More reliable than e-mail, fax delivers peace of mind
Susan Avery -- Purchasing, 4/17/2003 2:00:00 AM
In the market for a facsimile machine? If, as a corporate office equipment buyer, you have not purchased a fax machine in three or four years, you may be surprised to learn that a copier-based multifunction product (MFP) may best fill requirements of your internal customers. In fact, you may find that some manufacturers have stopped offering single-function fax machines all together. MFPs have capability to perform a multitude of functions; in addition to copying and faxing, these machines have capability to scan as well as print.
"All our fax machines come with some kind of multifunctionality or are positioned to provide additional upgrade capabilities such as Internet faxing and network printing and scanning," says Christine Sedlacek, assistant director of marketing, Integrated Business Systems Division, Canon U.S.A., Inc. "A fax is not a fax anymore. It's a communication device and it needs to be able to offer additional value to a customer."
Increased demand for multifunction products is one factor impacting facsimile sales. Analysts at Gartner, Inc. see a big drop in placements of workgroup fax machines. "We forecasted a small decline in the market in 2002, but in reality units fell 20%," says David Haueter, senior industry analyst. For the workgroup sector (consisting of both laser and LED fax machines), he expected a little more than a million units to be shipped last year. The actual number is closer to 850,000 units.
"More standalone fax sales are being lost because of fax boards on digital copiers," says Haueter. "MFPs have been around for a few years. I think people are becoming more comfortable using them" after purchasing them for their home offices.
Other factors contributing to a drop-off in fax sales: fewer dedicated fax sales people, the sluggish economy and use of email to send and receive documents.
Looking ahead, Haueter expects the steep decline in sales to continue. "Last year we forecasted workgroup fax falling 2% annually through 2006," he says. That outlook seems optimistic, after the drop in 2002. He plans to revise his forecast downward.
Manufacturers echo Haueter's comments. "Over the next three years we see a small decline in the total fax market in both the U.S. and Europe," says Doyle Riley, product planning manager for the Xerox Office Group. "Specifically, we see the traditional single-function fax machine sector rapidly declining, being replaced by fax-based multifunction products." Riley sees some sales growth in the low-end, or personal fax, unit segment. One contributor: Some workers who have lost jobs in the corporate sector because of downsizing are turning to free-lance and contract work or are starting new businesses. They're buying MFPs for home offices at retail outlets.
As a result, demand for one type of personal device, flatbed inkjet fax, is picking up. Hewlett-Packard recently introduced its Officejet d series MFP for the small office/home office which has print speeds of up to 19 pages per minute (black and white) and 16 ppm (color). Low acquisition cost (users can replace those older thermal transfer units), fast print speeds, color print capability (a plus for users without access to email), network connectivity and availability through the retail channel all are attributes which contribute to the attractiveness of inkjet fax. At many companies, low-end MFPs are considered expense items; available for less than $500 they can be acquired by users without having to go through central purchasing processes.
As a technology, fax is not going to go away any time soon. "It's too big a market to disappear entirely," says Christy Stevenson, product manager, Brother International Corporation. Others in the business point to continued widespread use of fax by the legal, financial and medical industries. "Although they have electronic tools at their disposal, they tend to rely on hard copy documents," says Sedlacek of Canon. Gradually, however, users of fax technology are moving to other ways of communicating hard copy documents, particularly via email or scan to e-mail technology.
"Availability of affordable copier-based multifunction machines and widespread use of email are both impacting the fax business," says Riley of Xerox. "But it's going to be a long time before fax goes away altogether. It is ingrained in people's minds and the way they do their work. It's easy to use and happens in real time."
Canon's Sedlacek agrees. "The standalone fax certainly is not going away. It will not be replaced by email. For one thing, fax is more reliable than email, whose attachments may contain a virus. Users receive immediate confirmation upon delivery of the document. It's easy to use and brings a peace of mind you don't get with email. There's a very high price tag placed on that green button."
