By Lou Slawetsky

The last few years have more change, and the potential for change yet to come, than I can remember in most of my years as a participant in the office imaging industry.  I don’t want to age myself, but early on in my career, productivity was measured by how fast you could carve a stone (stones per year, or SPY)! 

Watching the recent changes, I was struck by the reactions of vendors, dealers and industry observers.  Universally, they were saying, “It won’t work!  It can’t happen!  It will fail!”

During all of the years I’ve worked with clients in the office imaging industry, manufacturers and dealers alike, I’ve developed one simple strategic marketing philosophy:  You cannot base your marketing strategy upon the assumption that your competitor will fail.  What if they don’t?   Want some examples?  Read on.

Near the end of 2004, Konica Minolta launched the bizhub PRO 1050 – a monochrome system operating at 105 PPM and offering a duty cycle of 1.5 million pages per month.  Competitive manufacturers quickly passed the word.  It won’t do it.  At Industry Analysts, Inc., we said, “but, what if it does?”  And it did, although not in a typical single shift operation.  Nevertheless, the capability was there and the system became one of the top sellers in its market segment.

Also at the end of 2004, Hewlett-Packard launched the LaserJet 4345 MFP, offering an output speed of 45 ppm, color scanning, fax and auto duplex for $2,495.  What it did not offer was ledger-sized printing.  Competitors said that no one would want it because of a pervasive need for 11” x 17” output.  We said, “But, what if they do?”  And, they did.  In fact, the product went on to become the top seller in its market segment.  Keith Kmetz, program director of IDC Hardcopy Peripherals Solutions and Services, was quoted as saying, “HP’s LaserJet 4345mfp has the potential to significantly disrupt the traditional copier business model by bringing its low cost, no service contract requirement and open distribution approach to the higher-speed office segment. Customers are asking their suppliers for products and services that reduce their costs while maintaining essential functionality. HP is addressing this need with a unique offering in the workgroup MFP market.”  Even today, competitors state that they never run into the product.  If that’s true, they’re just not looking!

More recently, we saw Xerox Corporation purchase Global Imaging Systems in an attempt to capture a larger share of the SMB market – a segment traditionally emphasized by Tom Johnson and his staff.  And the industry response?  The cultures don’t match.  Xerox will never make it work.  But, what if they do?  We’ve seen near term response that included promotional funds so that dealers could buy out existing leases and prevent Xerox from “flipping” the installed base.  We saw Ricoh and Canon stop hardware shipments to the Global network.  Both of these are short term tactics – not the long term strategies needed to adjust to what could be a significant competitive threat.

At the end of the first quarter of this year, Ricoh Corporation reorganized and eliminated an entire brand (Gestetner) in the U.S. In addition, they folded their Lanier branches into Ricoh Business Systems (RBS) to strengthen their direct distribution. Competitors were almost unanimous in stating that Ricoh could never make it work – that the Lanier and RBS cultures were too dissimilar.  But, what’s the impact on the market if, in fact, Ricoh becomes a dominant direct force?  What happens to pricing and margins?  Will dealers take on other brands in order to compete?  What happens if it works?

How about this one?  Hewlett-Packard launches Edgline – a high speed multifunctional color system offering prints at up to 71 ppm.  Users can buy into this system for as little as $21,000 – considerably less than the competition.  In addition, HP claims a savings of 30% or more on most color output. What’s the catch?  It’s an ink jet system.  Not ink jet in the sense that we’ve always known it.  No, it features new ink, new ink head technology and stationary print heads the width of the page.  “It’s ink jet,” says the competition.  It will never work.  But, (getting the message by now?) what if it does? Do competitors have a strategic response ready to go?  Do they have their own versions of this new technology? 

Each of these examples has significant commonality.  The initial move was disruptive to the market.  Konica launched a duty cycle of 1.5 million pages when everyone else was less than a third of that capacity.  HP set a new price level and further disrupted the market by stating that a service contract was not needed.  Xerox added almost 2,000 sales representatives to a market where they had almost no presence – and they did it overnight.  Ricoh potentially doubled the number of direct branches through which they can distribute their products.  HP is attempting to penetrate the workgroup environment with a color technology that could bring significant savings - both in acquisition and running cost.

Do you have a strategy to compete with these potentially disruptive changes?  Have you looked at new technologies?  Have you considered new pricing plans? Have you implemented compensation plans that will lock your sales representative to the page volume of each of their accounts?  Or, do you agree with many of the manufacturers from whom we’ve heard, when they say, “it will never work.”  To those in this category, we ask, “but, what if it does?” u