Printing Money

Not anymore. Today's printers are becoming secure, robust multifunctional devices that can do almost anything, from producing colorful presentations to electronically routing them at the push of a button.

With the increased emphasis on sophisticated printing and imaging capabilities comes the need for more assistance in getting these devices up and running and managing them more efficiently. This is where VARs come in.

"VARs can show customers what printers they have and what they cost, and they can help customers change machines or route their activity to the most efficient devices," says Cathy Lewis, senior vice president of marketing for Ikon, a $5 billion company that serves as the largest independent channel for printing services in the world.

Ikon resells printing and imaging products from all the major vendors and many of the smaller ones, deploying management services that help customers knit their document production operations together. Lewis says her company tries to represent products from at least two vendors in each category to make sure that every customer wrinkle is covered. "We mix and match products and will go outside of the primary vendors to find products that fill in the gaps," she says.

Ikon did just that recently when it began reselling a Konica production color printer. "The production color category has been growing at about 35 percent per annum, which is the fastest-growing space for companies with more than 100 employees," she says. "The Konica printer runs at 50 pages per minute and provides a price breakthrough that enables companies to bring color production back in-house."

Some of the hottest new products are the copier-based multifunction printers (MFPs), which have finally become an affordable option for many businesses. "The MFP market has grown dramatically in the past five years," says Dennis Amorosano, director and general manager of integrated business systems at Canon. "Customers have historically purchased standalone printers but have begun to migrate to MFPs because the cost is lower over the life of the product than traditional laser printers."

This lower, long-term cost is due to all the different tasks MFPs can perform. "Because they can do other functions like scanning and document distribution, MFPs integrate well with other parts of a company's business," Amorosano says.

Ikon's Lewis says the MFPs are one of the most exciting rollouts the industry has seen recently. "They're in their third or fourth generation now and allow customers to lower costs by moving to a single device," she says.

The increasing affordability of color also is driving this segment, as the cost has shrunk in recent years from 20 cents to 40 cents per page to less than 10 cents, according to Amorosano.

Ann Moser, Ricoh's vice president of printing solutions, says the sweet spot for color printers seems to be under $1,000. She says that the lower costs and increased capabilities of these products has influenced VARs and others to focus more on providing complementary services with their product sales. "We recruit VARs, systems integrators and ISVs who want to bundle services with their products, and they've been very successful in the health-care, education and government segments," she says.

The emergence of affordable color MFPs coincides with an apparent upgrade cycle among customers who have had more basic printers for the past several years. "There's a very large segment of our target market with single-function printers who would like the upgrade option for multifunctions, such as color, scan-to-e-mail and scan-to-file," says Pete Richardson, product manager for Ricoh's scanners and printers.

One choice VARs have to make is which printing and imaging products to represent. Ron Potesky, Ricoh's director of marketing, suggests that resellers pay close attention to the margins each vendor is likely to provide as well as how easily integrated a particular product is likely to be. "It's very important to be priced right, but resellers tell us they're equally focused on products that work well with other products and that aren't overdistributed in the channel," Potesky says. He says, for example, that HP's distribution through the Web, in retail and with its channel partners "creates tremendous price pressure for VARs and compresses margins."

HP's innovative track record, however, gives it a leg up in certain market segments. Lewis says the company has historically taken a more printer-centric approach to its devices, which may have made HP's devices less appealing to some. "Printer-centric devices have higher operating costs, and when the copier capability is added later, it's usually not robust enough," she says. "With its latest devices, HP is playing catch-up because they're a new entrant, but they also have market leadership with their security and networking capabilities."

So what comes next? Can any more devices be folded in? Perhaps, but most observers agree that the hardware innovation is winding down, and software is now where the innovative action lies.

Amorosano expects to see upgraded capabilities for document distribution and management and for in-house publishing and production. Lewis says Ikon expects almost every printing manufacturer to add affordable color options in the next six months "Software is where the real innovation lies now," she says, "along with services that help customers understand their costs and how to control them, [and] how to manage their devices."