Nobody doubts that toners, ink and paper are big business. But some people beyond the realms of the office products industry may be surprised to learn that digital imaging supplies revenue is expected to top $100 billion in 2006, according to Lyra Research.
In a report published this week, the digital imaging authority estimated revenue to grow to $101 billion, which marks the first time the supplies sector will register 12-digit revenue numbers, exceeding hardware revenue by 68 per cent.
And a large portion of this pie – over 65 per cent – derives from office demand. Rodger Reis, research analyst at Lyra and author of the report, told OPI+ that the growth can be attributed in large part to the rise of web pages and PDFs on the internet, which began life as printed documents in the office. "This has had a big impact on office hard copy consumption," said Reis. "And the toner and ink per page has increased even on the monochrome side."
Growth on the OP side is also being fuelled by the availability of more affordable, high-speed, easy-to-use colour inkjet and colour laser printers that enable users to print more graphics-intensive documents.
Other factors driving growth – on both the office and consumer side – include broadband internet service; digital photography; high-capacity email accounts; and desktop publishing technologies – all elements that have made it easier to create, share and access electronic documents.
Going forward, Reis estimates digital imaging supplies revenue to grow to $117 billion in 2009. However, at this stage Reis is unable to say whether it will be the OP side or the consumer side that will grow the fastest. This is mainly because it is unclear how much offices will use colour printers even if they do install them. Reis says: "Lyra estimates that colour and graphics-intensive documents will consume three to four times as much toner and ink per page as traditional monochrome applications such as photocopies. These trends will result in increased consumption of ink and toner and, to some extent, value-added papers, driving digital imaging consumables revenue worldwide."
The major players shaping the industry, according to the report, are Xerox and Hewlett-Packard (HP); Ricoh and Canon at the high end; and Epson and Canon on the consumer side, and to a lesser extent, Lexmark.
Xerox and HP are leading the way when it comes to innovation, said Reis. The former is currently undergoing a massive marketing push, with colour at the forefront of the campaign, which is targeting office and consumer as well as the commercial environment. HP, meanwhile, is following a two-pronged strategy, pushing inkjet printers into the office and home, and pushing strong colour laser printers into the office.
"Innovation is the key to success in this market," said Reis. "HP, with its scalable printing technology [a high-performance printing technology that features separated printheads and ink tanks], is well placed in the market."
The aftermarket is also looking more than comfortable. Third-party manufacturers currently have a bigger impact than ever over OEM suppliers, said Reis.
And there is a new group of third-party suppliers emerging: the OP superstores themselves. "Staples is now selling own-branded cartridges, which its customers seem to trust even more than known third-party suppliers," said Reis. "Although the retailer’s true impact on the market at this stage is unclear, we know that it will be significant."