Printers: Non-Impact Makes Impact

Despite impressive growth in inkjet multi-function devices, the
overall printer market grew just 5.9% in FY 07 to reach Rs 1,650 crore. This
is because of negative growth in both single-function inkjets as well as in dot
matrix printers (DMPs). While single function inkjets showed a decline for the
second year running, DMPs showed a decline after a healthy growth last year. The
inkjet multi-functional devices (MFD) overtook single-function inkjets, while
laser printers managed to sustain double-digit growth.

The SMB segment clearly stole the limelight as all prominent
vendors targeted this segment with considerable focus. The government too has
been one of the biggest spenders with several e-Governance projects launched
during the year. Other factors driving sales included VAT implementations and
core banking solutions implemented by the leading banks.

The printer market in FY 07 was characterized by a high
growth in lasers, hi-speed impact printers and those pitched at retail. The year
also reaffirmed the shift from inkjet to lasers across several segments. Lasers
certainly are closing in on the gap. The increasing affordability of laser
printers was one of the important factors behind this phenomenon. FY 07 can
possibly be regarded as the watershed year as lasers start to become the largest
selling printer segment. There is also a substantial leaning towards the
multi-functional devices owing to a significant drop in price points.

DMPs Hold Ground

With the entry of the non-impact technology making its presence felt from
the start of the decade, many observers yet again predicted the end of the dot
matrix printer era. Interestingly in India, the dot-matrix printers co-existed
with lasers and MFDs, with three out of seven companies still having their
impact printer plants operational; these Indian companies being TVSE, Wipro (WeP)
and Lipi.

The DMP market showed a decline of 8%, after a healthy growth of
10% last year. They recorded total sales of Rs 477 crore in FY 07 with Epson
dethroning TVSE from its leadership position. Epsons market share in this
segment was 39.3%. This was made possible by the launch of its DMPs with
additional features like support for 10 Indian languages.

TVSE was a close second with a 35.7% share largely due to
buoyant demand and repeat orders from banking, insurance, and government,
besides a strong SMB demand. Some of the major orders bagged by TVSE during the
last fiscal included LIC branch computerization, Indian bank, Bank of Baroda,
UCO, Dena Bank and the SBI.

The government sector was once again one of the biggest spenders
with a majority of the investments towards e-Governance projects including
computerization of the primary education in Andhra Pradesh, Tamil Nadu and
Assam.

WePs overall printer business was characterized by
significant growth in its high-speed impact printer category. This included the
line matrix and high-speed dot matrix range. The company launched DR400 impact
printer to address the strong growth in the retail segment.

At the other end of the scale TVSE launched the Pro VX 3810, an
80-column 380 characters-per-second printer that constitutes part of the Proton
range. The Pro VX 3810 is redesigned for tough Indian conditions, with even the
tear bar made of stainless steel.

However the future for dot matrix does not seem bright even
though the technology has managed to hold on until now. Madhan Dhandayutham,
assistant manager, Peripherals Research, IDC India says: "With the rapid
advent of lasers and other alternative products such as Point-of-Sale (PoS)
printers, the growth opportunity for this product category looks bleak. The
market is anticipated to decline marginally over the coming years due to the
higher penetration of competing printing products."

Single-function Inkjets Plateau

Single function inkjet printers also showed a decline of 4%. These recorded
total sales of Rs 220 crore, according to IDC India. FY 07 was the first year
when inkjet sales finally slipped below inkjet MFDs. The total number of single
function inkjet printers shipped was 620,000 units; a substantial decline from
the 660,000 units last fiscal. With the price points of laser printers hitting a
new low, even the SMB customers opted for laser printers.

According to Dhandayutham, "despite growth being witnessed
in the overall inkjet market (SF and MFDs combined), the market for single
function inkjets has been showing a declining trend. This can be attributed not
only to the rapid adoption of multi-function products, but also to aggressive
pricing tactics adopted by the laser printer vendors of late. However, SF
inkjets are likely to continue to be in demand due to the printing needs of home
offices/small offices and for special applications such as photo printing."

Belying market fears of a downturn in demand in the inkjet
space, HPs market share increased to 71%. The vendor launched its Officejet
Pro Printer Series that enable small businesses to save up to 30% in terms of
cost per page. Most importantly, HP took to the bundling route in order to push
more volumes of entry-level inkjets. Canon on the other hand did not launch many
products in its Pixma series that was introduced in FY 06 with much fanfare,
the only exception being the IP 1880 photo-printer.

MFD Juggernaut Rolls

This was the year of the MFD. MFDs recorded revenue growth of 32.4%--several
times higher than the overall market growth of 5.9%. Like the other segments,
this segment too was focused on the SMB business opportunity. Says Shiladitya
Sarkar, manager, Peripherals Research, IDC India: "The inkjet MFD market is
expected to continue to grow at an increasing rate for at least the next couple
of years, with its prime focus on the SOHO and SMB segments. The ability of one
device to perform three or four functions has attracted buyers from these
segments towards this All-in-One print/copy/fax device."

