“Be Careful What You Wish For”
Some old-timey sayings fall by the wayside, but others never seem to lose
their luster. A case in point is that old standard, “Be careful what you wish for.” It’s occurred to me
recently that this axiom is particularly apropos to what we see going on today as MFP vendors gently nudge (or blatantly harangue)
their dealers to “get with the program” and make some life-altering changes in the fundamentals of their businesses.
logical for vendors to want dealers to broaden their focus beyond print. And there are few surprises on the list of the most
common areas of business that MFP vendors choose to promote, whether it’s IT and managed network services; ancillary
IT offerings like cloud storage and IP telephony; document management software; workflow and business process related consulting;
or deeply vertical solutions.
But what’s surprising is there’s been so little public attention to the no-win
situation MFP vendors face as they pursue this approach with dealers.
First, there’s the rather obvious and reasonable expectation
that dealers will heed their vendors’ warnings, as well as what they’re already seeing and hearing on their own.
As a result, many dealers will materially shift their efforts and investments to non-print areas in their businesses.
will feel little allegiance to the limited and often ineffectual offerings MFP vendors haphazardly try to promote as the best
way to achieve diversification. At the risk of mixing my metaphors, once the beyond-the-MFP diversification genie is out of
the bottle, there’s no good reason for dealers to limit their non-print business options to just those few specific
offerings sanctioned and sold by their MFP vendors.
Moreover, these twin effects feed off each other, thereby compounding the
overall risk to vendors. Essentially, the more that dealers invest in the non-MFP parts of their businesses, and the more
they obtain growth and rewards from diversification, the more they’ll accelerate their investment in opportunities further
afield from printing. Likewise, the more expert and confident dealers become in those other domains, the more likely they’ll
stray even further from what their suppliers are offering them beyond print.
It also doesn’t help that MFP vendors today
are pretty blatantly using their investments in IT services, ECM software, and business process automation services largely
as a “hook” to sell more MFPs and printers. Hardcopy vendors like to talk about their non-print offerings, but
they still measure success mostly in boxes and pages.
In fairness, it’s not as if MFP vendors have a lot of other choices.
On one hand, companies like Xerox and Lexmark spent lots of financial and organizational capital in their attempts at significant
but supposedly adjacent diversification. But they discovered they weren’t good at running non-print businesses, and
they still had little to offer dealers who were looking beyond print.
On the other hand, it’s not like MFP vendors can simply
stay the course and not make any real effort to encourage or help their dealers expand beyond traditional office and production
printing. Savvy dealers know they have no choice but to diversify, with or without the aid of their print suppliers. So it’s
a classics case of “Damned if you do and damned if you don’t.”
As difficult as this dynamic would be under the
best circumstances, two other changes in recent years are making the entire process of channel evolution even more daunting
for hardcopy vendors.
For one thing, the MFP channel pendulum is swinging back from direct to indirect sales. Some of this is
because of major initiatives at Ricoh, Xerox, HP and Lexmark to aggressively recruit or shift business to dealers. It also
partly reflects a growing desire by vendors to enable IT resellers to offer MPS to SMB customers. And the rest reflects the
simple fact that dealers have outperformed branches across the MFP industry.
On top of all this, there’s the massive
increase in dealer acquisitions that’s accelerating each month. We’re clearly moving toward a final wave of dealer
channel consolidation. A combination of acquisitions, customer absorption, and organic growth is putting unprecedented distance
between dealer haves and have-nots.
Among other things, this is quickly changing the relative balance of power between vendors
and dealers in the MFP industry. Today’s regional US dealers doing $100 million, $200 million,
or even $300 million and more in revenue are in the catbird’s seat. Vendors quiver and kowtow to what these big guys
want, say and do. Even the mere suggestion they might switch an MFP product line or expand in a new direction beyond traditional
MFPs and printing can be calamitous for their incumbent hardcopy suppliers.
So what are MFP vendors left to do?
I can really provide only two directives. Focus on truly diversifying acquisitions without regard to the fit with MFPs or
dealers (like Canon and Konica Minolta have done in medical), and be honest top to bottom, internally, and with channel partners
about what’s happening. That’s it. Wishing won’t help.
