Printing Redefined

Multi-Function Devices (MFDs) are doing for the printer space something akin
to what the Internet has done to empower connectivity across locations. Fiscal
2003-04 saw MFDs coming to age, an index of the same being a recent bit of
research by IDC that says that during 2003 around 2.48 mn MFDs were sold in
Asia-Pacific alone. Analysts infer two major causes for the growing MFD
adoption. For one, their prices have steadily declined in the last two years,
with 2003 seeing great price slides that brought an entry level MFD device into
the sub-$200 price threshold. While in advanced geographies like the US and
Japan, the MFDs or the All-in-Ones (AIO) make rapid strides in challenging the
single function inkjet and entry level laser printers, the market in India still
displays only a cautious optimism. All the major printer vendors are bullish on
MFD adoption, but it is still a value segment in India, though industry sources
say that, a few years down the line, MFDs will witness volume growth.

The Market Dynamics

A closer look at the market reveals that A3 MFDs dominate the higher end of
the spectrum. These are typically consumed by very large enterprises, which
heavily use copying and printing on a day-to-day basis. Meanwhile, the
large-enterprises and SMB segments drive sales of A4 MFDs. Says Kuldeep Malhotra,
general manger-volume products, Xerox Modicorp, "Today enterprises are
increasingly becoming cost conscious and they except more RoI out of their
investments. Investing in MFDs is an ideal option from both TCO and RoI terms.
An MFD also makes for better asset management as they can handle four critical
output needs-print, scan, fax, and copy- eliminating the need to run
standalone devices, which in addition to initial acquisition cost, also have AMC
costs. The inherent merits of MFD devices will drive the market in India to
large-scale adoption in the days ahead." The entry of traditional copier
companies like Xerox into the MFD space is a marker of the intense competition
in the laser MFD space.

The Indian printer market is unique in many ways. For one, the print
technologies used are diverse and range from impact to thermal printers. For
instance the impact printing segment market in the west has declined steadily
over the years, while in India, on the contrary, dot matrix printing technology
is on the growth path, with players like TVSE, Epson and WeP having large
mandates. Meanwhile inkjets are a volume segment, and during 2003-04, India
consumed around 690,000 standalone inkjets and 155,902 lasers, as against
114,018 inkjet MFDs and 15,980 laser MFDs. This is clearly a huge gap, but it is
one that will ultimately narrow down considerably as MFDs cannibalize on the
standalone mid-end inkjet and laser printers.

However, some in the industry aver that it is too soon yet to talk about the
cannibalization effect in an Indian context. For instance Samir Shah, country
category manager, shared printing and connectivity, HP India, says: "At
this point in time, all kinds of print technologies are in vogue in the Indian
market and it is still early days for MFD devices to pose a major challenge in
the printer segment. That said, MFDs will play a bigger role in the coming
years, even as other technologies co-exist alongside. MFDs offer more freedom of
choice in terms of technology and they are clearly value enablers in an
enterprise's output device management strategy. HP's total print management
and balanced deployment strategy is all about hastening new technology adoption
and optimal printer deployments."

“Multi-function devices (MFDs) are being seen by vendors as the most promising segment in the Indian peripherals space. Top vendors are cashing in on this wave and aggressively pursuing the market”  -Lakshmi Narayan Rao, assistant director, marketing, OSS value chain, Canon IndiaInfosystems “The benefits associated with MFDs, like enhanced productivity, versatility and low cost, have captured the imagination of the users acceptance towards these devices”  -Vivek Prakash VP, IT products sales, Samsung India Electronics “Today enterprises are increasingly becoming cost conscious and they except more RoI out of their investments. Investing in MFDs is an ideal option from both TCO and RoI terms”  -Kuldeep Malhotra GM, volume products, Xerox Modicorp

In a macroscopic market, both inkjets and laser MFD have their place. The
inkjet MFDs will be consumed largely by the SOHO segment and corporates will
drive laser MFDs. Says Vivek Prakash, vice president, IT products sales, Samsung
India Electronics, "Indian enterprises are slowly realizing the strong
value proposition that laser MFDs embody. We estimate the market for the
inkjet-based MFDs to be about 12-15 times that of laser MFDs, and in the last
few months, one is seeing a decline in the growth of inkjet all-in-ones
primarily due to the strong positioning of laser MFDs by various vendors."

Given the potential for laser MFD sales, as compared to the short-term gains
on inkjet all-in-ones, most vendors are putting in place aggressive strategies
for the laser MFD offerings. For instance, players like Xerox concentrate only
on the laser segment. Today an entry-level laser MFD is in the sub-Rs
20,000-price range, as against an entry-level inkjet MFD, which costs about Rs
8,000. This, when contrasted to single function inkjets (Rs 3,000) and lasers (Rs
10,000), show that in price-driven terms, the bigger market is, clearly, for
inkjet MFDs. But the key question is whether the forces driving demand can be
sustained. For instance, SOHO is a very price-conscious segment, and once price
reaches a threshold, vendors will find it difficult to sustain inkjet MFD
volumes. So in the days ahead, the laser MFD's current aggressive product and
technology positioning will put the brakes on the inkjet MFD numbers.

