With prices of multifunction printing devices coming down to as low as Rs 10,000, companies are likely to start preferring these. By Pupul Dutta
In the recent past, MFPs have become increasingly popular with companies given the productivity factor and also the need to save costs. Furthermore, in today’s hyper competitive business world, it is more important than ever to ensure that workgroups are armed with all the tools they need to stay productive.
“One of the most effective ways to achieve this is by integrating high-performance MFPs, which consolidate the critical document functions into a single space-saving device. In today’s scenario, MFPs not only lead to increased productivity, they also help in streamlining tasks and potentially decrease costs and maximize the use of space,” said Shailendra Aragula, Country Manager, Lexmark India.
After steady growth in FY11, the segment saw a slight dip in the beginning of the fourth quarter as floods in Thailand impacted the global supply chain, raising costs. Also India’s own business confidence declined substantially in the second and third quarters of the fiscal.
Printer sales are linked to numerous factors and one more challenge the industry had to deal with is the ramifications of the massive earthquake in Japan. Many companies across segments including biggies like Canon and Xerox felt the heat.
Past Year
After a good start, growth slowed down in 2011 as ravaging floods in Thailand hit the manufacturing industry in a country, which has become a production hub for most global firms.
Also continuing economic sluggishness in markets like Europe and the US did not help matters. The Indian economy too had its share of problems as the global economic uncertainty began to rub on the South Asian giant and business confidence tapered off amid a slew of interest rate hikes. Also the rupee’s staggering depreciation in the third quarter only made matters worse.
FY11 also witnessed a major trend of reduction in prices of printers by approximately 10% as a competitive measure while there was an increase in volume of units sold.
He explained that though the printer sales went down but the printing industry increased considerably. “Consumer sales increased last year although the laser color segment did not grow very well,” said V P Sajeevan, Director – Consumer System Products Division, Canon India.
“The content explosion, mobility and new Web-driven usage models; a movement from analog to digital (21% growth in digital printing as against 2% analog printing growth); and service-driven business models (India is the fastest growing Managed Print Services market in Asia Pacific) were the trends in 2011,” said Nitin Hiranandani, Director – Laserjet Enterprise Solutions, Imaging & Printing Group, HP.
Multifunction vs. standalone
There has been a consistent shift happening from single function printers to multifunction ones given the productivity factor and also as it is cost efficient. To add to it, the cost of an MFP has come down to as low as Rs 10,000.
“We have seen huge growth of our MFP segment to the tune of 50% growth and just about 20% growth in single function printers (SFP) over last year. Epson as a company is planning to capture market share based on this growth which has given us 30-35% market share in the overall printer market,” said Ram Prasad, Deputy General Manager – Consumer Product, Epson India.
Though MFPs are in vogue, however if we go by sales it is the SFPs that rule the market, be it in terms of revenue or number of units sold. While single function laser printers sold about 10 lakh units last year, MFPs could stagger sales of only 3.5 lakh units. In terms of revenue too SFP contributes larger for the industry albeit the future is MFP. In inkjets, this trend has already evolved wherein multi function printer sell about a million units while SFP manage just about 4 lakhs.
“One trend that clearly emerged last year was the popularity of laser printers and this segment will continue to grow. Among laser printers, the growth rate of multifunction devices has been higher than that of single function printers. This year too, MFPs will continue to lead,” commented V Balakrishnan, Vice President (National Marketing), Ricoh India.
“The mid- and high-end printer segment grew and contributed about 40% growth for Canon. A fact that has been emerging in the market is that though the printer sales have decreased but printing has increased manifold. The printing industry is expected to touch about Rs 140 billion by 2014,” said Sajeevan of Canon.
“However, color laser printers did not sell well last year though laser MFP grew 40%,” he added. It was the same for the inkjet single function printers while all-in-one sales grew about 9%.
MFP sales picked up in the second half of the year, giving a boost to overall business. Prasad of Epson reasoned this trend stating, “In the second half, small and medium enterprises started showing a positive trend. The educational institutions too opted for more all-in-ones. Even the government chose MFPs over standalone printers for most of its e-governance projects.”
Mahaonline, a Maharashtra government project purchased 28,000 MFPs. Sajeevan pointed this out as proof positive of the fact that it is not the fact that MFPs are cost-efficient but also a productivity decision that drives MFP sales.
Another interesting trend that emerged last year was that the number of prints taken is higher in MFP than in SFP as MFPs are used to for business printing and it also gives a high printing recess. Moreover, single function printers are largely sold in the consumer segment.
Since business printers are usually network A4 printers, here single function ones are best performers and hence sell more. Through networking printing happens faster, just at a click.
SFP are still more in demand despite the popularity of MFPs and have also got maximum chunk of business. Moreover, it is low cost and justifies consumer behavior where they are looking at cost optimization. Not all customers need a scanner or a copier and hence, for them the more intelligent decision would be to buy a single function printer that just prints pages than an all-in-one. MFP costs are more or less higher by 80% than a single function printer which proves the bulk sales of the latter.
Printing apps
Last year saw some very important trends surfacing in the market that had a significant impact on the imaging and printing industry and will continue to gather momentum this year as well. Some of the key trends were: mobility, content explosion, color printing in office and Cloud printing besides the services like managed print services and document management solutions.
With increasing mobile and Web connectivity, growing adoption of smart phones and other mobile devices, the demand for technologies such as ePrint, which allows mobile users to easily print documents, presentations, reports and photos at their nearest network printer, in office or at home by simply emailing it to the printer’s e-mail address has picked up.
“We empower enterprise users to print from a Blackberry or iPhone remotely,” said Hiranandani of HP.
“Every technology has to be present in mobile form. Anyone who is into delivery, manufacturing etc. has to travel a lot and needs the ability to hit print from anywhere,” said Ricoh’s Balakrishnan.
