This is an “update” to this post, having just realized that I typed “Xerox” instead of typing “OCE” in the last paragraph of the post. So, the following paragraph is the “corrected” paragraph:
“There is another issue as well. This one's an interesting, if not an intriguing, one. There are reprographers "out there" who have been doing quite a lot of business with Xerox (wide-format) because their relationships with OCE and/or KIP ran amuck. Sometimes because of "terms", sometimes because of "price" and sometimes because OCE or KIP did not like how those reprographers were paying (or, I guess I should say, not paying) their bills. Those reprographers may realize the biggest adverse impact from Xerox's decision.”
How Will Xerox’s Decision to Discontinue “Wide-Format” Impact Reprographers, Xerox Wide-Format Dealers, and the Reprographics Industry’s Other Manufacturers of Wide Format? Blog author’s commentary and opinions.
Overall comments.
Yesterday’s announcement from Xerox Corp that it had made a decision “to stop taking orders for wide-format products in the U.S. and Canada in 2011 (with specific timing based on inventory levels)” was an interesting and, I believe, a very significant development. In the e-mail I received from Xerox Corp’s Director, Business Groups, Public Relations, Ms. Patty Quinn (and that e-mail carried Scott Frame’s name as well (Scott is VP of Wide-Format, Xerox), Xerox also said, “Xerox has opted not to invest in wide-format product engineering in 2011.”
Xerox did not say that it was discontinuing its wide-format business forever. And, Xerox did not say that it would not resume investing in wide-format at some point in time after 2011. But, while Xerox did not release a statement saying that it will be out of the wide-format business forever, it will likely prove difficult for Xerox to resume its wide-format business, even if it makes a decision, at some point down the road, to resume its wide-format business. The decision that Xerox made had to have been an extremely difficult decision for Xerox to make. For it was Xerox who first introduced “plain paper” toner-based copying systems to the reprographer marketplace. I fondly recall our first Xerox 1860 (cost was around $115,000, and, yes, we bought the Xerox 1860, we did not rent it), followed by our first Xerox 2080 (cost was around $125,000. After the Xerox 2080 was introduced, it was followed by Shacoh’s first large-format plain-paper system, the Shacoh 920, and the introduction of the Shacoh 920 did have a big impact on Xerox’s market share (not to mention Shacoh’s growth in subsequent years, as it morphed into KIP and became the reprographics industry’s #2 vendor of choice.) Our first “electrostatic” plotter was a Xerox wide-format product. We built our “plotting service bureau” business around that plotter. Xerox’s introduction of the Xerox 8845 represented the first “fairly fast” digital printing system. But, not long after that, OCE introduced one of the most remarkable wide-format printing systems to ever hit the reprographics marketplace, the OCE 9800 (which did revolutionize the reprographics business and industry.) The OCE 9800 had a very dramatic effect on Xerox’s share of the wide-format equipment business. Xerox’s market share fell significantly; at one point, we learned that Xerox was trying to sell its wide-format equipment business; word had it that they could not find a buyer, which, I guess, is why the kept it and continued on. There was also a time when Xerox began to use KIP equipment for the print-engines of at least some of Xerox’s wide-format systems, with Xerox adding its own software to those systems. During the ten year period ,1997-2007, KIP gained market share over Xerox (at least that was the case in the reprographics marketplace), OCE continued gaining market share; both of these led to further decline in Xerox’s market share in the U.S. And, then, the reprographics industry and its vendors got hit by this ugly “Great Recession” (which I refer to as a depression, not a recession.) From my perspective, it is very, very sad to see one of the reprographics industry’s most prolific and innovative equipment vendors -a vendor with one of the most recognizable brand names in the world, withdraw from the wide-format segment of the imaging-equipment marketplace. While I want to say “thank you” to Xerox for being an integral part of the reprographer marketplace and that “I’m sorry to see you bow out,” one never knows what the future holds. Perhaps someday Xerox will renew its R&D and manufacturing of Xerox-branded wide-format equipment.
How will Xerox’s decision affect the other companies in the industry who develop, manufacture, sell and distribute wide-format printers and systems?
