Increase in MFPs: good news for dealers

All dealers listen up – because an emerging trend is expected to give the community a boost. As monochrome laser multifunction printers (MFPs) become more commonplace among SMEs and home workers, demand for toner and service will go up, says digital imaging authority Lyra Research, and it is dealers that are well-placed to benefit.
In its new report, entitled Service with a Smile: Aftermarket Opportunities in the Growing Laser Multifunction Printer Market, Lyra estimates that worldwide shipments of personal monochrome laser MFPs will grow from around 2.3 million units in 2004 to 2.5 million units in 2007 before the growth starts to flatten to approximately 2.3 million units in 2009. By contrast, single-function inkjets will account for only 22 per cent of printers by 2009, according to the report.
The shift away from single-function laser printers is similar to the shift that has already occurred in the inkjet market. Because MFPs use 20 to 60 per cent more toner per device per year than single-function counterparts and require higher levels of service, this could translate into big bucks for dealers and OEMs alike.
Regional dealerships, which often enjoy a close relationship with their customers through lucrative service contracts – sending technicians out to pick up empty cartridges, remanufacturing the cartridges, cleaning the printer and keeping it running and so on – will likely be the first point of call. As a consequence, many are already starting to stock a greater mix of OEM and remanufactured toner cartridges to fulfil customer requirements.
Jim Forrest, senior analyst at Lyra Research and author of the report, explained to OPI: "With many companies spinning off companies as separate entities and the growth in home working, MFPs are far more economical. All-in-one inkjets are a concept that has finally dawned on the using public. And with the greater amount of technical parts, MFPs use more toner and will require more technical support than single-function printers. The growth in the installed base of MFPs can only be a positive thing for these dealers and should lead to increased sales of remanufactured toner cartridges."
Angele Boyd, imaging and printing analyst at IDC, also recognises the potential for pay-per-use contracts as a result of heightened demand for MFPs. "Yes, there is an interest in pay-per-use," she told OPI. "Our US research shows 20 per cent of companies are interested, and this is expected to grow with increasing marketing and vendor-to-dealer channel programmes to facilitate adoption."
And the trend towards colour MFPs is expected to exacerbate the trend, says Lyra. The colour MFP market, which at present is relatively small with only around 216,000 units shipped in 2004, is expected to grow at an astounding 55 per cent compound annual growth rate (CAGR) to more than 1.9 million units in 2009 – and keep growing.
Colour laser MFPs will use more toner cartridges than monochrome MFPs because each colour device has four cartridges. As colour laser printers and MFPs grow and more offices print in colour, demand for cartridges used in both types of products will increase rapidly, estimates Lyra. In 2009, shipments of cartridges for colour laser MFPs will grow to nearly 22.2 million units, says the report, a staggering 108 per cent CAGR.
But while some dealers may see a rise in business thanks to growing MFP demand, the OEMs also want to get in on the action. Some are already starting to aggressively target SOHO and SME buyers. Canon now sells some of its MFP family in the retail channel, for example, and Xerox has started selling through open distribution.
"The incentive for MFP makers to hold onto their share of the consumables market is clear, and they’re doing this with programmes similar to copier companies," said Forrest. "With these sources of competition, OEMs are also working to protect supplies annuities with service contract programmes and cost-per-page plans that force users to buy OEM consumables."
With a number of high-end devices, OEMs have also begun to offer customers services and price-per-page contracts in addition to the option of purchasing the machines outright and performing their own service. A host of companies have already started to pay Hewlett-Packard so much per page in exchange for service, said Forrest.
So although both the dealer channel and OEM service providers have a sizeable window to increase service revenue through MFP demand, the fact remains that service contracts will allow dealers to at least differentiate themselves from the big retailers.
"Its tough to put a number on it,"  Forrest acknowledged, "but service contracts are one way where small dealers can differentiate themselves from the big retailer. The big boxes such as Staples don’t do service – but of course, you never know…"
For more information on the report or to purchase a copy, visit: www.lyra.com