The Managed Print Services Bubble
There has been an enormous amount of press written about “over the top” valuations by tech companies. A recent GLG post questioned, “Is there a tech bubble?” Fred Moran, a Benchmark Company analyst, said the $25B valuation for Groupon is “rich compared to Internet and e-commerce companies including Google, Amazon, and eBay.”
For your enjoyment, here are some other valuations of tech companies that have become near and dear to most MPS professionals due to social networking, peer-to-peer communication or just plain fun.
Many prognosticators are forecasting another tech pullback based on the valuations shown above. Normally, a decent price to earnings (P/E) ratio for tech firms is in the range of 20-30. The way these firms are valued above is based on their REVENUES, not earnings. I’d hate to calculate a P/E ratio for some of these since they would be astronomical. Learning point: emotion drives many investment decisions.
Compare this bubble to what some call the MPS bubble. There are a few OEMs and resellers/dealers that believe that MPS is still hype. SME Channels reports that “Epson is very clear that business models such as MPS and cloud printing is still hype and does not have a market in reality.” Some companies are early adopters and some are laggards.
Laggards have various reasons for not getting into something:
- They do not understand it.
- MPS is a premature concept.
- “The customer does not understand it”
- “We’ll wait till the market comes to us.”
- “Our brand will cover us.”
- “We need more data to prove MPS is mature.”
- “I know I have to change, but I’m only 5 years from retirement.”
What can be said to these individuals (or companies)? Most consultancies agree that managed print services has become mainstream and the sense of urgency to make the transformation toward services is upon us. Here’s hoping the “tiny bubbles” from Don Ho fame does not cloud their thinking until it is too late.
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Mike, interesting comments about a tech bubbles and MPS. I would add that it is a matter of perspective, if people buy-in to trends or not. For instance, Rick Perry, the Texas governor and presidential candidate, continues to say it is too early to accept the global warming theory. My guess is that he sees it as a reason to inflate government programs. and he wants less of that. That’s his perspective. On the other hand Epson may not find MPS impactful in the consumer markets that they serve. Therefore if it doesn’t impact the world they live in, then it doesn’t matter much. I agree there are lots of reasons to deny a growing trend like MPS. Another reason is that it is also changing as it transforms markets. One possibility is that MPS will become managed IT in a short time. Then someone can say, “See, it never existed.”
David, thanks for your comments – you always provide a well-thought out perspective that readers can consider. I will have to think about your final comment that “MPS will become managed IT in a short time.” At this point in time, I am unsure if they want to tackle MPS unless they see it as adding to their revenue stream. Keep your comments coming.
I personally believe that the managed print services industry and profession are in their early stages and that adds to the core traditional imaging and printing players reluctance to go ALL IN.
The providers are usually a few years behind the larger players, depending on how your view the industry. Cloud services are a good example. Whether Cloud is mainstream and mature depends on who your clients are.
Sometimes those of us watching an industry or the economy get so focused we forget about all those that are not participating in the object of our interest. Growth rates, valuations, forecasts are all futures and speculative.
Speaking of the valuations of these social media and business transformation companies, sometimes the value includes the monetary impact the activities and services of the company being valued may have in the future. Venture capitalist and the investment capitalist are willing to fund and promote companies and technologies that have the potential to change our societies and business models. If the company goes bust then the capitalist has a loss to offset their profits in other successful ventures.
As our world moves forward it seems many of the practical common sense approaches to life and business are being ignored. The speed at which we attempt to live our lives just adds to the complexity. Do any of us really need to be plugged in 24/7?
Joe, good point – sometimes we get so mired in our MPS world things on the “outside” seem irrelevant. I’m with you – attempting to be plugged in 24/7 reduces our effectiveness and can make us dull. This is the greatest time to be alive more than any previous generation. In terms of social media, I guess it comes down to our choice in how connected we really want to be. Friends are very important, but sometimes I just want some down time. Thanks again for sharing your insights and thoughts.