The Top 13 Trends for 2011 If you read my article last month on the Top 10 stories of 2010, you may be able to predict some of the industry’s trends for the upcoming year. If you didn’t read that story, but you’re more than a casual observer of the office technology industry, you shouldn’t have much difficulty making some educated guesses as to some of the trends for the coming year. Leaving nothing to chance, we contacted some of the industry’s leading analysts and movers and shakers to get their opinions on what we can expect to see over the next 12 months. What we gleaned from those conversations are a baker’s dozen of trends, some obvious and a few off the beaten path. And if some of the trends seem to contradict each other, so be it. It’s all part of the prognosticator’s game. Number 1: The Industry Continues to Struggle with MPS It’s no surprise to see MPS the top trend for the coming year even though the industry is still grappling with the concept. “When you talk to dealers and ask them, ‘Do you have an MPS program?’ they all say, ‘Yes, we’ve got one,’” says Bob Sostilio, president of Sostilio & Associates. “Then when you ask them how many machines they have under contract, they don’t know. There’s a big disconnect between what the experts are calling managed print services and what dealers define as managed print services.” “There’s still a lot of room for cost savings for medium and large enterprises to adopt managed print services so the story goes on in 2011,” adds Keith Kmetz of IDC who cautions the dealer community that MPS is more of a way to protect market share than win new business.” “My spin on MPS is sort of good news bad news,” says Brian Bissett, editor of The MFP Report. “I see quite a few vendors trying or retrying to figure out a channel-based MPS offering that works and it’s everybody from the copier guys to HP to Lexmark and everyone else. It’s a renewed emphasis on trying to get it right with channel-based MPS.” “If there’s a major trend this year as it relates to MPS it’s that dealers have begun to figure out that it’s not what they thought it was and they need to strategize accordingly,” states Lou Slawetsky of Industry Analysts. “It doesn’t minimize the potential that is there. It’s not a growth market in terms of increasing the overall number of impressions being made, it’s a shift. In fact if you do managed print services correctly, you actually decrease the number of pages being printed.” Number 2: Big Dealers Buying Smaller Dealers What’s the big dealer to do if he wants to grow market share these days? Buy a smaller dealer. “There are opportunities out there for dealers who have cash to make acquisitions,” says Sostilio. “The more I talk to dealers, I’ll bet 90 percent of them say the only way they’re going to grow their business is through acquisitions not by capturing someone else’s market share.” Number 3: A4 Keeps Growing Bissett describes A4 as the hard copy version of the year of the network. Still, this could be the breakout year for A4 technology as more vendors focus on this space, most notably some of the bigger copier/MFP OEMs who have been proceeding with caution down the A4 path. “Based on the momentum in terms of product launches, you’re going to start seeing A4 eating into A3 more and more,” predicts Bissett. “Customers are starting to understand A4 doesn’t have to be a perfect replacement for A3 across the board, but it is an alternative in some cases. Certainly by the end of 2011 every manufacturer of every stripe will have what they consider to be their heavier duty office-aimed A4 product line, which is something you can’t say today.” “In 2011, dealers seeking to further strengthen their dealership will look at adding a secondary product line, such as Lexmark or Samsung, in order to add attractive low-cost placements to complement their primary-line hardware offerings, adds Business Technology Association President Rock Janacek. “These attractively priced units can be used to land new business or help fill a larger order and still keep the offering price low.” Number 4: Solutions Providers Embrace A4 Historically, third party and home grown solutions providers have ignored the A4 market and focused on A3 devices. Expect that to change in 2011. “There seems to be awareness that A4 must be connected to solutions whether it’s for capture, or MPS, or whatever, and that A4 MFPs have to be part of the solutions offering as well,” states Bissett. “Right now they kind of exist in their own world.” He sees more solutions providers targeting the A4 space and not just on the higher end of the A4 market, but on A4 devices starting as low as $500, particularly as these devices become an important component of an MPS engagement. Number 5: Contraction of Solutions Providers After touting dozens upon dozens of solutions providers, the OEMs may very well be ready to say enough is enough, or too much is too much as mergers and acquisitions expand into the solutions arena. “There’s only so many ways you can wrap a piece of paper, capture it, code it, and index it,” says Sostilio. “There are a lot of software solutions companies and a lot of overlap of applications. You might see mergers and acquisitions take place for them to survive.” Number 6: Environmental and Sustainability Initiatives Spread the ‘Green’ Brace yourself for a growing emphasis on sustainability and ‘green’ in 2011. The end of 2010 saw several announcements—FMAudit rolling out green reporting software, new recycling programs from Konica Minolta and Xerox, Ricoh Electronics installing a rooftop solar energy system, and Clover Holdings expanding their recycling footprint by acquiring Environmental Reclamation Services. “I think we’re going to see more emphasis on green throughout the industry,” states John Shane, Director of InfoTrends advisory services for communication supplies. “An interesting thing we saw in our recent MPS study of providers and people who use MPS, is that they see the OEM as greener than third-party suppliers. That’s probably because most OEMs have a recycling plan to take back empties. The ‘reman’ folks have a good story with reuse, but there’s not a lot of those cartridges that are collected and reused, and the new build product in the aftermarket, there’s not a lot of collection on the aftermarket side to take those cartridges back.” That may change with Shane saying he wouldn’t be surprised to see new competition to be green among all suppliers in the coming year. Number 7: Balancing Out Distribution Which distribution is best: dealer, direct, or both? The OEMs may be ready to figure that out in 2011. “This is the time when most companies are trying to rationalize the conflict between their channels,” says Industry Analyst’s Slawetsky. “All