With the Indian printing market maturing, MFDs have become more
affordable. There is a wider choice of in terms of features at different price
points. Enterprise users increasingly perceive the printer as a major
contributor to office productivity. The new features incorporated in printers
today have only made them more versatile thus offering more value for money. The
MFD space is witnessing three main trendsconvenience, convergence and
connectivity. And the market is at a turning point where more and more customers
are realizing the benefits of MFDs. MFDs have started to break into the market
for copiers as well.

Once again, this market was led by HP with a 84.2% share in unit
terms, followed by Canon at 6.9%. While all other competitors to HP saw a
decline in their respective market share, Canon increased it manifold from last
years 1.9%. Lexmark exited from this space following a sharp decline in
market share, almost all of which was picked up by Canon.

HP rolled out some well-planned marketing. The vendor is now
looking to place more emphasis on the educating the channel partners in order to
familiarize them with the new technologies that are being introduced. An
aggressive marketing strategy in tier II and III class cities is also a priority
agenda apart from building infrastructure for the channel partners in these
cities.

Sharp is also planning to re-enter the color market aggressively
and is looking to position itself more as a solutions vendor. Sharp has two
offerings in the MFD space; the A4MFP, a 15ppm product is targeted at the SMB
segment, and the new range of A3 models that prints between 25CPM/PPM to
55CPM/PPM. A3s claim to enhance efficiency and profitability and are targeted
mainly at the enterprise customers.

Lasers: Everyones Choice

As in the previous years when the single function laser printer market
demonstrated solid growth, FY 07 too was no different. This segment once
again saw rapid growth with fast adoption by the SMB segment. The reasons are
not too far to seek. As Sarkar puts it: "Higher printing speeds, falling
prices and provision for enhancements in features have made this product a
preferred choice of not only the corporate sector but also the SMBs."

In the past, laser printers were primarily used by the large
corporates while inkjets were used by SMBs and home users with small printing
requirements. Interestingly in FY 07, this stereotyped concept was done away
with, as falling prices of laser printers induced the shift to upgrade.

FY 08 is expected to see a major price war among the major
players. HP announced an aggressive strategy to grow the laser printer market as
part of its three-pronged go-to-market strategy. Right from offering unit level
replacements during warranty, to setting up 300 exchange points across 130
cities, and making entry-level laser printers more affordable, the company is
looking to enhance its leadership. HP also launched a series of multi-function
devices in FY 07 to empower SMBs, as there has been an acceptance for laser
technology among this segment as well as the SOHO market. To celebrate the
global sale of its 100 millionth laser printer, the vendor launched an entry
level laser printer in the Indian marketthe Laserjet M 1005that also
doubles up as a copier and scanner.

Looking to position itself as company that manages clients
overall print services, HP launched more than a dozen separate multi-function
laser printers including the M 5035. At 35 pages a minute, it can be touted as
the industrys fastest desktop wide format (A3 size) printer. In its bid to be
a network solution provider, HP introduced software solutions like Web JetAdmin
that enables enterprises to closely monitor printer usage and performance.

Samsung also expanded its portfolio by announcing a slew of
products including the CLP-300 color laser, the smallest color printer in its
class. The vendor also launched four new network printers during the year taking
the total to seven in its product portfolio. Keeping in line with its strategy
to achieve the targeted growth for FY 08, Samsung expanded its sales and
marketing force fourfold in the first quarter apart from going in for strategic
distribution tie-ups to enhance territorial and market reach.

Looking to increase its share in the laser printer segment,
Xerox opted for product portfolio expansion and positioned its entry-level laser
product as a viable alternative to inkjet printers. The move comes in the wake
of Xeroxs strategy to target the mass market for laser printers by making
them more affordable. Brother International, a relatively small player in the
stand-alone inkjet category expanded its presence and entered the laser printer
segment with a host of offerings. The company targeted the home office and the
SMB segment with MFC-7420 that incorporates features like flatbed copying,
full-feature fax and color scanning.

Lasers, MFDs: Way to Go

The laser printer segment is likely to emerge as the most preferred printing
technology in the years ahead with the vendors likely to compete to be the first
to introduce models with higher printing speeds.

MFDs have managed to upset the market for inkjet printers, with
lasers also managing to notch up significant sales in volume terms. With the
price differential narrowing between laser printers and inkjet printers, the
market for the laser printers is on the upswing. Giving due emphasis on the
production printing business, Xerox India launched an Innovation &
Technology Excellence (XITE) center with an investment of Rs 5 crore. The center
was launched for providing a hands-on-experience to the customers on newer
technologies. The vendor expects an increase in the customized data printing
from 31% in 2003 to 49% in 2007. The SMB sector continues to be one of the
largest customers followed by the government sector that continues to drive
demand.

Stuti Das

stutid@cybermedia.co.in