PRINTING SOLUTIONS: Evolving With Customization

According to IDC, the total printer market in India for 2003 was estimated at
1.2 million unit shipments as compared to 0.94 million units during 2002,
registering around 30% growth. During the JFM quarter of 2003-04 it pegged 14%
CAGR each for inkjet and laser printer.

HP is the undisputed leader in the printer market. According to the company
it has 51% marketshare in inkjets, 74%in laser, 82% in AIO and 20% in laser MFP.

Epson too has been increasing its share in the inkjet space from 10% three
years ago to nearly 24% last year. It expects to achieve 28% share in the
current fiscal.

Canon India has grown its overall printer category market share from 3% in
2001 to 30% in the year ended December 2003 according to IDC.

"Currently digital is 8% of the worldwide print volume. In India, this might be even smaller, hence there is a huge opportunity" "We grew at 40% in  2003-04, compared to the industry's 23% growth. This year, too, we expect to grow faster than the industry rate" Atul Saran Country Head, Electronics For Imaging  SS Rao, Director TVS Electronics

Says Alok Bharadwaj, Director and GM, Consumer Imaging and Information
Division, Canon India, "In the inkjet space, we hold the #2 position,
largely because of the technology advantage that we offer even at the cost of
charging a premium on the same."

In Gujarat and Rajasthan, it attained market leadership with 40% in Q4 2003.
According to the company its overall inkjet printer business grew by 93%, while
lasers saw a 218% jump in 2003 over 2002. "All-in-one sales went up by 152%
and digital laser MFPs rose 200%," adds Alok.

Wipro ePeripherals (WeP) enjoys about 30% marketshare in the impact printer
business, while TVS Electronics (TVSE) claims to have 43% marketshare in the
impact printer segment. "We grew at a rate of 40% last year as compared to
the 23% growth that the industry grew by. This year too we are looking at
growing far more than the industry rate," says SS Rao, Director, TVSE.

Zebra Technologies, which operates in the thermal printing space or barcode
printers, expects a 20-25% year-on-year growth. According to Shailesh Deshmukh,
Account Manager-Indian Operations, Zebra Technologies, currently this segment is
in its nascent stage in India with a market size of about 5,000 printers per
year.

CUSTOMIZED SOLUTIONS

Vendors are enabling partners to offer more customized solutions to
end-customers. That is the only way to succeed in the printing market. WeP has
introduced solutions like AC-DC printing for army, specialized printing for air
tickets and multi-lingual solutions to broaden a solution provider's
offerings. "We would also be shortly introducing printing solutions for the
vast population of retail establishments, which we believe are about 18 lakh in
number," adds Raghavendra Prakash, Chief Marketing Officer, WeP
Peripherals.

"We suggest the right mix of hardware and software that a customer should put in place, after underst- anding his printing needs." "Document security is an issue with organizations. So they would purchase an MFP, rather than outsource their printing needs" Harish Shetty, MD Binary Systems  PG Kamath Country GM, Lexmark India

With partners showing an inclination to offer printing solutions, TVSE has
internally formed a solutions group, which addresses opportunities in this
space. Recently it worked with partners to undertake projects like eSeva, where
the challenge was to offer cost-effective printing solutions as well as keeping
in mind the inferior quality of paper that might get used. It also worked on a
project for ticket printing.

Says Rao, "Today, our partners understand that printing needs of
customers can be very diverse at times and they have to provide customized
solutions. This is where we offer them the entire platform for hardware and
software."

SERVICE MATTERS MOST

As with all solutions, service is the most important differentiator that
figures on an enterprises buying decision list. Recognizing this, vendors are
pulling all stops in setting up the infrastructure to take care of post-sales
service.

HP has more than 300 service centers in over 90 cities covering A,
B and C-class cities and other upcountry locations, well networked with call
centers. Service is provided through experienced third party support providers.
"HP has a well structured program for all these service providers which
involves, workforce development/training, formalised ongoing communication and
regular total customer experience workshops, dashboard monitoring and monthly
reviews  to ensure we have a high level of customer satisfaction,"
informs Puneet Chadha, Country Manager- Commercial Sales, Imaging and Printing
Group, HP India.

"Computer to Plate technology costs upwards of Rs 75 lakh and an inkjet LFP is an integral component of each installation" "We will introduce printing solutions for retail establish- ments, which we believe are about 18 lakh in number"  Suresh Govindachari Business Manager-Consumer Products, Epson India  Raghavendra Prakash Chief Marketing Officer, WeP Peripherals

Epson claims to have a network spanning across 89 cities through authorized
service partners for AMC, repair and out-of-warranty services. Canon is
currently in the process of expanding its network from 110 to 143 locations.