OCE will benefit from Xerox’s decision. But, inasmuch as reprographers have been mired in an ugly recession for at least a couple of years by now, I don’t think that OCE will immediately benefit from Xerox’s decision. Reprographers are doing their best to avoid having to purchase new systems to replace older ones. Wide-format color printers are gaining in proportion to wide-format b/w printers (and Xerox never* produced a fast color wide-format printer for the A/E marketplace), so the fact that Xerox will, at some point in 2011, “stop taking orders” for its wide-format b/w printers, will not, in the near term, provide the same huge benefit to OCE that would have been the case had Xerox made this same decision five, six or seven years ago, when reprographers were investing significantly in wide-format b/w printers. (* Yes, I am aware that Xerox, years ago, introduced the Max200 “spot/red” wide-format printer, but that system proved to be a complete flop, much to the chagrin of reprographers who acquired that model.) As the reprographics business comes out of the recession, OCE will benefit. But, secular (whatever that means) challenges may take some of the wind out of the benefits OCE will reap from Xerox’s decision (I don’t think anyone in the reprographics industry is not concerned about A/E/C customers finding ways to avoid printing as much as they used to print “per project”.) I bought shares in Canon yesterday. (Canon owns OCE.) (That’s generally the kiss of death to a stock, for “when Joel buys, it is time to sell.”)
KIP will also benefit from Xerox’s decision. However, I’m guessing that KIP has not faired well during the recession, in spite of the fact that it has some very decent wide-format systems. KIP is not in the “small-format” equipment business. Being not-at-all-diversified, the recession has to have had a very negative effect on KIP’s business. My former company (NGI) was a “servicing dealer” for both OCE and KIP. We had great success with both brands. We sold, leased and FM’d both OCE and KIP. During my entire time at NGI (10+ years), we only acquired one Xerox wide-format system, and that was at the request of the customer we provided that particular FM for. So, while I do think that KIP will benefit from Xerox’s decision, the effect will not be significant until this recession is over and done with.
Ricoh and other companies who manufacture and sell wide-format printers will also benefit, but I think that OCE and KIP will be the major beneficiaries of Xerox’s decision.
With reduced competition (Xerox pulling out of the market and competition for wide-format printer/system placements), one could expect “price to rise”. But, it is not assured that that will happen, especially in the near-term.
How will Xerox’s decision affect dealer/distributors of Xerox wide-format printers and systems?
Quite a number of the reprographers who are wide-format equipment dealer/distributors and quite a number of the companies who are not reprographers but who do distribute wide-format equipment are dealers for more than one brand. For those companies, I don’t think that Xerox’s withdrawal from the wide-format business is going to cause any problem. Hopefully for them, they will find a way to quickly clean-out their Xerox wide-format equipment inventories; they will then be able to concentrate on the remaining brand (or, in the plural, their remaining brands). For equipment dealers who are only dealers for Xerox wide-format, Xerox’s announcement may, going forward, have an adverse impact on their business … if they are unable to convince KIP and/or OCE to approve them for dealerships.
Right after I published Xerox’s announcement on my blog, a reprographer who exclusively sells OCE wide-format e-mailed me to say, “this is good news for us, since we are an OCE dealer” (they are not a Xerox dealer.) Shortly after that, I received an e-mail from a long-standing, large Xerox dealer, and he said, “Having been involved with the launch of the Xerox 2510 program this is truly like the end of an era.”
Just a few quick “profiles” of some of the companies who are Xerox wide-format equipment dealers:
RS Knapp / Napco – is the #1 Xerox (wide-format) dealer in the NY/NY/Conn area and is the #3 Xerox (wide-format) dealer in the U.S. Fortunately for RS Knapp / Napco, they are also an OCE wide-format dealer.
RPG (Reprographics Product Group) – is a significant Xerox (wide-format) dealer in the Washington/Baltimore Greater Common Market area. Fortunately, RPG is also an OCE wide-format equipment dealer (when I visited RPG’s web-site this morning, I found that they were an OCE dealer, but I only saw OCE’s wide-format “color” systems (ColorWave 600 and ColorWave 300) advertised on RPG’s web-site.)
Xact Supply Co – is a significant Xerox (wide-format) dealer in the Florida market. But, like RS Knapp / Napco and RPG, Xact is also an OCE wide-format equipment dealer.
