Dotting Along

The Dot Matrix Printers (DMPs) are still surviving and continuing to screech and hammer in many organizations, despite the tough fight they face against rivals in the printing space.
Interestingly, while the overall printer market slumped last fiscal, the dot matrix tribe survived, even though the growth was almost flat at just two percent. Epson carried the leadership flag by keeping over 54 percent of this market. The market leader grew 48 percent in Q3 of 2009 as compared to the year before. This was due to a 22 percent growth in serial DMPs and 27 percent in flatbed inkjet devices.
There is no denying of the fact that many distributors and channel partners quit this business as they saw the segment breathing its last. But the market is still very optimistic as there still exists a niche need of DMPs in SMBs and not large enterprises. “Government organizations, public sector banks and the Indian Railways are currently the only large customers for DMPs, while most corporate users are migrating to other emerging technologies,” says Pankaj Chawla, Lead Analyst, Peripherals and Emerging Technologies Research, IDC India.

Stagnant Yet Steady
The Dot Matrix Printers, a niche category in the printer space, is dominated by vendors like TVS Electronics, Epson, and WeP Peripherals. All of them had another good year. At the higher end of the spectrum is Lipi. DMP products over the years have developed and manifested themselves in different applications like point of sale counters, passbook printing in banks, etc. While in the West DMP has faded in favor of inkjets and lasers, the Indian market is showing continued traction for the DMP products. The biggest driver that kept the DMP market going year after year was the issue of TCO and costs in running the printers. In both these parameters, DMPs consistently scored higher against non-impact printers. As an industry expert puts it, "Choosing a printer is not simply a matter of picking the first available machine and forgetting about it. It is important to select one that will provide the optimum, most cost-effective service over its lifespan, significantly reducing printing costs and the amount of user intervention required to keep it running."
The key verticals that drove the DMP numbers during 2008-2010 were banking, government and retail. Industry experts said that for printing transaction-related documents like bills, receipts and invoices, dot matrix printers found many takers. A closer look at the vendors shows the dominance of Chennai-based TVS-E which contributed Rs 188 crore, on seeing good growth for its DMP products. The company attributes the growth to its three-pronged strategy adopted over the years which includes-emphasis on high quality printers and consumables, low running cost of consumables plus quick, efficient and wide support network. Product ruggedness is also one major USP for TVS-E printers.
On the impact side, the year demonstrated the changing needs of the enterprise and a specific print solution satisfying the need. Hence, vendors talked about various technologies and its dividends. For instance, if an enterprise intends to opt for an impact printer it has various options like 9 pin to
24 pin technologies to choose from. Retail verticals should ideally choose the 9 pin narrow model, and government, the 24 pin. Companies like WeP, TVS-E, and Epson have made many innovations in the impact printer technology over the years. Given that, the earlier noisy and bulky impact machines have been replaced by sleek and silent ones. WeP, for instance, introduced a new category of 40-column receipt printers, ideal for receipt, ticket, and transaction printing. It also expanded the languages available on DMP to now include Chinese, Turkish, Thai, and Arabic.

Changing Scenario
Over years the Indian market has become burgeoning for printers. India is also one of the geographies in the world where the market for impact printers is growing at a healthy pace. During 2005-2006, the DMP segment grew by 15 percent with major vendors TVS-E, Epson and WeP battling it out for a greater marketshare. The government vertical continues to drive the DMP market, especially during the last one year with the implementation of VAT by many state governments. DMPs are able to withstand competition from non-impact technologies because of their ruggedness and they are well suited for mass printing. The total running cost of DMP is also far lower. Samba Moorthy, Senior GM-Sales and Marketing, Epson says, "DMPs have very low failure rates. The print heads we use in our printers will run for years."
(Major player TVS-E shipped close to 185, 169 units of DMPs in the last year. The chunk of business came from segments like retail, SME, government and BFSI. Other vendors like Epson and WeP also attacked the market with several of their DMP offerings. Epson shipped around 178, 320 units, while WeP followed suit with 124, 402 units. In sum the total size of the impact market during 2005-06 in unit terms stood at 495, 770 units.) : Source Dataquest
The fortune of the printer market, for obvious reasons, is closely linked to the PC market. So a dip in the PC market would cause a steeper decline in the printer market as had happened in FY '09. The PC market revived to a certain extent in FY '10, and printers too followed suit. Both PCs and printers had a slower H1, with signs of revival showing Q3 onwards and finally ending the year with the best quarter.