WeP currently has about 284 partners offering services. It has started
offering the 'Channel Lyceum' program for these partners, which provides the
channel with management-level training and HR-related programs to help them
manage their workforce better.

Lexmark has established the LexExpress, which is a door-to-door service
initiative and the company claims that it is the only vendor offering this
service.

SETTING ONESELF APART

In an overcrowded market, vendors have to work very hard to create brand
distinction and reach their target audience. For Epson, the printer business is
clearly divided between two sets of partners - one selling low-end low-value
printer boxes and the other dealing in specialized printing solutions like large
format printers (LFPs) which are not just high-value but also offer better
margin business.

The first kind of partners prefer selling multiple brands with-out
identifying the differentiating factors between them. The company is witnessing
a noticeable urge in these sellers to graduate to more specialized and
high-value selling. Clearly solution providing is here to stay.

This is why Electronics For Imaging (EFI) is focused on going beyond printers
to offer print workflow solutions, print management systems, web-based print
submission systems. "We also have hardware offerings, which are print
controllers called Fiery but they get supplied to our OEM partners like Xerox,
Canon, Panasonic, Ricoh," adds Atul Saran, Country Head, EFI.

Canon spends 8% of its annual turnover in R&D to make technologically
superior products at low running costs. "We want to be distinguished as a
complete digital imaging company with expertise in image capturing, creation and
delivery," says Alok.

Lexmark, on the other hand, is focusing on educating partners and customers
on how to escape the trap of 5% acquisition and 95% management costs. It had
held a series of seminars, explaining how enterprises often go for a
lower-priced product, but end up spending more time and money on ensuring its
upkeep, networking and scalability.

PRINTING SOLUTIONS ON A PLATTER

Getting partners to realize the kind of solutions they can build around
printers is not an easy task. Says PG Kamath, Country GM, Lexmark India,
"Often, we have to convince partners to sell printers as a solution and not
a stand-alone device. But it is an uphill task." This is probably why
Lexmark has less than 10 corporate resellers.

Not everyone can sell a product like Large Format Printers (LFPs). Here,
besides the product, lot of other solutions like a Macintosh PC, a color
management system and other devices will also be required, complete with
seamless integration between them.

These machines are ideal for large printing presses and publication houses.
For this vertical, another emerging business is the CTP (computer to plates)
technology. According to market sources, in the last eight months nearly 50 CTPs
were sold in the country.

These CTPs typically come in the range of Rs 75 lakh to 2 crore. For each CTP
installation, an inkjet LFP is an integral component. "So if partners can
really tap this segment, they can really reap the benefits in a big way,"
notes Suresh Govindachari, Business Manager-Consumer Products, Epson India.

Puneet suggests that partners should study and analyse their customers
current TCO for an installed printer and offer a much more cost effective
solution with the latest technology and balanced deployment. "He may later
charge a small amount for TCO analysis done for the customer," he adds.

COLOR IS THE FUTURE

With the prices of color printers on the decline, enterprises are more
inclined to adopt it in their workplace. Gartner forecasts that US will witness
a CAGR of 18.93% between 2003-2008, for color printer sales.

Gartner also predicts that units sales in India will rise from 12,70,378 in
2003 to 15,33,092 in 2008. In many developed countries, one-third of printing
has moved to color already. In India, the trend has just started.

The research company predicts that color-enabled applications will act as an
accelerator for sale of color machines. Graphics organization sales will either
remain flat or decline, as more companies rely on in-house outputting,
especially for on-demand printing needs. Production in color will grow in
double-digit figures.

Market margins will decline as sales increase, but volumes will compensate
for it. Front-end margins will fall, but vendors will devise their own margin
plans for rewarding their partners.

SOLUTIONS OFFERED BY PARTNERS

With the convergence of office automation (OA) devices and printers,
partners can offer the entire bouquet of products to a single enterprise
customer. Says RS Anand Kumar, Country Manager-India, Brother Singapore,
"We entered India by offering OA products before launching our inkjet MFPs.
Now, we engage the same set of partners to offer the OA and printer needs, as
they can go to a buyer with the entire plethora of products." MFDs are the
best replacement arrangement for an existing OA setup.

There is a significant change in the mindset of partners when it comes to
offering printing solutions. A case in point is Ansata Computers, which has
steered clear of selling a stand-alone product to customers. "Instead, we
engage with end-customers and based on mutual assessment, we provide our buyers
with the right solution, which could be a mix of hardware and software,"
says Leslie Lean, Director, Ansata Computers. On the software side, it offers
document management software, which helps utilize the maximum potential of many
high-end printers.

