Print is not dead

Marc Pillay, Konica Minolta Marc Pillay, Konica Minolta

There are countless metrics that measure the effect of the pandemic on business and society, but one that throws how office work changed into stark relief is that of printer sales.

According to local figures from the Infosource advisory firm, total sales of multifunction printers in the first quarter of 2020 in South Africa were at 22 778. This dropped to just over 9 000 units in Q2, and then slowly started to recover for a total of just 62 000 units for the year.

As Marc Pillay, CEO of Konica-Minolta in South Africa, told me recently, the last year has been the toughest he’s seen for both businesses and people. He should know, as he’s spent almost three decades in the printing industry, starting out as a technical apprentice after he finished school.

 He says that even before the lockdown, he was already seeing a decline in the multifunction printer market driven by digitisation. Businesses were scanning more and printing less. “And then we all know what happened last April. Everybody shut their doors and we all had to learn to navigate this new world.” He says the biggest impact has not been felt in its new business, but in what he refers to as ‘click’ and annuity revenue. The annuity business has `taken a hiding’ and is down by between 25% and 30%. The click revenue, the service revenue from running the machine, is also down. However, These figures are slowly improving.

This is purely because people aren’t at the office, or at least not as much as they used to be. He says a lot of staff members at medium and large businesses and corporates are only going in twice a week, which he believes is going to last for the foreseeable future.

“There are certain industries where people have to be in the office, and others where staff can operate quite effectively from home. Last year was a catalyst in that area – to teach people how to work from home – but it also showed people that you can work from home if you have a proper internet connection and there are virtual ways of interacting with your customers and peers.”

Move to digital

“At a board meeting, people used to sit around a table, everybody printed minutes and there were copies of the agenda. Now, you have a virtual board meeting and somebody just shares their screen. All those images, prints, copies are gone. And they’re not coming back.” So with the annuity business down by about a third, Pillay says he was faced with two choices.

 “You either accept that your business is going to be a little bit smaller in terms of revenue, or you choose to find that revenue elsewhere. We chose to find it elsewhere and looked at innovative ways of bolstering the lack of print. We need to play more in the digital space.”

He says the total market size in South Africa, excluding the personal market, is roughly between 75 000 and 80 000 units per annum. Of course, that was before the pandemic, and that figure was quite a bit lower in 2020. Still, that’s a lot of printers, and the country has one of the most mature markets in the world.

 “It’s an unbelievable stat,” he says, adding that South Africa is ‘ahead of the curve’ when it comes to things like managed print services and the rental model. However, he believes it’s now more important than ever to show the value of MFPs and their effect on business productivity. He says the machines are no longer just a printer or an output device, but, as they’re linked to the internet, are now workstations and standalone servers. He says work can be stored on the machines, and they’re now more what he calls a ‘communication centre’.

Keen competition

He says in the past, there were separate printer and copier markets, but these have now converged, which is leading to increased competition.

 “Today, we compete against HP, which we never would have done 10 years ago. Then, it was an A4, home market device, and you’d find them in the office, but it was mainly for single users.” Its go-to-market has been to focus on multi-functional devices, for multiple users.

How many people are back at the office? Pillay says he thinks the majority of the financial services industry, as well as the top 100 JSE companies, are not yet back, and his company is feeling the impact of this decreased usage. He says this has led to a ‘big fight’ between the brands, but that all the companies offering MFPs have a share of the market to a greater or lesser degree.

According to Infosource figures, Kyocera was the market leader for 2020, with 8 964 MFPs sold, with Konica Minolta in second place at 8 387. Nashua was third with 8 034. “The devices are still in the office, but how many people are using them? That’s where the biggest link to revenue is sitting. They’re also not buying as much as they used to, but it depends on your segmentation and who you’re targeting as a customer.”

He says it has a nice mix of customer profiles, and sold a lot to the public sector. It is also targeting customers who didn’t have the option to work from home, which was a new market. He says the company used to dominate in the tertiary education area, and ‘that’s been a nightmare’.

“Students haven’t come back and if they do come back, they come back with iPads and all their notes online. We run the print rooms and the student labs and the libraries. In some areas, our reduction in volume is down to below 10% of expected volume.” He says by September last year, their business was roughly 30% down, but the situation has improved a bit since then, and they’re now about 12% to 15% down from the norm.

Different ways of selling

I ask that with so many offices still empty, and people not printing and buying, how has it managed to make up so much ground?

He says it’s due to a lot of cross-selling, and offering existing customers more digital solutions, such as document management. “We’ve had to put in a diversification plan very quickly, but it’s always about the document. When paper gets scanned, it becomes digital, and once it’s digital, we can do anything with it. We’ve been offering clients solutions about how to manage their paper better, and how to manage their document workflow.

There’s still going to be documents. Even if people aren’t in the office, there’s still a document being generated, whether it’s in a physical or digital format. There’s still stuff moving around between people,” he says, such as authorisations, signatories and board packs.

As to a digital workflow product, he says it uses OnBase, from Hyland Software, for corporates, and its own solution KM Files for the mid-market. With digital signatures, he says the company is ‘working on it’ and there are some dominant companies, such as US-based DocuSign.

“For us, the key is to show the workflow from scanning it on a bizhub device, and managing that all the way through to cloud-hosted solution, or whatever the customer has in place, or needs.”

Many people want mobile and virtual printing, and this is done by sending the document through an app, which would end up in the printer queue. When the employee is next at the office, the print can be released. How has the industry adapted? He says it was fortunate in that it has its own direct channel and an indirect channel composed of dealer partners.

It has 19 branches in South Africa, and about 45 independent dealers selling the brand. For the larger deals, it will typically partner with its branches or dealers. The company hasn’t lost any partners, and while there may have been some delays in paying dealers, they’re all still in business. It has also helped its dealer partners with extended terms.

Unlike other businesses, its supply chain was also no affected, or, as he says, it takes the ‘safety-option’ with supply.

“We carry nothing less than three months stock in our warehouse, and we split it around the country, so can move it around quickly. We’re fortunate to have the Bidvest chequebook to allow us to do that.”

 What does he see for the future of print? “My vision is that there’s going to be a return to the office in a lot of sectors, but the hybrid model will remain for the short to medium term. We need to be innovative in how we get a share of wallet from clients to make that hybrid model seamless. That’s going to be our trick as an industry,” he says.

Read more: Transforming the office

“For example, if a customer buys your solution, how do you make it work from home, and how do you make it work at the office at the same price and the same service levels? That’s going to be the future of our industry to make that work. It’s very difficult to provide a service-level agreement to an end-user sitting in a gated estate in Joburg. Can you imagine the nightmare of trying to get in? These are the kinds of things we have to analyse and think about. Our industry is going to change, and we need to start providing print points around the country for people to go to,” he says, adding that it does have a partnership with Minuteman Press, which could well be expanded in future.

“We’re not sitting back. We’re looking at how we do things differently. We’re one of the largest Konica-Minoltas in the world and we’re involved in quite a few of the global discussions. South Africa has recovered from this pandemic a lot quicker than many European countries. The revenue has come back a lot quicker.”


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