Next trend that the market witnessed was the content explosion. The growing availability of content in the digital form means that more pages are being printed than ever before. This trend is most noticeable in the growing adoption of printers at home. Simple home printing for normal text and color pages and photo prints are a common norm now. “All-in-ones are rapidly making inroads,” said Aragula of Lexmark.
Color printing too has picked up lately, with most businesses increasingly adopting color printing at a scale never seen before. This trend is driven by the availability of competitively priced color laser printers, and technological solutions.
“Though color as a whole hardly contributes 5% of the industry’s overall revenue, Ricoh performed better here,” said Balakrishnan.
Further, as the Cloud has become popular in India in every sphere of business, it is gaining ground in printing industry as well.
Though the market is yet to see a significant shift, experts believe that 2014 will be the year of Cloud. Before that it would be wireless and mobile printing ruling the roost.
Sajeevan of Canon explained, “We can expect a surge once the Windows 8 operating system is launched. More such applications would become popular then.”
Overall, currently the industry is still in its nascent stage when it comes to the acceptance of all these applications given the rudimentary habits of an organization coupled with old apprehensions.
However, Green IT or green printing is being implemented in a big way giving rise to the increasing demand for eco-friendly printing solutions.
CIO’s take
Though all these trends are the latest buzzwords and the hot topics of discussions but most CIOs of large enterprises have not yet adopted any or either of these applications.
UC Dubey, VP-IT, Iffco Tokio General Insurance, said, “At Iffco Tokio, we use a combination of laser and multifunction printers for our printing needs. Though we are planning to implement mobile printing but the Cloud is yet a faraway thought.”
According to Dubey, managed print services too was not very appealing and hence was discontinued after a brief stint.
Voicing the same opinions, Girish Rao, Head IT, Marico Ltd, a leading FMCG company, said, “Currently, we are not using any of the technologies and are not planning to implement them either from the sheer fact it needs investment and skilled workforce.”
Marico uses laserjet printers usually but also has a few MFPs for its high end printing needs.
Predictions for 2012
The year 2012 is expected to be a bag full of goodies as according to the research analysts as well as industry.
IDC and Gartner both have predicted double digit growth in 2012 with the Indian economy gaining back the lost momentum. “The lending rates are down again prompting the industry to move forward and so is the foreign exchange rate leading to rupee appreciation. Even the stock markets are performing better which has brought back the good buying mood,” said Sajeevan of Canon.
He explained further saying that the first couple of months may remain tight as a reflection of last year, however, growth would pick up from April. “The printing industry normally behaves at a rate that’s three times higher than GDP (national income of the country) and with the given GDP prediction we can expect better business. A lot of government projects too are due given the upcoming elections in lot of states that would lead to huge investments, foreign investments are also coming back and hence creates a positive atmosphere for doing business,” he added.
“The prime reason for the growth in MFP shipments has been due to a spurt in smaller workgroups, SOHO and SMEs. These organizations buy MFPs initially and then move on to SFPs. Cost optimization too plays a big role in this choice,” commented Ricoh’s Balakrishnan.
“We see a growth of 12-18% in printer segment in India,” said Ram Prasad of Epson.
In the inkjet category, the transition from SFP to MFP is already happening leading to lower contribution of SFP in terms of revenue – around 20%, as now one can get a MFP at the cost of SFP.
Secondly, consumer printing especially photo and Internet printing is expected to grow with more and more people opting to print at home giving a boost to printer sales. Lastly, Wi-Fi as a trend would pick up and companies will come out with a good range of Wi-Fi printers for Indian consumers. The cost per printing too is expected to come down in a big way with as low as 30 paise per print.
In the laser segment almost similar things are expected with the expansion of businesses and hence printer sales. “MFP sales are catching up and especially in the networking segment. Networking is the keyword now and if you see business of networking will grow faster here,” Sajeevan said.
Lastly, from second half of this year, Cloud printing is expected to emerge as a key trend. Also, devices with Windows 8 compatibility will be launched.
Challenges
Printers, copiers and document management have never been the most favored area in the IT department’s eyes. As a result, it has not been a focus area for CIOs. However, the continued focus on corporate cost cutting has led CIOs to focus on MFPs paving the way for higher adoption. “There is need for more awareness and maybe, better campaigns that would facilitate the adoptions of MFPs across all verticals,” said Aragula of Lexmark.
“The PC industry has been the biggest challenge last year due to Thailand floods and European sluggishness. With the recovery of worldwide economy, we can hope for a better year ahead,” said Sajeevan.
Secondly, profitability in this sector is very low and needs to be brought up. One reason was the forex rate, however, more needs to be done on this front. “Companies also need to support channel partners in making better profits,” Hiranandani said.
Choudhury of Gartner believes that upselling needs to happen and for this channel partners need to be educated. Lastly, value added services are a must have in this era of competition. VAS differentiates one company from the other and hence promotes better sales.
Final thoughts
Last year was marred by a series of mishaps from slow economic growth to natural disasters. However, with the dawn of new year, positive growth is expected with the launch of new technologies.
Increased mobile and Web connectivity across all major cities in India and the fast-growing Internet population will fast change the way consumers interact with content. Companies will have to continue to deliver Cloud-led and Web-connected innovation that would allow people to seamlessly integrate print into their digital lives no matter where they are.
In addressing students and home-user’s needs to print a considerable volume of study materials, there will be a demand for high-capacity ink, allowing for high-quality and reliable printing at affordable prices.
Energy saving is another factor that will drive new variations in technology since not just corporate but also government are promoting Green technology in all spheres of life.
To sum it up, it would be a mix of cost efficiency with business productivity that would rule the Indian printer bazaar.