Demand and supply
As such, there are no problems with supply or availability. Delivery is on time. Most corporate buyers purchase or lease fax machines through the reseller channel. Increasingly, however, some are purchasing fax machines from retail outlets, some of which now have catalogs and distribution channels devoted to the corporate sector. Manufacturers are stocking shelves with fax machines with print speeds of to 15 ppm, high-speed modems and price tags of less than $500. Similar units were selling for more than $1000 just two years ago. "Retailers are very aggressively going after corporate customers without asking them to go into the store," says Stevenson of Brother. "It's never been so easy for buyers to comparison shop."
Along with having new sources of supply for fax, corporate buyers are looking for fax machines sporting functionality different from those machines of the past. Until 3-4 years ago the focus in the corporate environment was on high-volume faxing. But ways workgroups are managing documents have changed; users often opt to send documents via email instead of fax. So buyers are looking to purchase fax machines with a lower copy per month duty cycle. Instead of 20,000 to 30,000 copies per month, they now have requirements for machines with an 8,000 copy-per-month duty cycle. "This, coupled with affordability, substantially increases the number of units they could place in an organization," says Stevenson.
Prices for facsimiles are starting to fall a bit, manufacturers say. "It's not a huge drop," says Riley of Xerox. "But as we track prices year over year for similar types of products we see a decline of 5% on average." What tends to occur is that many manufacturers offer products at the same price with additional features (faster print speeds, more paper capacity). "We build a lot of value into the device by offering Internet fax and network printing capabilities," says Canon's Sedlacek.
It's not difficult for manufacturers to take costs out of a unit because users no longer expect fax machines to perform the same functions, says Stevenson of Brother. More important, users are looking at what it costs to operate a fax device in relation to other units more than actual workload.
Manufacturers have programs that help corporate buyers determine the optimum mix of office equipment needed to keep an office running smoothly. Xerox's Office Document Assessment, for instance, looks at enterprise use of documents and ways companies may reduce costs. On average, 40% savings can be accomplished by using one piece equipment for more than one activity or function, says Riley.
What's new?
While manufacturers say there is no new whiz-bang technology on the drawing board that will help slow the decline in fax machine sales, they continue to enhance the devices. Such functionality demanded by users as print speed and resolution of fax-enabled copier-based MFPs is expected to keep pace with units being manufactured by the printer industry. In addition to faster print speeds (quicker than 19 ppm), buyers should see innovative new designs (such as larger LCDs to accommodate input of email addresses) from manufacturers.
Gartner's Haueter says buyers should expect manufacturers to continue to introduce MFPs with computer connectivity. He cites the Sharp FO-DC500 and Canon LASER CLASS 700 Series as examples. Canon designed its 710 model as a standalone fax capable of upgrading to support additional applications; the 720i and 730i are Internet-fax enabled.
"But, based on the trends we've seen in the market over the past five years, we believe this is going to be a difficult sell for manufacturers, he says. "The reseller is focused on selling copier-based MFPs, not the fax as a device that can be connected to a computer network. It's up to manufacturers to provide the sales force with proper training. What may help is installing the same software in both devices. Sharp has done this with its FO-DC500. It has the same software as its copiers." The Sharp FO-DC500 Super G3 Document Communication System provides 16 ppm scanning and printing as well as faxing.
At the same time, manufacturers will be dropping some high-end features (batch transmission, confidential mailbox) not as popular with many users. In their place, buyers will see more scan-to-email and Internet fax capabilities. Manufacturers will be positioning fax as a scanning device (to an email system) and suggest users begin thinking of the technology as sending a document to a location (a server or email address) rather than to a destination (phone number).
Corporate buyers should keep an eye out for such security features as encryption (some faxes have capability to hold a document in memory which can only be printed once a user enters a password), and watch for a merging of low-end fax and copier-based MFPs. Such a device would have both a document feeder and a platen (a plus for scanning irregular-sized documents).
It appears that the jury is still out on the need in a corporate environment for a fax device with capability to send and print documents with color.
Gartner's Haueter sees color as "one of the real growth segments" in the office.
On the other hand, Sedlacek of Canon says that corporate buyers may not be willing to part with additional dollars for color capability, turning instead to email.
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