Xerox Results Mark End of Printers’ Golden Age

  • Tweet  
  • LinkedIn  
  • Facebook  
  • Google plus  
  • Send to Kindle
  • Send to  

Xerox reports a 12 percent decline in quarterly revenue, and demand for printers and associated consumables has slid. Other printer vendors, including Hewlett-Packard and Lexmark, are pushing managed print as the future, but the disruption caused by tablets and smartphones has reached its zenith. The golden age of printing is finally over.

Strike up the bugler: The golden age of print is officially dead. Time of death is hard to determine, as vendors and solution providers will continue to sell and support printers for many years to come. But the time when printers were a license to print money is over, as noted by the latest quarterly financial report by Xerox Corp.

The company synonymous with printing, photocopying and document management reported a 12 percent profit decline, as decreasing demand for printer equipment and consumables slide. Staunching the decline is the Norwalk, Conn.-based company’s evolving professional and outsource services, which is offsetting much of the lost printer business.

Related articles

It wasn’t that long ago when Xerox was called a “cash machine,” as its printer business, driven by multifunction devices and document management software, created the opportunity for the company and its partners to sell an endless stream of highly profitable consumables, including inkjet cartridges, color print packs and maintenance support services.

Just as the printer market isn’t what it used to be, so too Xerox is a changed company. Even though the company’s name achieved a iconic status as a noun and a verb for copied documents, it only earns 20 percent of its revenue from photocopiers and roughly one-third of its revenue from printers and consumables. The balance -- and growth -- comes from professional services and business process outsourcing built on the foundation of Xerox’s 2009 acquisition of Affiliated Computer Services.

While Xerox continues to push managed print services in the channel and the general market as the model for future success, the bulk of its growth is coming from general IT services that were once mostly sold by IBM, Hewlett-Packard Co.’s Professional Services (formerly EDS) and Dell Inc.’s blooming services division through its acquisition of Perot Systems.

Generally speaking, the printer business has been in decline for years, as vendors pushed more and cheaper hardware products into the market to capture more of the lucrative consumables market. Kodak tried disrupting the conventional model by selling its printers at premium prices and low-balling consumables. For solution providers, printers have always been a bit of sticky issue, as they often required a larger purchase, such as a PC fleet refresh, to start a sale. But with PC sales declining, there’s less opportunity to sell peripherals.

The advent of smartphones and, more significantly, tablets is what’s put the printer market into a permanent decline. The minute end users learned they could read e-mails and documents on their Amazon Kindles and Apple iPads, the need for printing became moot.

Xerox isn’t the company peering through the looking glass on printer decline. Hewlett-Packard is looking to its printer -- the one-time cash and profit cow of the conglomerate -- to buoy its recovery. Last spring HP merged its Imaging and Printing Group with the flagging PC division, Personal Systems Group, to form the Print and Personal Systems Group, an organization that represents more than $50 billion in HP sales. The logic behind the move: save cash through economies of scale in component purchases. Meanwhile, HP is seeing printer and consumable revenues slide.

Lexmark, once the lion of pure-play printer vendors, is considering selling off its inkjet business as it comes under continued pressure of declining sales and misaligned products. It’s placing more of its hopes in software development and managed print.

And Konica Minolta is diversifying in a similar way to Xerox, but focusing more on managed services. In 2011, the Japan-based electronics company with a robust printer business bought New Jersey-based All Covered, a regional IT MSP that already had a culture for buying smaller rivals to bolster its capabilities. All Covered continues to make MSP acquisitions, which causes consternation among other MSPs and software suppliers, as each deal signals a market consolidation.

In the short run, managed print does offer solution providers a potential boon in profitable products and predictable revenue that complements other remotely delivered services. According to CompTIA, only 21 percent of SMBs have adopted managed print services, leaving a huge sales opportunity. However, the printer vendors’ shift to professional and BPO services should send a message to solution providers: The managed print market may not have the durability that many analysts project.

Regardless of how the trends are interpreted, it’s becoming increasingly clear that printers and their consumables are no longer the golden profit machines they once were.

  • Tweet  
  • LinkedIn  
  • Facebook  
  • Google plus  
  • Send to Kindle
  • Send to  
More on Channel Business
mock3-0913

Channel millennials to learn from older peers with new CompTIA initiative

Initiative may help with 2015 emerging threat of millennial expectations

NY traffic lights

Gigamon launches partner program

Traffic visibility firm includes pre- and post-sales training certifications in new partner program

Sales online and in the shops

Black Friday wearable tech uptake splits industry

Shoppers may have snapped up a bargain wearable device on Friday, but just how much impact will this have when they choose to wear it to work today?

Backbytes - a happy computer

Perk up! HP opens up former direct-only perks to the channel

Latest ServiceOne partner program released as Q4 results disappoint

Visitor comments
Add comments
blog comments powered by Disqus
In-depth
Handshake in London

Microsoft Big Data acquisition shows willingness to embrace open platforms

The software giant embraces yet another open-source tool in R and stakes its claim in the analytics arena

head-in-hands

U.S. patent system 'broken'

Patent 'trolls' wreaking havoc for technology in the U.S.

tom-fedro-paragon

Vendor Q&A Series: Tom Fedro, Paragon

The latest channel exec to sit in the Channelnomics hotseat is Paragon Software Group's president

Windows logo

Windows-10-as-a-service? You'd better believe it

Is the channel set to miss out on revenue as a result of Microsoft's decision to deliver Windows 10 as a service?