March 2018: “Cat Got Your Tongue?”
More and more these days, the single
biggest part of my job has shifted. It’s now less about interpreting and analyzing what vendors say they’re doing.
Instead, I have to interpret the vacuous statements they proffer, and increasingly I must overcome the total absence of any
communication whatsoever precisely when vendors should be saying something ... anything!
Yes, I’ve often railed
against the declining quality of communication from MFP vendors when it comes to mundane announcements of products, solutions
and programs. But the antics this month just about pushed me over the edge. Ricoh was the final straw, but its actions —
or the complete lack thereof — sadly
are not unique.
So in March, Ricoh in Japan ignominiously blamed its US operation for just about everything bad that’s happened to it this entire fiscal year. That includes the biggest
write-down in its history, and the largest operating and net losses it’s ever recorded in more than eight decades of
existence. It was all because of IKON, and mindSHIFT, and the inability of the US
to focus on profitability, and the failure of the US organization to adapt to
a changing market. Meanwhile, there hasn’t been one word from Ricoh in the US.
Not an “Oops” or a “Wait.” Not “Let us explain” or “Here’s
what we plan to do.” Nope. Bupkis!
Who does that? And why? In fairness to the
US folks at Ricoh, it could be the company’s investor relations team or legal counsel in Tokyo simply won’t allow the US to speak.
But that merely shifts where to lay the blame. And it begs this key question: Who’s been minding the store in
Japan? It certainly doesn’t justify the lack of a reasonable explanation
or any communication in the US. It doesn’t help that Ricoh has never been
at a loss for words when blathering on about its inscrutable “Workstyle Innovation Technology.” I’d gladly forego one posting on that topic for real answers to these very real issues.
As for other
culprits, look no further than Fujifilm. The company looking to take control of Xerox and its iconic brand and legacy has
basically ceded all of the public commentary to Xerox, even though its own credibility and capabilities are critical issues
in the debate over the proposed transaction. And even when Fujifilm does say something, it looks like Xerox wrote the script.
I can’t think of any other instance in which a public company doing the buying has left it to the public company being
bought to explain the deal to investors and the world. How is one to believe Fujifilm can handle the massive challenges inherent
in the deal if it won’t take the lead to justify this contentious transaction?
This deal has also put Xerox
in the unenviable position of having to speak repeatedly but belatedly about how it really has no other options for growth
— or perhaps even survival — and
how it’s utterly dependant on Fuji Xerox for nearly everything it sells. That’s an awkward about-face from the
company’s past bravado. Indeed, if Xerox had been more matter-of-fact and forthcoming about the fundamental nature of
its hardcopy business, it likely would have been better for the company in the long run.
Nor is this phenomenon
limited to major vendors. Look at the case of little old OKI. A year ago, the powers that be in Japan
fundamentally altered (i.e., curtailed) OKI’s printer/MFP business,
particularly in the office market. There’s nothing wrong with that, but one might have thought it was newsworthy ...
or at least deserving of comment or communication by OKI sales companies in the US
and elsewhere. But one would have been sadly disappointed. And don’t get me started about the utter confusion in Panasonic’s
The same problems can also afflict software companies in our industry. More than a year ago, Nuance had
to acknowledge that an appreciable dip in sales in its Imaging division was self-inflicted, the unforeseen impact of some
vague kind of sales reorganization. But Nuance’s Imaging sales had already been stagnant for a few years, and neither
that situation, the nature of the sales reorg, nor what the company was doing in response to the problem has ever been discussed,
certainly not in any proactive sense. In fact, Nuance has said barely a word to press or analysts about the nature or direction
of its imaging business in two years.
At a more general level, the hardcopy industry as a whole has only very recently (and
also very reluctantly) begun to acknowledge openly that the problems it faces from slowing demand
for products and pages is not just a “someday” matter. It’s already here. And it’s bigger and badder
than vendors are presently ready to let on. But so far not a single MFP vendor is discussing in a complete, clear, credible
or quantitative manner where it goes next. A few are doing an “OK” job, particularly HP and Canon, and to a lesser
degree Konica Minolta as well. But there’s a lot of room for — and
a desperate need for — better communication all around.