the OEMs who were exploding the size of their direct distribution are realizing they can’t afford to do that and those that were behind are quickly realizing you can’t survive on dealer distribution alone and there needs to be a marriage of the two and the marriage is a compromise. Maybe it’s some of these rules of engagements contracts that we see floating around and both sides are convinced that they’re giving up more than they’re getting. What they’re getting is the ability to co-exist in the same marketplace under a specific set of guidelines.” Number 8: Moving Beyond the Core Business into Services Could services, and not just managed print, be the next big thing? Slawetsky and Cannata think so. “Look what Xerox did with ACS and HP with EDS,” says Cannata. “On a lesser scale, manufacturers will be forming stronger relationships or acquiring services type companies. But that will be done regionally, not globally.” “IBM realized years ago they couldn’t make money selling hardware, so they did it with services,” adds Slawetsky. He predicts that within five years, the services that ACS provides will make up half of Xerox’s business. “I don’t know if that means the overall revenue of the company decreases and therefore ACS gets a bigger piece of a smaller pie or whether their growth will be incremental to the corporation,” he explains. “I don’t know which way that goes, but I know it becomes more significant to them where their solution is no longer tied to the number of pages being generated. That’s a huge shift for them and a huge shift for HP who is doing the same thing with EDS.” Number 9: The Industry Gets Serious About Intellectual Property This past November, Panasonic issued a press release about how they are ramping up their efforts to protect their copyrights, trademarks, and intellectual property, while boasting of their cooperation with authorities in confiscating a huge batch of counterfeit fax toner cartridges with counterfeit Panasonic labels. This could be a harbinger of things to come. “The most important thing I see coming over next year is more emphasis on intellectual property by the OEMs,” predicts InfoTrends’ Shane. “There’s been a lot of claims in courts about infringing products and I think that’s going to intensify. I think you’ll also see many people in the aftermarket become wary of some products. Most guys in the aftermarket don’t want to deal with products that may be infringing so there may be a shift back to the ‘reman’ approach, which has far fewer pitfalls than some of the rebuild products coming in because people are becoming suspicious of them.” Number 10: PC-less and Cloud Printing IDC’s Kmetz predicts there’s going to be more talk in 2011 about mobility, printing from non- PC sources and bypassing the PC to go after page volume via Web enablement, cloud printing, and printing from a smart phone. “The big issue for 2011 is cloud printing,” states Cannata. “More manufacturers will incorporate cloud technology in their devices or through partnerships that facilitate cloud technology.” “Whether you want to believe HP’s message or any other research, as people use handheld devices more and more as their computing device on the road, they’re going to want to print from it,” adds IDC’s Kmetz. “I’m not saying there’s going to be a lot of page volume from these devices, but people are going to want to print when they want to, wherever they are.” Number 11: Corporate America Continues to Push Back on Color Not that color is going away, but all the excitement and all the predictions that more or less came to fruition within the past five years regarding color in the office have simmered down and we’re finding more organizations rethinking how they’re using color and whether or not purchasing a color device was the prudent thing to do. “After all these years of color you would think you’d see more than 30-35 percent of units sold through the dealer channel in color and you’re not,” reports Slawetsky. “You would think in those that are sold you would see more than 25 percent of the page volume in color and you’re not. It’s been pretty stagnant for years. Maybe it’s a sign of the economic times, but there’s a pushback in color where companies are saying, ‘I like color but I can’t afford to like it so much.’ So they’re becoming more judicious in its use.” Number 12: Leasing Companies Show Dealers the Money Ask virtually any dealer how tough it’s been to get approvals from their leasing companies over the past 2-3 years, and they’ll pretty much all say that the number of approvals have sunk like a stone. But things are looking up and may continue to do so in the coming year according to MRC’s Cannata. “The only good news we’ll be hearing is there will be a lessening of the pressure on the financial side and leasing companies are getting a lot easier in terms of approvals,” he says. “That will be huge this year if it continues.” Number 13: The Paperless Office Re-Emerges Just when you thought that horse was beaten to death and buried back in the Reagan years, it’s back. “One of the biggest question marks is, as the economy recovers, does that mean hard copy recovery?” questions The MFP Report’s Bissett. “Recently we’ve seen a couple of good quarters that are making up for the big drop in ‘07 and ’08 although it’s not clear if the recovery in hard copy will peter out as the overall economy improves. A lot of companies are questioning not just the MPS aspect of this, but particularly medium and larger companies are thinking more broadly than a lot of the vendors are in terms of how to redesign paper out of a particular workflow operation, not how to put it on another device or a better device.” Related to the paperless office trend is what’s happening with medical workflow, particularly as the medical industry looks to automate even more and forge ahead with initiatives focused on electronic medical records. “It’s all on the cusp of the next 4-5 years from some digital and scanning to all digital—automating workflow to keep up with paperwork regulations,” predicts Terry Wirth of Wirth Consulting. “Paper will be going away. It’s happening slowly, but it’s going away faster than ever once they get a handle on what they’re going to do with digitizing medical information and how they’re going to distribute that.” Wirth contends all channels need to face up to the fact that paper is going away and if they want their son or grandson to take over the business and survive, they need to keep an eye on digital workflow and the breakthroughs that are going on with an emphasis on what the Federal government is requiring in this area. Scott Cullen is a regular contributor to ENX and has been writing about office technology and channel issues since 1986.