Copier, Printer Solution Providers Join Forces

That's the conclusion reached independently by PrinTrax, a veteran player in the copier market, and Sigmanet, an established IT solution provider. Each organization realized it knew its own market well but was flying blind when it came to assimilating the new world created by the convergence of the copier business, printing and IT networks.

But with Hewlett-Packard acting as matchmaker, the two companies have pooled the experience gleaned from their respective businesses and formed a strategic alliance to capture the complete networked printing market, including supplies and service.

Daniel Ruymann, senior director of HP business development and marketing at Sigmanet, an Ontario, Calif.-based solution provider, explains that seasoned players such as Ikon, Ricoh and Xerox have ruled the copier world. "They have a very different sales motion than does the IT VAR," he said. "They typically sell on a multiyear lease with a cost-per-page that incorporates service, supplies and profits. Honestly, we tried to go that route, but at the end of the day we couldn't understand the financial models used by the copier industry."

A contract might yield some bewildering figure like 2.145 cents per page, Ruymann said. "We didn't know how they derived those numbers. It was a nightmare trying to understand where the cost models were coming from. We simply couldn't do it. ... It became evident that if we were to take the relationship to the next level and be at the forefront of this new convergence movement in the printer and copier world, we had to partner with someone who had that expertise from the get-go," he said.

Enter PrinTrax. Jon Hafey, PrinTrax co-founder and vice president of service and operations, explains that the copier business is a very relational type of sale and usually goes through a procurement or facilities manager. On the other hand, printers, because they are connected to IT networks, most often go through the IT department. "You have two fundamentally different types of people making decisions," he said. "The print world is operating on constrained margins and can't provide the service and relational type experience you get with copiers. And printer guys can't afford to provide all of the services that you need in the copier world."

Starting this year, PrinTrax and Sigmanet launched a joint venture to bridge the gap between these two business models. Armed with HP's lineup of MFPs, the two companies are mounting a coordinated assault on the new merged environment.

"Instead of treating the market as copiers or printers, we now treat it as the market share of potential pages within a customer," he said.

While PrinTrax brings to the table the copier, price-per-page business model, which includes supplies and service, Sigmanet adds the relationships to the IT departments and a broad customer list of SMB accounts.

Ruymann noted that the copier industry feels threatened because the new breed of MFPs is designed for IT networks and, therefore, it is trying to make its products more network-friendly.

"IT departments don't feel comfortable with these devices that were stand-alone for many years but only recently have become network friendly," he said. "But HP and their printer products have always been network capable and IT knows that if they connect an HP printer to the network, it won't crash it."

NEXT: Taking a consultative approach Mark Thomas, PrinTrax co-founder and vice president of sales, agreed.

"IT drives what's on the network," he said. "Sigmanet has a great relationship with IT and we know [IT departments] are very accepting of HP. The only thing lacking is their MFP knowledge and we bring that to the table."

While the joint venture is just a few months old, PrinTrax and Sigmanet project that their alliance will generate a 200 percent annual growth rate for the next three years.

As a result of the alliance, Sigmanet is adding a consultative approach to how it sells printers and MFPs, which is yielding incremental demand for hardware and services.

"One of our midmarket accounts is in a rapid growth mode and they came to us and asked about purchasing printers," Ruymann said. "With PrinTrax's help, we were a little bit more consultative. We asked, 'What copiers do you use? How many fax machines do you have? What's the office layout going to be when you move to another location?' By asking these questions, which we wouldn't have asked in the past, we crafted a customized printer services agreement."

In addition, Sigmanet estimated the number of pages the company produced under its current lease and forecast how many pages it would produce in the future. He said they were able to show the client that it was only printing about 10 percent of the pages it was being charged for under the company's current monthly lease contract.

Because of this, Sigmanet negotiated a buyout of the lease on two Canon copiers and installed a whole fleet of HP MFPs and printers along with a consumables and service contract.

Hafey said IT solution providers need to quickly develop business models to address the convergence between copiers and printers.

"If you are an integrator and you have a great account base, the competition is trying to get in your back door and they are leveraging a print management strategy to do it," he said.