To understand the buying patterns that emerged in FY '10 it is important to see how different categories of printers fared. Inkjet MFD and single-function laser both grew, albeit by varying margins; that showed both consumer buying sentiments reviving as well as the SOHO and SMB sectors gradually picking up again. Dot matrix still grew proving that it had its own share of takers in the government and PSU sectors. However, the steep decline in sales of laser MFDs meant enterprises were still not ready to make adequate capital outlays on hardware. Besides, managed printing services becoming mainstream in organizations too might have impacted the laser MFD adoption.
DMP is one segment which more or less remained stagnant. Epson is the major shareholder with 43 percent of this market, and this has been the case for quite a few years now. DMP as a technology is most preferred for transaction printing across organizations. Being traditionally the strongest player in the DMP market, Epson launched the LQ-50 Dot Matrix bill printer especially for the retail segment. LQ-50 comes equipped with ten Indian languages, with an aim to automate the rural market.As per a MAIT-IMRB study, the consumption of DMPs grew by 13 percent in OND 2009-10 compared to the same in the previous year. This might be attributed to a significant increase in e-governance projects and power projects resulting from the boom in the infrastructure sector. The next in command was TVS, with a marketshare of 36 percent. WeP Peripherals was the only company showing growth of three percent. Epson's constant hold on the DMP market can be attributed to its channel engagement program wherein it educated all its channel partners on its existing line of products. Herein WeP launched its CSX450, the high-speed printer in the 80-column segment.
DMPs cater to the huge transaction printing market. Besides, given the low paper and consumables cost, these printers are best suited for the Indian PSU banks and low-end retail. As such, this market never shrinks substantially.

Market Analysis
There are three major players dominating the DMP market in India. The global business restructuring, whereby Epson hived off its LCD business to Sony and significantly shrunk its semiconductor business, did not have much impact on the Indian market. Epson maintained its number one position in the market when it came to DMPs (51 percent), POS printers (55 percent) and projectors (16 percent). This was followed by 22 percent growth in the serial DMP business and 27 percent in flatbed Inkjet devices, where it captured the second position with 31 percent marketshare. It also focused on consolidation of channel partners for its entire range of products. It launched three all-in-one new printers and aimed at the home user and SOHO segments plus launched India's first six-inch bill printer LQ-50 for the retail segment.
Once a predominantly DMP company, TVS-E is now a diversified IT peripherals player, with an aggressive focus on the POS market. In FY '10, it forged strategic tie-ups with application software development partners to offer an entire gamut of retail solutions for textiles, pharmaceuticals, restaurants and grocery stores. It also rolled out a nation-wide campaign, Sanskriti, to establish itself as a seasoned retail POS player. It further strengthened its presence in the AIDC space when it started distributing Zebex products in India.
DMPs accounted for 70 percent of WeP revenues (Rs 118 crore). But the decision to focus on complete business automation solutions hit the topline. Mid-level retail outlets were targeted for its printers (including CSX 450) in tier-2 cities like Mysore, Pune, Hubli, Kochi, Thiruvananthapuram and Coimbatore. As the current fiscal progresses, the battle for greater marketshare will further intensify with focused marketing campaigns and product offerings.

Plugging the problem
There are certain issues plaguing this segment, both on the customer end as well as the distributor's end. Karthikeyan, MD, Bloom Electronics said, “Earlier a key value creation was that DMPs scored better on total cost of ownership (TCO). The difference in TCO between the laser and DMPs has now squeezed. About five years back, the difference was sizeable, up to 10 percent, but now it is a meagre two to three percent.” To tackle such issues, DMP vendors are focusing on new distribution networks and partner training programmes, especially in C and D class towns.
However, some distributors are not convinced. Anil Sachdeva, CEO, Kadam Marketing, discontinued dealing in DMPs a few months back, citing poor quality of products and unsatisfactory after-sales service.

The opportunities
Acknowledging that the growth in the DMP segment was flat last year, Ganesh Kumar, Head-Sales and Marketing, TVS-E said, “The way forward is to create opportunities and customize. There are niche requirements that continue to exist.” Explaining the opportunities further, Ganesh commented, “Dot matrix applications basically comprise POS, which is bill printing, a single copy print; and the other extreme is data processing, which includes managing books.”
Analysts say the vendors are keen on expanding their portfolio keeping in mind the market requirements. The focus for vendors now is to make the product more service-centric. It may be a status-quo as far as the growth of the dot matrix sector is concerned, but that does not mean that there is no product innovation.
According to Ramesh V, Business Manager-Serial Impact Dot Matrix Printers, Epson (India), there is an increased migration from Windows to Linux, so vendors have to design their products accordingly. “Most of the systems are now coming with USB plug-ins. Thus, such customizations are indispensable,” said Ramesh. A matter of concern for these vendors is a new breed of competitors. “Many software solution providers are now diversifying and venturing into hardware as well, Infosys being an example of the same. The fight becomes tougher,” concluded Ramesh.
DMP vendors were bullish that they would consume a good number of printers in the current year. However, analysts view the government's IT spending potential with guarded optimism. This is because state governments are saddled with fiscal deficits that greatly hamper e-governance initiatives. Given that, the biggest challenge for vendors is to enlist new clientele from emerging upcountry markets, which is where a lot of action is expected to be seen in the current year.

Ramkumar R
(ramk@cybermedia.co.in)