Similarly, focusing on the right vertical is very important when it comes to
providing the right mix. Modi Peripherals, for instance, has trained its sights
on banking institutions for passbook printing.

Lexmark sees great scope for e-printing which will negate the use of paper
stationery. Enterprises who go for this can save on warehousing costs and
changing stationery every time a logo or company name is changed. Partners can
encrypt this solution, to that it is non-alterable and secure.

As a vendor, Zebra expects healthcare and retail to drive the movement for
their thermal solutions. Manufacturing is another segment, which have
traditionally been buyers for printing solutions.

Binary has identified corporates, jobbers and print professionals as their
target customers. "These buyers require a lot of hand holding when offering
them the solutions," remarks Harish Kumar Shetty, Chairman, Binary Systems.

For LFPs, the most promising customer segments remain pre-press
establishments, graphics designers, advertisement agencies, design agencies,
publishing, GIS mapping companies and digital photo printing establishments. All
these segments require a very focused approach from partners, as there are
lucrative service incentives attached.

DOCUMENT MANAGEMENT SYSTEMS

If you are planning to offer end-to-end offering in printing solutions, then
think Document Management Systems (DMS) or Print on Demand (PoD). DMS focuses on
effective management of documents to enhance organizational productivity through
digitization, archival, retrieval and deployment of the resultant electronic
document. PoD solutions focus on variable data printing and manipulation of data
through till deployment of processed data over various mediums.

IDC has identified document solution services as a key component of document
solution strategies (DSS). This includes planning and implementation activities
that help end-users to make decisions regarding their IT strategies and put them
into operation.

According to IDC, HP offers four document capture and management solutions,
mostly through third-party providers. AutoStore 2002 is a server-based
application that provides automated capture of documents from multiple sources
and processing and distribution into many document, content and database
management systems.

Even Canon is focusing on and investing in DMS to grow and provide optimum
RoI. It has imageWARE publishing manager, which enables users to generate
professional-looking results in an office-publishing environment.

NICHE PRINTERS

There are some niche solutions which can be targeted at specific segments.
Thermal solution is one such example, which comprises a barcode printer, a
barcode scanner and software. On software front, there could be either standard
software, or partners can come up with customized versions to address certain
application needs. Says Shailesh, "With increasing adoption of ERP
solutions, these software are now required to be customized to get integrated
into the solutions as well. This presents a great amount of value-add to our
partners and they easily stand to make double-digit margins." Photo
printers are yet another solution that will take off, especially as enterprises
adopt color-on-demand printing. Here, the customer has the option of getting
color whenever needed, rather then spending money on both color and mono
printers.

Similarly, Brother has come up with a small Micro Palm printer which can be
slipped into one's pocket and can be used by sales people who are on the move
and need to print on demand. This product has not been debuted in India yet.

SERVICE OPPORTUNITIES

Services are the mainstay of the printer business. The most basic service
agreement is for maintenance of the hardware and providing regular supply of
consumables. There is also a significant increase in demand for integration of
their hardware and software products into the software environment of the
end-users. Often partners have to act as consultants rather than providers to
address a customer's needs. Says Harish, "We understand a customer's
printing needs and processes that he should be putting in place. Based on this,
we suggest a right mix of hardware and some software solutions."

It is very important to offer a cohesive solution to partners so they do not
have to worry about scalability with legacy systems or inter-operability. This
calls for educating customers. Solution providers should show them how their
business efficiencies can be improved and downtime reduced by having a
seamlessly integrated printing solution in place.

The challenge for partners is to engage in a long-standing relationship with
customers, gauging their requirements proactively and then suggesting the right
solution for their requirements. To go the extra mile, partners can develop
flash animated pop-ups which will indicate the IT manager when a particular
printer is low on toner, or when the cartridge needs to be changed or just about
a paper jam.

Adds Anand, "With the user's permission, the solution provider can get
his email added to an alert mechanism, when the printer needs servicing. These
activities are the best and cost-effective ways to take the headache of the
printer management off the head of the customer and make it your
responsibility."

Another good service option is to lease out printers to enterprises. Here the
printer sits in the customer's site, but he does not own it. Instead, he is
charged for the number of prints for a month and is charged for any extra
prints.

The opportunities are limitless, but what is needed is understanding of the
customer's exact needs and the most cost-effective way to meet it. So, arm
yourself with a good game-plan and get ready for better business in printing
solutions.

VINITA BHATIA with
inputs from GOLDIE in Bangalore and ATANU KUMAR DAS in New Delhi

WILL OUTSOURCED PRINTING TAKE OFF?

WeP Peripherals recently announced its plans to roll out over 10,000 printing
centers over the next three years. This initiative calls for an initial
investment of Rs 80-100 crore.

