Insights from Lyra Imaging Symposium

Insights from Lyra Imaging Symposium

The Lyra Imaging Symposium was last week, and attendance was up from last year with 150 plus attendees. The conference was a success and the content was intriguing. This year’s Symposium’s focus was “Navigating the Road to Profitability” and covered a number of topics from many areas of the imaging industry including, but not limited to, office printing, printing and the environment, consumer printing and photo output, MPS, supplies and software, and finally, commercial and production printing. The Imaging Symposium is known for containing insightful data on the financial performance of the manufactures, and this year was no different.

Two of the key presentations for the event was on the performance of the printer and copier manufacturers. The top performers included HP, Canon, Ricoh and Xerox. The worst were, OKI, Epson, and Kodak. In the analysis, Lyra compared each company on four metrics, impact of the recession, recovery from the recession, revenue and profitability. HP was the clear leader, while Canon, Ricoh and Xerox competed closely with Canon having the better revenue and profitability, Ricoh having the lowest recession and better recovery and Xerox being pretty solid across the board while having a slower recovery.

When looking at the companies, it appears that the copier companies are eating the printer companies lunch, due to the fact that HP is the only printer company on the best performer list. However, this is very misleading. When looking back, the peak of the hard copy industry was in Q4 2007 and the worst performing quarter was in the first half of 2009. From late 2007 to early 2009 revenue was down 26.9 percent and profitability was down 65 percent. As of Q3 2010, revenue is still down 21.4 percent and Profitability is still down 27.3 percent from the peak in 2007. Overall, the industry has seen a slow recovery to its former glory. While the recession has seemed to plateau, or at least slow, we have a long way to go – just to get where we were. This phenomenon was labeled throughout the week as the “New Normal.”

There are a few reasons why the better performance of the copier companies is misleading. First of all, not all of the revenue is from hardware sales. Xerox has been making great strides in services through the acquisition of ACS. This is helping them gain revenue from new renewable sources. HP, Canon and Ricoh have also had several successes in MPS. The erosion of hardware sales will continue and A4 is becoming the standard. Both of these trends are detrimental to copier companies long term. However, Lyra is projecting growth to segment 4, 5 and 6 color MFPs in the future, most likely due to speed and user-to-device ratio. However, A4 is taking over.

Price pressure is another reason. As hardware sales continue to decline, margin on these sales will also be reduced. Focus has already, and will continue to be shifted to high-margin services.

So, copier companies have performed better financially over the last year, but it’s not due to hardware, copiers versus printers. The companies that have excelled have done so with services, and this trend will continue. HP, Canon, Ricoh and Xerox have made this shift and continue to evolve.

As food for thought, I’ll leave you with this. During the conference, it was proven again, that everyone and anyone is getting into MPS. Copier dealers, IT VARs, office products dealers (even furniture dealers) – they’re all jumping on board. MSPs are moving this way slowly, but steadily. How will the imaging product channels be affected when those that manage IT infrastructure today take over print and document management? How will it affect copier dealers when these MSPs prefer A4 printer-based devices? What’s the future for copier engineer’s and dealers as we know it. A wind of change is coming quickly.

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