IDC: HP’s Acquisition of Samsung’s Printing Group Will Break Hold of Fuji Xerox, Canon, and Ricoh in China

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According to market-research firm International Data Corporation (IDC), HP Inc.’s pending acquisition of Samsung Electronics’ Printing Solutions Group for $1.05 billion, as well as HP’s plans to launch 16 A3 MFPs, will have far-reaching effects in China’s A3 copier market, which has long been dominated by Japanese vendors Fuji Xerox, Canon, and Ricoh.

The move reflects HP’s upbeat outlook on the relatively high-profit margin copier market.

“The acquisition will allow HP to build on its own strength in printing solutions and leverage Samsung’s leading position in the smart-office sector to expand its printing-management service business,” commented Donna Wang, research manager at IDC China, “To a certain extent, HP’s focus on these two areas will trigger major changes in China’s printing market.”

IDC believes that the acquisition of Samsung’s printing business, as well as its launch of 16 new A3 copier-based laser MFPs, will help HP “improve its existing technologies, expand its product portfolios, and speed-up business model transformation.”

Meanwhile, it says, such moves will also result in a product-lineup upgrade and sales-model transformation in China’s printing market.

IDC’s China’s Hardcopy Peripherals Market Quarterly Tracker 2016Q2 shows that A3 copier-based laser MFPs only made up 6 percent of overall shipments in China’s hardcopy peripherals market in the first half of 2016, while its A3 copier-sales revenue accounted for 34 percent of this market – meaning A3 devices had a substantially higher average price than desktop printers.

IDC also states that A3 copier-based laser MFPs generally have greater print volumes than desktop printers, which means larger potential profits from follow-up consumables and services down the road.

HP’s Entry to Break through Current Monopoly in China?

According to IDC, HP’s entry into the market will break the monopoly currently held by Japanese brands such as Fuji Xerox, Canon, and Ricoh, which control the core technologies for copier-based laser MFP, all of which it says will suffer from the change. These Japan vendors will be forced to increase investment in R&D and product upgrades, and attach greater importance to black-and-white mid-speed and high-speed models and color models.

IDC says this will be particularly true in the color copier-based MFP segment, where three of the 16 new products to be launched by HP will be A3 PageWide copier-based inkjet MFPs. In terms of printing speed, color imaging, and cost per page, the firm says these A3 PageWide products will have more advantages over traditional color copier-based laser MFPs (for instance, Wirth Consulting notes that inkjet printers have far fewer moving parts than their laser-based counterparts, resulting in better reliability for inkjet products). Consequently, color copier-based laser MFPs will see fiercer competition in China’s A3 copier-based laser MFP market in the future, accelerating the replacement of black-and-white products by color products.

After entering the A3 copier-based laser MFP market, IDC says HP is also likely to attach more importance to print-management services, which are still at a nascent stage in China. However, more and more contracted businesses will replace transaction businesses. Under the traditional direct-sales model, the firm says Fuji Xerox has clear advantages in the print-management market, while HP is trying to expand its share of this market by enlisting more third-party partners.

IDC also expects that HP will turn its print-management services into compact modules and packages, and will help third-party agents to provide pre-sales and after-sales support. It also believes that this will encourage more third-party agents to adopt the print-management service business model, further expanding China’s print-management services market.

However, according to IDC analyst Donna Wang, the biggest asset HP will obtain from its acquisition of Samsung’s printing business will be Samsung’s 6,500 printer patents, which will allow HP to amass more intellectual property rights in printing, and “make up for its lack of core technology in laser printing in the past.”

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