2019’s Top Ten Office-Imaging News: From Xerox-HP, to New Business Models, and More

It’s that time of the year, when many in the media publish “Top Ten” lists. Here’s our own take, a list of the most important events, developments, and trends in the office-imaging industry, ranked generally in order of importance:

  1. Xerox bids to acquire HP Inc. HP’s board and management has so far rejected Xerox’s offer. But Xerox, backed by investor Carl Icahn, then presents an offer directly to HP shareholders, threatening a proxy war. Icahn doesn’t yet seem to have enough shares yet – he’s currently the fifth largest HP shareholder – to replace  current HP board members with his own proxies who would approve an HP sale.  Such a merger would result in a U.S.-based office-imaging giant . But there’s no guarantee it will occur, and our feeling is that it won’t. Back in June, the two companies were getting along much better, announcing a new expanded partnership. (See Xerox, HP Inc. Partner Together on PCs, Printers, DaaS Technology.)
  2. Xerox sells off its 25-percent in Fuji Xerox, its decades-old joint partnership with Fujifilm. Xerox will still source some of its hardware from Fuji Xerox. But it’s lost a distribution channel in Asia Pacific. For its part, Fujifilm, which now owns 100 percent of Fuji Xerox, has threatened in the past to directly market in Xerox territory – North America and Europe. However, Xerox tweaked Fuji Xerox hardware for the user culture of those markets. And to date, Fujifilm has remained silent on any prospective plans. Fujifilm also withdrew its $1 billion lawsuit against Xerox for reneging on a proposed Xerox-Fuji Xerox merger.
  3. Vendors must contend with a U.S.-China trade under which printers and MFPs that are made in China – and a vast number are – are subject to a U.S. tariff. Several vendors have responded by stating they will shift production to other locations, primarily in southeast Asia. U.S. President Donald Trump has stated we must wait until 2020 or 2021 to see an end to the tariffs. In a welcome move, in September, the U.S. Trade Representative granted printer/MFP supplies a one-year tariff exemption.
  4. Virtually all vendors continue to diversify, whether it’s with IT services, medical-imaging, commercial printing, production printing (Canon launched its first entry-level production printer), label printers, 3D printing, etc. (See, for instance, Konica Minolta Touts Growing IT Revenue.) HP enters the textile-printer market, while Epson continues to develop tech wearables and robotics
  5. HP continues its strategy of expanding its global A3 copier market share. So far, its share has grown from about 8 to 13 percent.
  6. Vendors such as Ricoh promote subscriptions for service, while others promote print-as-a-service, such as Lexmark. With print-as-a-service, the vendor installs and maintains all equipment and supplies, including print servers. (See Printing-as-a-Service: Lexmark Digitizes its Future with MS 365 Cloud-Connected Tools for more on print-as-a-service.)
  7. In the business-inkjet segment, vendors continue to up-end the “razors-and-blades” model, instead offering higher priced model that use lower-priced supplies, via ink-tank models and continuous ink supply system (CISS) models. Vendors also continue to introduce much faster models (see, for instance, Epson Rolls Out 100-PPM A3 Mono MFP for Enterprises.)
  8. Virtually all vendors and many dealers now offer A4 models in their lineup. It’s been a slow and painful process, but most seem to realize A4 in their lineup is a requirement.
  9. Staples acquires Dex Imaging, an office-imaging equipment and managed print services provider. Where will this go? Staples has a national footprint – could it deploy Dex Imaging’s MPS offering this way?
  10. Dealers continue to acquire other dealers. Those doing the acquiring include Kelley Imaging, Gordon Flesch Company, Flex Technology, RJ Young, Loffler, All Copy, Novatech, and Marco. Other key non-dealer acquisitions include Nuance Communications’ sale of its document imaging division to Kofax.

Other trends to be aware of include: HP continues making big strides in the 3D-printing market for industrial/manufacturing applications (producing over 10 million 3D parts in 2017); lower supplies revenue at HP; resignation of HP Inc. CEO Dion Weisler; former Xerox CEO Jeff Jacobson is appointed CEO of Electronics for Imaging (itself acquired by private-equity firm Siris Capital); Lexmark appoints a new CEO and president, Allen Waugerman; Dan Cooper, formerly of Lexmark, becomes CEO of Novatech; worldwide printer/MFP shipments decline year-over-year; generally mixed financial results from many vendors throughout the year; Sharp expands direct-sales coverage, while Xerox closes/consolidates many Global Imaging Systems locations; Xerox re=brands Global Imaging as Xerox Business Solutions; Xerox prepares to enter the 3D-printer market; vendors introduce voice-activated printers and MFPs; and Sharp is back in the PC business and returns to exhibit at the Consumer Electronics Show.

We think that about covers it. In the coming year, we’re likely to see answers to these important questions: Will Xerox acquire HP? Will vendors reverse flagging revenue and earnings trends? Will HP succeed this time in the copier market?

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