The company launched its onsite component called the 'Print
and Save' scheme nearly a year-and-a-half ago. Under this scheme WeP installs
its own printers in corporate offices who then pay per use. That is, the
customer does not buy either the printer nor does he have to invest in
consumables. He pays for the number of pages he prints.

The offsite component of this initiative is the opening of
printing centers that will cater to people with occasional but specific printing
needs. These would be SMEs that do not have enough volumes to require a printer
on the premises.

The idea is to free enterprises from the hassle of buying
printers, product obsolescence, toner costs and maintenance. But are Indian
customers ready for it?

WeP maintains they are, waving the fact that it has over 800
customers currently opting for this option. But other vendors are not so sure.

Brother International's India Country Manager, RS Anand Kumar
says, "For a logistically complicated country like India, this model might
not work. This is because enterprises might like to own the asset to claim
depreciation benefits. Also, they can write-off the maintenance of the machine
as an expense on the balance sheet."

Also security of the printouts can be a core issue. Elucidates
PG Kamath, Country GM, Lexmark India, "Organizations might not like to show
their documents to anyone outside their company. Therefore, they would purchase
a MFP, rather than outsource their printing needs."

Puneet Chadha, Country Manager- Commercial Sales, IPG, HP India
presents another interesting argument against outsourcing. Accroding to him,
most corporates don't know the actual cost of printing for their organizations
or their expenditure in terms of TCO for printers, inluding cost per page,
infrastructure, maintenance or number of units. How can they decide to the cost
benefits of outsourcing in this scenario?

Even partners have not warmed up to the idea of outsourcing.
Says JP Modi of Modi Peripherals, "When any urgent printing is required, a
user can't wait for a courier to arrive which will contain the company's
printout."

But there are companies like Electronics For Imaging (EFI) who
are also investing towards creating web-based print stores, wherein users can
fire design brochures, literatures or mailers in a very customized manner and
fire the print command on their web interface while the output comes at a
different print location and then gets delivered to them. "We have tied up
with eight partners and would be appointing a few more in the months to
come," adds Atul Saran, EFI's Country Head.

DIGITAL PUBLISHING ON A ROLL

HP believes that digital printing will take over conventional printing.
According to Steve Donegal, Commercial Development Manager, Digital Publishing
Solutions, HP Australia, the changeover is certain, especially in the enterprise
segment, where printing is often outsourced. And he has the statistics to back
his prediction: digital publishing is growing at 65% year-on-year, while
conventional publishing is posting only 1% annual growth.

Steve reasons that though conventional machines have faster
output speed averaging 10,000 pages per hour, they accept only static data. Also
these machines are economically feasible only for bulk printing.

"Enterprises now want to offer personalized mailers or
marketing collateral for internal and external use. And these are usually in
limited numbers," Steve reasons. In such a scenario, digital printing would
be the ideal alternative, as the user has the option of adding variable data or
printing as little as 10 pages.

Also, some vendors like HP offer digital printing solutions that
can be remotely managed. This shortens the printing cycle while offering
mobility to the user. These innovations are putting the brakes on the growth of
the conventional printing solutions.

Steve however adds that for the next few years conventional
publishing will continue as there will always be a need for on-demand and bulk
printing. But the volume of this demand will also see a recession.

Electronics For Imaging (EFI) too sees an increasing growth in
digital printing and publishing. Says Atul, "Currently digital printing
makes up for about 8% of the worldwide print volume. In India, this might be
even smaller, hence there is a huge opportunity."

Also there is a huge demand from the photographic industry for
these software solutions. The Indian market is on the verge of change and the
pre-press business itself is witnessing a paradigm shift as far as processes are
concerned. There is a gradual move towards CTP technology, hence indicating that
digital is the way to go.

Adds Uday Kendhe, Product Manager-Digital Publishing, Neoteric
Infomatique, "Offset will continue to address a very different set of user
requirements. But more and more enterprise buyers will go for CTP
technology."

The Indian prepress industry is a fairly big market. Just take a
look at some of the registered companies that operate within this space. There
are over 700 advertising companies and 15,000 publishing houses bringing out a
lakh newspapers and magazines. Among newspapers, there are some 25,000 local
publications with a daily circulation of less than 5,000 copies each. Add to
this, there are over 30,000 business outfits, which take on outputting jobs on
demand.

In short, there are over 75,000 customers who are continuously
going in for new technology solutions and upgradation. Any solution targeted at
this industry costs upwards of Rs 1 lakh. So if you take this as a base cost of
a solution and multiply it with the customers in this business, the value of the
digital prepress industry can be pegged at over Rs 750 crore, on conservative
estimates.