materialize and knowledgeable persons are questioning whether any benefits from the GEO will ever materialize.  Why didn’t Canon introduce two or three additional patents into the ITC case that would not have been so straightforward for the “clone” manufacturers to design around and may have then produced the results they were surely looking for in terms of slowing the flow of (what we all believe to be patent infringing) products entering the USA marketplace?  I believe we would all be having a different discussion with regards to the events that took place in 2013 and the outlook for 2014 had this been the case.

 For 2014, it will be interesting to see if any significant changes result from the acquisition of OfficeMax by Office Depot as, potentially, this event could have a significant impact on the aftermarket and some of its key participants.  However, I am particularly interested in how the aftermarket deals with market conditions more within its control as opposed to opportunism with third party events. 

What I mean here is that I think the aftermarket finds it easier to compete with itself rather than the OEMs.  If an OEM is selling a cartridge for $50, for example, then traditionally the aftermarket cartridge would have sold its version for around $40.  If the reseller made 10 percent on the OEM, it perhaps made 40 percent on the aftermarket.  So, for a reseller purchasing an OEM cartridge at $45 and an aftermarket cartridge at $24, this results in $5 of margin on the OEM in order to resell it at $50 versus $16 on the aftermarket cartridge to resell at $40.  This is the business model the aftermarket was developed on. 

Now, along comes a “clone” offered to the reseller at, say, $8.  The OEM doesn’t change its price but the aftermarket does, and inevitably contributes to its own downward spiral.  We have to do a better job to educate the resellers of the dangers of selling a product with a cost that is simply “too good to be true” and to help stop this dangerous trend. 

Further, I don’t believe this “pricing commoditization” issue is limited to the traditional transactional business—take a look at Managed Print Services (MPS).  What does an OEM charge today for mono and color printing?  What does the aftermarket charge?  How much has the OEM price come down in the last 12-24 months versus the aftermarket price?  I suggest the OEM price has not materially changed but the aftermarket price has been reduced by as much as 50%.  Why?  Who are we competing with?   

There are many dynamics here but I suggest, again, that it’s primarily an education issue.  Managed Print is not a “silver bullet” and for sure it is not for everyone.  The complexity of MPS can be daunting and for a traditional transactional reseller facing massive price pressure from cloned cartridges, MPS may appear to be an effective competitive tool.  For an inexperienced MPS reseller, a “penny-a-page” may seem like a profitable deal.  For an experienced MPS reseller it may not, but the “penny-a-page” deal is already established out there and the damage is done.

To be sure, this is a challenging industry with challenging market conditions and, despite the market having passed its peak and now phased into a steady decline, the dollars at stake remain huge.  Powerful organizations and their stakeholders still have significant investments and potential profits to consider despite the advanced maturity of our industry.

I anticipate there will be many twists and turns in 2014, some of which may surprise us, and others perhaps less so.  However, if we stay true to our business ethics and sell smart, then overall I believe the outlook for the aftermarket remains healthy with guarded cause for optimism.  - Ian Elliott, President Print-Rite N.A., Inc.

 

 


 

 

When the books finally close on 2013, we’ll undoubtedly see that it was the year that started a major shift toward technology convergence.  That is, convergence of technology expectations for service providers by businesses and, in turn, a corresponding convergence of technology capabilities in the marketplace by service providers.  While this move has been in progress for several years—primarily due to challenging economic conditions—it firmly took root in 2013 and gained a solid foothold that all-but-ensures that the days of “IT wildcatting” on specific, narrow-focus projects are a thing of the past.  

In 2014 and beyond, this convergence evolution means that service providers will need to have more in their offering portfolios, a broader spectrum of competencies, and the ability to meet a growing list of enterprise-level demands—even at the SMB level.  Specialties like just “managing print” or offering cloud services will no longer suffice; they’ll become components in a larger offering that integrates things like inventory management, life cycle refresh, and cyber security.  In a growing number of cases, service providers will offer less of these capabilities and enable more of them.

