PC connectivity is coming!
By Susan Avery -- Purchasing, 1/13/2000
Although corporate buyers are purchasing new digital copiers in record numbers (by 2003, 70% of all copiers placed in the U.S. will be digital), they still appear hesitant to connect them to company computer networks.New forecasts for placements of copiers available from CAP Ventures, Inc., Norwell, Mass., show a connect rate of about 60% for those units placed in 2003.
"We expect the market to change by about 95,000 units between now and then, for growth of about 61% through 2003," says Robert F. Sostilio, group service director, converging digital peripherals, North America/Europe, CAP Ventures. "These figures are for digital, standalone copiers, with a connect rate of 60%. What the customer is saying is that he still needs a copier out in the hall that doesn't have to be hooked up to anything." Sostilio was one of several CAP Ventures researchers delivering a forecast for the office equipment market at the firm's second annual Converging Digital Peripherals/Integrated Office Conference '99, held recently in Boston.
Looking at the copier market by segment, CAP Ventures numbers show that most of the personal copiers being placed are analog machines (those that use light-lens as opposed to digital technology to reproduce documents). In this segment, copier manufacturers Xerox and Sharp are the only ones that have introduced digital units. Likewise, copiers in segments two and three (those that produce more than 25 copies per minute, or cpm) currently placed are mainly made up of analog units. "Still, our forecast out to 2003 shows every segment will be predominately digital by then, with connect rates running from about 70% for personal units to 100% for segments five and six," says Sostilio. (Copiers in segments five and six produce upwards of 50 cpm.) "So, while the average may vary by segment and by application, every unit sold beyond 2000 will have to have connect capability."
The color copier market in the U.S. grew by 34% to 74,100 units in 1998, in part because of falling prices. Still, much of the growth was fueled by strong demand for inkjet color copiers from Hewlett-Packard; excluding figures for these units leaves growth relatively flat at 4%. Connect rates are running at about 65% to 85%. The top three manufacturers (HP, Xerox, and Canon) make up 87% of the color-copier market. At the same time, the three top laser manufacturers represent about 77% of the total market. "The point here is that if you are selling digital, you have to be selling a color solution," Sostilio told the copier manufacturers gathered at the conference. "If there is no color in your digital solution, you are missing an opportunity."
Snapshot of the copier market
First, the worldwide market for black and white analog and digital copiers: Since the introduction of significant quantities of digital copiers in 1997, this market has grown on a worldwide basis of almost 9%, says Sostilio. In 1997, unit placements totaled 4.5 million. At close to 5 million units in 1998, this robust market is being supported by strong demand in the personal copier segment. In the U.S., total unit placement growth came to about 6% from 1997 to 1998.
The worldwide market for color copiers in 1998 and the early part of 1999, too, has been relatively flat, at 112,000 units placed. Sostilio points out various reasons: For one, many copier manufacturers did not introduce new color models in 1998. (Canon introduced its 2400, but did not ship it until late in the fourth quarter.) Then, there was some disruption in the distribution channel over the sale and servicing of these units. And then Xerox created some confusion of its own by setting different prices for the same products.
Looking at the worldwide market for black and white digital copiers shows placement growth of roughly 86%. Extremely healthy on a worldwide basis, this market still represents just 1.2 million units. At 28%, the U.S. share of the worldwide market alone grew by more than 240% in 1998. This share was 15% in 1997.
In the U.S., the market for black and white copiers is relatively healthy, with unit placements growing 6% to nearly 1.8 million units in 1998. Again, demand for personal units drove this growth. Looking at the market without this segment finds growth of only 0.9%. Digital copiers make up 19% of this market. Connected units represent 9%. Without figures for digital units, the U.S. copier market in 1998 actually contracted by 8.6%. Market leaders Xerox, Canon, and Sharp have about 69% of the total analog and digital market, a figure which, as Sostilio points out, hasn't changed much in the past four years.
Digital drivers
Of 100 copiers introduced last year, 84 are digital. Of 147 models launched in 1998, 76 are digital. Xerox, Canon, and Ricoh drive the market for digital copiers.
In the U.S., Xerox has 30.4% of the black and white copier market, 39.8% of the black and white digital market, and 33.4% of the color copier market. "We expect Xerox to hold onto most of this during 1999," says Sostilio.
Canon has 28.3% of the black and white market, 8.7% of the black and white digital market, and 31.4% of the color market. "Making significant inroads in the overall market for black and white copiers in the U.S., Canon only had a small percentage of the digital market at the end of 1998," says Sostilio. "At 31.4% of the color market, the company is very close to Xerox."
Ricoh has 4.5% of the black and white market, 13.3% of the black and white digital market, and 12.8% of the color market.
"At 4.5%, Ricoh has a small percentage of the overall market, but is very persistent with its digital strategy," says Sostilio. "These figures do not include Ricoh subsidiaries and OEMs; if they did, Ricoh's numbers would be much higher."