Reflecting on this trend, an IDC report says that the inkjet MFD market is
expected to grow at a CAGR of 82% between 2004-2006. During the same time laser
MFDs will grow at around 40% CAGR. But in value terms, laser MFDs will take a
bigger share. Says Lakshmi Narayan Rao, assistant director, marketing-OSS value
chain, Canon India, "We are betting heavily on laser MFD devices, and here,
almost 50% of the business comes from solution-based devices. Canon is also
preparing a very aggressive marketing strategy to push its value range of
converged communications devices into the enterprise segment. To this end, the
company is working on a strategy called Canon to the Max."

Value for Money

From an enterprise standpoint, how does a CIO look at these devices? Says
Arun Gupta, senior director-business technology, Pfizer India, "MFDs are a
good option for small offices and active home users. They are good devices
offering value for money while also cutting down on the clutter due to their
compactness and multifunctionality. As the prices keep dropping, they will end
up cannibalizing the low-end laser printer markets. We have deployed these
devices at our regional offices, as well as in some remote clinical trial
locations which need more than just a printer."

However, in most Indian enterprises, single-function inkjet and laser
printers still monopolize the current print infrastructure, but any new buying
will tilt the balance in favor of MFDs. Pfizer in India has around 30 inkjet
printers, 20 laser printers and some DMPs: this showcases the diverse varieties
of technology used by Indian enterprises. This poses a huge challenge to vendors
putting forth the MFD value proposition, which the vendors link to TCO and RoI.
Here, laser MFDs score over their inkjet counterparts. The ownership costs for
standalone print devices add up to Rs 53,000 with the following breakup: an
entry-level laser printer at Rs 10,000, a scanner at Rs 3,000, A4 copier at Rs
30,000 and a fax machine at Rs 10,000. Contrast this with the cost of an
entry-level laser MFD, which costs just about Rs 18,000, or one-third of the
cost of equivalent standalone output devices. Thus, MFDs are indubitably a value
proposition.

Once an enterprise is convinced that it would rather own a MFD, choosing the
right MFD technology is also vital. For instance if the enterprise has large
print and copy volumes, then a laser-based MFD will address its requirements
best. For instance, currently, it costs on an average about Rs 3 per page on an
inkjet MFD, while the corresponding costs for output on a laser all-in-one will
come to just Re 1. So, if an enterprise that has, say, an overall output demand
of 2,000 impressions per month, migrates from inkjets to laser MFDs, it will end
up saving Rs 48,000 a year, and, as its output-demands increase, it obviously
stands to save still more. However, the point to be factored here is that laser
MFDs can yield maximal gains only when print costs are going overboard due to
the sizeable consumable and AMC costs associated with running single-function
output devices. Hence, the CIO should clearly map the output strain areas, and
induct MFDs in those departments that have a large copying and printing
requirement.

Sea Change

The evolution of MFDs is creating a new equation in the print landscape. In
addition to the expected cannibalization of inkjets, standalone laser printers
will also witness tough competition. However, companies like HP strongly believe
that, unlike standalone inkjets, single-function lasers will continue to have a
good market. Meanwhile the laser MFD space is heating up, as all the major
vendors are trying aggressively to garner a major slice of the pie. Players like
RICOH and Toshiba are making the market extremely competitive. Says Gunjan Sahni,
product manager, Ricoh India, "We have already introduced 12 models of MFDs,
and these devices will add great value to enterprises due to the convergence of
print, scan, copy and fax. We provide, with these output devices, tailor-made
solutions to meet the various multi-tasking demands that enterprises have. And
with quality outputs being a necessity in today's competitive environment,
MFDs will have a good market." Meanwhile Canon's roadmap for laser MFDs
is aimed at capturing a 20% market share. To this end, the company recently
launched IRC 3100, a multimedia imaging system aimed at large enterprises. HP,
on the other hand, through its Total Print Management (TPM) initiative, is hard
selling its balanced deployment strategy. Vendors like Samsung are also creating
huge awareness exercises on the laser MFD front: Samsung has a broad MFD
portfolio with six key models that are expected to drive most of its laser MFD
sales

What emerges at the end of the day is that enterprises stand to gain tangibly
by adopting MFDs. New technology adoptions will also be further hastened with
output device management getting due attention in organizations in recent times.
Analysts believe that by 2005, the cannibalization of standalone print devices
by convergence technology will become more evident, with the laser MFD, leading
the charge against all other print devices, whether inkjets printers or
scanners, by virtue of its versatility.

Shrikanth G in
Chennai

Driving MFDs

Key drivers that will hasten laser MFD adoption in India:

• Inherent product qualities-efficiency, versatility, cost and space
  saving
• Growing realization among consumers that laser multifunction printers are
  robust products, and breakdowns are rare, and thus, office documentation
  processes will not come to a standstill
• Attractive prices of laser multifunction printers
• Low acquisition costs as compared to those for standalone output devices