2013 was an important year in IT…standby for 2014…  - Dave Westlake, President, Print Command LLC



The managed print services (MPS) market is maturing, particularly in the developed, enterprise markets in which penetration is relatively high, and many contracts are in their second or third renewal cycles. Nonetheless, IDC forecasts sustained healthy growth for print services worldwide, at a compound annual growth rate of 12%. Growth will be higher in the less mature small and mid-sized customer segments, rising as high as 25% for lower mid-sized customers in developing regions. Much of this growth will be driven by offerings from the indirect channel, frequently facilitated by programs delivered by hardcopy vendors to support their partners. These programs often reflect key initiatives on the part of the vendors and include customizable portfolios of hardware, software and services to meet varying channel requirements.


The development of new work processes and business models facilitated by cloud-based applications, mobile devices, and the increasing socialization of business applications are also providing new opportunities to vendor and channel alike, as organizations seek to leverage these technologies to streamline and automate print and document workflows. Some vendors are offering turnkey programs to enable channel partners to offer higher-margin value added services. Of course, no matter what the services or program, operational excellence remains as critical as ever in an increasingly competitive market.  - Holly Muscolino, Research VP, Document Solutions, IDC


 

During 2013 we have seen the same trend as in previous years in the US MPS market with the slow-down being such that there was almost no growth. The answer to it is in the fact that the independent dealers and distributors who landed in MPS 3-5 years ago, are now finding that the service they promised never show up. Instead, they find themselves again competing based on price, quickly eroding their margins. As a result of their primary focus on collecting counters, their back-office has grown much higher than their business, cannibalizing any possibility of making profit. It is not odd, then, to see them not pushing MPS anymore.


The good news is that key market players are reacting and have changed the path. Their new focus on cost control around MPS and auto-fulfillment is pushing ahead their confidence in MPS. It is indeed the end of monitoring tools, while the demand for MPS yield management tools is booming. As a result, we expect 2014 to reactivate the confidence in the MPS business, making existing players begin pushing it again once their cost control and order fulfillment problems are solved.


MPS emerging markets like Europe do have the option to learn from others’ errors and build their businesses in a solid way. We perceive this lesson learned by MSPs, while dealers are still struggling to understand what MPS is all about, often mixing up collecting counters with managing printers and their supplies. Opposite to this, Russia seems to be clearly disembarking in MPS with auto-fulfillment proposals, combined with value-added assessment.


During 2014, both Europe and Russia will see the MPS industry growing fast, though with very different results in terms of the success of the service providers.  - Antonio Sanchez Navarro, Founder and President of Nubeprint



2013 was a very revolutionary year for 3D printing in both professional and personal solutions. The emergence of a true retail sales channel for personal 3D printers will have the biggest impact on future growth in the short term of any other development trend that occurred in 2013. But there is still a lot of growing left to do. We have seen very few manufacturers of personal 3D printers really focus on adding value to the segment. Instead, most are content to race to the bottom to create the cheapest printer that isn't capable of doing much of anything. The link between the personal and the professional markets has grown stronger, and will continue to grow in 2014, as industry leaders have realized that being able to provide fabrication solutions at a very low price point is a great way to bring the benefits of rapid prototyping and design to small businesses and entrepreneurs the world over. - Scott Dunham, Research Manager, Photizo Group



Next year, we expect the industry to continue to evolve into a more service- and software-driven industry, while overall print volume will stay flat or actually decline.  In the aftermarket space, we expect continued price erosion and price pressures as low-cost compatibles continue to flood the market and take share away from both the OEM as well as legitimate remanufactures.  That being said, ACM’s focus remains unchanged, which is to deliver the highest quality products and service to our customers and resellers.  Opportunities for continued growth in the market for ACM include further product expansion, a focus on the higher-end, quality-driven customers, and continuing to expand our ecommerce and EDI capabilities to streamline the ordering process for our customers. - Ben Lin, ACM Technologies



2013 has been a quick but very successful year for Green Project. We successfully moved past all legal issues, launched our own Gear and gained customs approval for the importation of our toner products. Our customers have continued to show signs of growth and we hope to feel that Green Project can account for part of their success. Green Project’s client base has continued to diversify along with our Dummies brand, which continues to grow into the retail market space.  