The need for color
"We think that color will be a function of multifunction devices," says Sostilio. "Color products per se will not be color copiers or color printers. Corporate buyers will actually be able to purchase an appliance with 'color capability.' So we don't think color copiers will give way to color multifunction devices. Basically all printers now sold in certain segments are black and white printers with color capability, and we believe that this type of strategy will continue: Users want to offload color documents they capture either on a Web site or transmitted over the Internet. We look at color copiers really as high-speed color printers that have been connected to a computer network, or color output devices. When these devices are put on a network, the network sees them simply as a color output device. It never asks whether there is a sheet of paper lying on the glass. So we will be seeing 22 ppm and faster color devices that will be hooked up to networks as high-speed color printers."
This trend, Sostilio points out, is going to allow total cost of ownership to become more significant in selling color than in the past. "Before, if a buyer purchased a color copier he or she actually paid a penalty to make a black and white copy. The trend now is for manufacturers to produce a color copier that will produce a black and white image on a sheet of paper at less than or equal to that of the price of an analog device. So it's very simple. Purchasers can have a black and white copier in a workgroup space and not be penalized at cost per copy--paying for color only when necessary--and we think the same will appear with a printer strategy. Look at color-based printers, for example. These models are being sold as high-speed 40 ppm black and white printers that, by the way, produce 12 ppm color if needed."
This brings up the issue of cost: How much does it cost to make a color output? Right now, there is no standard metric; however, there is a battle on the Web between a company in Ireland and HP and International Data Corp. here in the U.S. over measurement of a standard image, says Sostilio. Images run from 7 to 35 to 235 colors per page. "Until a standard is developed and agreed upon, it really is anybody's game as to the total cost of ownership. So we are suggesting that as color goes forward we will need to know what standard coverages are, the standard font of a color document, standard paper size of a color document, and does total cost of ownership mean cost per copy or the running cost of that device, and then where do the savings come?"
Digital strategies of manufacturers
Setting its sights on Xerox in 1998, Canon launched a number of new copiers (two digital and 17 analog models that year alone), boosting its product portfolio to about 18% digital (out of 30 models with seven color models to 31cpm). This figure continues to grow as the company adds new models to its imageRUNNER series.
Konica continues to successfully leverage its 7050 and 7060 models. It has launched three workgroup digital models as well as a color copier solution in early 1999. Its black and white portfolio is 28% digital.
"Lanier we admire as a marketing company," says Sostilio. "They really have an advantage and can become 100% digital quicker than any other company because they are not a manufacturer. They can pick the best of breed from all their suppliers." Lanier recently announced a global alliance with HP, which is helping it to penetrate some major account business. Its product mix is now about 27% digital. By the end of the year, Lanier will be spun off of its parent company, Harris Corp., making it a standalone company again.
In 1998, Minolta doubled growth of its color market in the U.S over 1997 figures. Adding four digital models in 1999 as well as a new color model brings its digital portfolio to 16%.
Now a wholly owned subsidiary of Kyocera, Mita has launched a series of digital models in 1998 as well as a color copier in 1999 that brings its portfolio to 29% digital.
Oce continues to struggle; its high-speed color copier has been as successful as the company had expected. With two new analog units and one new digital model in 1998, the company's mix is about 29% digital. With flat sales growth last year, it has gone through a staff reduction worldwide.
Panasonic has launched facsimile models and three digital copier models in 1998. The company has been emphasizing its direct sales strategy at the expense of its dealer channel. "We think the company has stubbed its toe lately by letting go of a number of field support people," says Sostilio. Its portfolio is 21% digital.
At close to 56%, Ricoh has the highest portfolio mix of all the copier manufacturers. In 1999, it launched 10 digital units, new color, and an 85-cpm digital machine. "We understand the company will continue to make significant model introductions in 2000 as well," Sostilio says. "So Ricoh continues to be among the strongest."
Sharp has done an admirable job of rebuilding its dealer channel in 1998-1999, says Sostilio. The company launched its Imager series, introducing eight new digital models by year-end 1998. For 1998, its black and white market share was 9.7%. In 1999, it created a new organization, Sharp Document and Network Systems of America, headed by Joseph Pickard, a 21-year veteran of Xerox.
Toshiba launched Minolta's color platform in 1997 and by the end of 1998 had three digital models. Early in 1999, the company announced four new digital models and showed a 22-cpm color copier at CeBIT. It has a 42% share of the black and white market. "Toshiba also has a new organization very similar to what we are seeing other companies doing," says Sostilio. "Everyone is trying to align their engineering staff with its support staff under the umbrella of marketing so they can aggressively support these digital devices."
Xerox created a new image for itself in 1998, becoming a "document company." In addition to the company's acquisition of Tektronix, it also announced an alliance with IBM, Microsoft, and Compaq. Its portfolio contains a small percentage of digital models mainly because it manufactures so many different kinds of copiers. Still, it has 61 digital models in it. "They've done an excellent job of introducing new digital devices this year, adding six new black and white models," says Sostilio.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
