The mantra of a generation of copier and printer executives has been: "maintain your MIF." The hardware, the Machines In Field, are what directly drive the back end of the business, namely the services and consumables revenue. Without the machines to feed, the annuity-based business model is that much less attractive. And as we know from our industry financial models, even slight shifts in installed units, product mix, output volumes and margins will have significant influence on all the financials.
So what's new? This (and every other) market has always endured pretty aggressive competition. What's new is that MPS provides focus, transparency and accountability where (to the great benefit of the imaging companies) they were missing in the past. Companies will now identify and control print volumes and, most importantly, restructure their printing environments. They will establish target output volumes and device ratios to streamline and rationalize their document flows and costs. They will install fewer printers and MFPs and manage them much much more rigorously.
The typical reaction and strategy of any individual company is totally unamazing: develop attractive MPS offerings to win the business and gain a higher document share at each customer site by taking away installations from the competition. Take a bigger piece of a smaller pie. Maintain, or even expand, your MIF.
There is some truth to this approach at vendor level, and we can debate who will really win out. But a further, no less certain, implication is that total MIF numbers will decline. But here is where we see a disconnect: industry forecasts expect future hardware sales to be flat, possibly even rising slightly. Even if we saw a slight unit decline, that would still not match the trend indicated by the MPS developments. When these assumptions were challenged at the recent events, the responses got squishy: print rationalization can take many forms, and hardware installations will not actually be affected so much . . . Hmm.
Forecasting is far from exact and never pretty, especially in retrospect. But in light of these trends, the available forecasts do not match up and need revision. Follow those forecasts if you have to, but be wary of how good the sight and foresight is of those analysts showing the way. You may discover that the one-eyed leading the blind (no disrespect intended) is not as helpful as you might have expected.
2 comments:
The 300 pound gorilla in the room?
MIF - was and still is the lifeblood of the copier(dealer) model; it is recurring revenue.
Important for the manufacturers but sacred for the "dealer" model -clicks equal profit.
MPS will effect the number of machines in field, it must, or it isn't "managed".
As you mention, "...MPS provides focus, transparency and accountability where (to the great benefit of the imaging companies) they were missing in the past. Companies will now identify and control print volumes and, most importantly, restructure their printing environments..."
"to the great benefit of the imaging companies..."
The last thing a copier vendor wants is for their customer to know the actual, monthly volumes on each machine. The last thing an old school copier sales person wants their prospect to know is the "real" CPC.
Studies have shown, over and over again, the great majority of customers purchase copy machines with specifications well over their actual needs.
You've scratched the surface here - IMHO - how are all these "hardware manufacturers" going to re-tool their model to fit into a channel based on service rather than product(in theory)?
Here's the worst - some may consider MPS as a marketing technique. Just another method supporting more hardware.
Good post, nice insight.
Rob - similar to the term "document management", "managed print services" means different things to different people. To help me better understand your post, what is your definition of MPS?
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