2014 should be one of best years yet. We have so many large pending projects that should be coming to fruition in each and every aspect of our business. It’s really one of the most exciting times we’ve had yet and can’t wait for 2014 to come. The industry will continue to consolidate, however, those companies that are able to stand out and offer something unique will benefit from the changes within our industry. Look for the Dummies brand in even more retail outlets in 2014! - Joseph Wu, Green Project Inc.

 



I have faith in the printer consumables industry. The future is bright and the path to success is clear. Seine is confident to be the best partner among the printing suppliers, and we hope we can have more success together in the New Year. - Jackson Wang, CEO of Seine Group



We thank all for the support from our customers and sales department. Our manufacturing department will keep on the R&D of high quality products and production control to make and keep customers satisfied. - Jim Wu, Vice President of Seine Group



In the beginning of the New Year, I’d like to thank all of Ninestar’s partners. In 2014, we’ll continue to carry forward our one-stop solution integration strength to meet customers’ needs and grow. We hope to keep learning from our business and to be innovative in our products and market. - Yan Wei, General Manager of Ninestar



Facing industry developments and the decline in profit margins this past year of 2013, Beijing Laser will focus on cost-cutting to reduce unnecessary expenditures, increasing our customer base and developing online supplier outlets to respond to market challenges. Currently, Beijing Laser has completed its process of signing distributor contracts for 2014. In the new year, we will double our efforts to achieve the company's growth expectations. - Haiyong Du, Vice President, Beijing Laser Hi-Technology Co., Ltd.



Time fleeting like a flash of light, 2013 has concluded on a satisfactory note.

Looking back on 2013, although the industry has been impacted by the gear patent issue, FG's rapid response by launching a patented new gear in a timely manner has provided customers with a good solution.  For the OPC and toner, always insisting on our motto "designated to be the global top choice", we have placed quality and service as our top priority. Together with our partners committed to contributing much effort to a healthy industry growth, we present customers with Mitsubishi products that offer high quality and reasonable price.

Looking back, we treasure the harvest and the experience; facing today, we cherish the moments; and looking toward to tomorrow, we are confident and hopeful.  In 2014, let our dreams fly!  - Dick Yu, General Manager, Future Graphics



The remanufacturing supplies industry has changed profoundly. Farewell to the blind pursuit of low-cost and imitation products and other backward industry models. The remanufacturing industry has carried out a series of technical and product innovations to create an industry that is sustainable, reliable, and cost-effective. We are thankful for the outstanding contributions made by colleagues in various aspects of the industry chain. Renewable supplies are economical and green and we must choose them to save the blue water and blue sky of our childhood for our children and grandchildren. For our earth tomorrow, renewable supplies industry colleagues, rise up! Acro-colorful Technology LTD provides you with high quality toner chips for regeneration. - Ping Zhu, General Manager, Acro-colorful Technology Co., Ltd.



2013 was a tumultuous year for the generic supplies market. The good old days are gone!  We will see more consolidation in the market, margins getting lower, consumers becoming increasingly demanding, and OEMs being more aggressive. The market has shifted from a Blue Ocean to a Red Sea. How to strategize your growth is the key. 2014, although not by leaps and bounds, still has a chance to grow. Changes are needed in large-scale supplies production and sales methods. The areas to focus on are R&D, fine production, enhanced services, and industry collaboration. This will help enterprises to develop a new world!

New Year best wishes to industry colleagues.  Keep the spirits high! - Zhihe Wang,General Manager, Beijing-US-India Science and Technology Co., Ltd.

 


 

 

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