Certified Reprographics & Engineering Systems, a company based in Salt Lake City, UT, with offices also in Las Vegas, NV - is reportedly one of the largest, if not the largest, Xerox wide-format systems dealers in the U.S. I don’t think Certified is an OCE wide-format dealer, so, long-term, Xerox’s decision may have an adverse impact on Certified Reprographics’ business. A few years ago, I attended an “FM Sales School” hosted by The PEiR Group in Las Vegas, and, at that “sales school” (we attended that school to learn how to sell FM’s!), I remember one of Certified Reprographics guys (one of the owners, and, sorry, I don’t recall his name) say that Certified was the “largest Xerox” dealer in the nation and that Certified, at that point in time, had around 500 systems in the field. 500! Lots of sales, leases and FM’s!
Mastergraphics – is a significant Xerox (wide-format) dealer in the Wisconsin marketplace. When I visited Mastergraphics’ web-site, I did not find that they are an OCE wide-format dealer. So, like Certified Reprographics, Xerox’s decision may have an adverse impact on Mastergraphics’ equipment business.
It will certainly be interesting to see how both OCE and KIP deal with the heretofore-only-Xerox equipment-dealers who will now turn to OCE and KIP (and plead their case) for dealerships for OCE and KIP equipment. OCE and KIP will both be in a stronger position to deal with those newly seeking dealerships from them. Quotas!
How will Xerox’s decision affect reprographers who have, in the past, committed significant investments in Xerox wide-format?
I believe that Reprographers who primarily use Xerox wide-format equipment in their production operations and at FM sites will, over the near-term and long-term, be adversely impacted by Xerox’s decision. Speaking as a “former” reprographer, if I had only (or mostly) Xerox wide-format equipment at my production centers, Xerox’s announcement would have given me a horrible case of indigestion and heartburn last night. At NGI, we operated multiple production centers and operated a lot of FM sites. If the wide-format equipment we had at those locations was all Xerox brand, I would be worried that my competitors would be out, en-masse”, to tell my customers that “the equipment NGI uses at its production centers and at its FM sites is “obsolete”, Xerox has pulled out of the wide-format business. I’d then have to run around and waste time assuring my customers that “there’s not going to be a problem, it’s no big deal, don’t worry about it, we’ll continue to take care of you as we always have.” I don’t like to waste time.
“Expected life” is an issue for reprographers. When any reprographer has to make a decision “what should I buy, which brand, which model?,” a reprographer is, of course … and absolutely …. going to consider, “how long will this machine last, how long will I be able to keep it in service and make money off of it?” I remember when the OCE 9800 was first introduced. A “very big” question was, “how long will this machine last, how long will I be able to keep it in service?” No one knew, no one had any experience. The OCE 9800 later proved to be an exceptional machine and one that reprographers could rely on for many years, not just for a few years. It was not uncommon to find reprographers using OCE 9800’s for ten years! That was unexpected. And, it was an expected delight! But, consider, now, a reprographer who is faced with the decision, “what to buy”, a reprographer who, because of the recession, has held off replacing his/her wide-format b/w equipment that would normally have been replaced two or three years ago. Let’s assume that this reprographer only (or mostly) used Xerox wide-format equipment at his/her production centers. Will it be likely that this reprographer will again buy Xerox wide-format? In the e-mail I received yesterday from Xerox, Xerox did say, “Customers will continue to have access to service support, supplies, media and parts from Xerox for their existing equipment for a minimum of five years from the last install of a particular product line.” So, perhaps that statement will remove some of the worry for reprographers who are, or will be, interested in staying with Xerox equipment. But, perhaps not. I’m not going to tell you what I would do. What I would do is irrelevant.
There is another issue as well. This one's an interesting, if not an intriguing, one. There are reprographers "out there" who have been doing quite a lot of business with Xerox (wide-format) because their relationships with OCE and/or KIP ran amuck. Sometimes because of "terms", sometimes because of "price" and sometimes because OCE or KIP did not like how those reprographers were paying (or, I guess I should say, not paying) their bills. Those reprographers may realize the biggest adverse impact from Xerox's decision.
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I’ve long been of the opinion that competition is healthy for the marketplace; this applies to reprographics services and to supplies, consumables and equipment in the reprographics marketplace. I am sad to see Xerox bow out of the wide-format business in the U.S., simply because that will reduce competition and could, in the long term, increase the costs that reprographers incur to provide the services (and equipment) they offer.
Your opinions and comments are invited.
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