The bottom line is that I can’t think of a single instance anywhere at anytime in which a company that’s
in the midst of a turbulent environment, or one that’s weathering a big self-induced mess, has ever been well served
by zipping its corporate lip. So speak up!
2018: “No Collusion!”
The phrase has become part of the political vernacular, although it remains to be seen if anything
comes of it all. Meanwhile, in the hardcopy world, we’ve also got an oddly unanticipated outcome that begs the question
whether the players were secretly and illicitly in cahoots to assure the result they all wanted.
What I’m talking about is the complete failure of compact, economical A4 MFPs to supplant significant swaths
of the market for oversized, overpriced A3 MFPs in offices. It ain’t gonna happen. Not now. Not tomorrow. Not ever.
But did this outcome result from dreaded collusion? Nope, it’s not. That’s because
Collusion is just one of the “Three C’s” that can explain how an unexpectedly irrational outcome can occur. The other two are pure Coincidence
and simple Common Interest.
Collusion entails intentional, often secretive efforts among coconspirators to achieve a desired outcome. Coincidence
is the complete opposite. Stuff just happens randomly in parallel to produce a particular result, even if it’s unexpected,
unlikely or flawed. Common Interest is an in-between explanation. It’s when shared preferences operate independently
to nonetheless produce a commonly desired outcome.
With the failure of A4 devices to supplant A3
devices in the office MFP market, there’s no need for an investigative committee or a special counsel. Hardcopy vendors
didn’t get together in a smoke-filled room and agree on a common strategy. But this also wasn’t just some random
throw of the dice. Rather, it has resulted from the overwhelming shared financial interests of hardcopy vendors, as well as
It also certainly helps when there ceases to be any credible threat
from capable and disruptive outsiders intent on spoiling the fun. So “everyone” is getting what they wanted. Oh
yeah, except for those pesky customers. Those stupid rubes continue to pay through the nose for A3 hardware that delivers
far more than they need.
I’m actually hard-pressed to think of a similar circumstance
from another market in IT or elsewhere. Generally speaking, we’re accustomed to seeing “free” markets respond
to unmet demand or underserved customers with new players, new products, or new platforms. No small cars from GM and Ford?
We got Toyota and Honda. Music albums are too pricey? We got iTunes. Taxis are expensive and inconvenient?
We got Uber.
The fact that collusion wasn’t needed to forestall a meaningful A3-to-A4
transition doesn’t make the end result any less suboptimal for individual customers or for the economy as a whole. Just
think of all the more productive things customers could do with the money they’re wasting on A3 devices when comparably
equipped A4 models could easily suffice. How about investing in IT security? Or developing new products? Or perhaps giving
raises to employees? It’s what academics refer to as “economic inefficiency.”
While A3 copiers and MFPs have been the office norm for decades, that wasn’t always the case. Mimeo and Ditto
machines were mostly letter or legal size. And the seminal Xerox 914 launched in 1959 wasn’t an A3 machine. Frankly,
I’m at a loss as to why the industry long ago settled on the idea that A3 paper handling was a sine qua non of design up and down the product line.
Was it the idea a customer would
only buy one or a few of these things, so each one had to be able to handle everything? Was it a carryover from the world
of printing presses? Or was it a way copier vendors could emphasize how they were different from what came before? Regardless,
it was a really bad deal for customers. And it stuck. Even in the copier boom years, no one championed the idea that customers
could buy twice as many machines that cost half as much, although it’s something HP figured out when it launched the
first LaserJet printer in 1984.
Instead, the ongoing prevalence of A3 devices in the
office MFP market is a case study in how the power of sellers’ shared business models and marketing have won out over
common sense and customers’ own financial self-interest. From the advent of complex leasing arrangements in the 1960s,
to a singular focus on cost-per-page in the copier-versus-printer wars of the 1990s and early 2000s, to the click-focused
MPS transition over the past decade, the dominant business norms in office imaging have all served to mask the massive A3
hardware price premium.
Of course, it didn’t help that the top printer vendors were
so excessively naive, simplistic, ill-prepared and mistake-prone in their efforts to push A4 alternatives. After years of
overpromising, underdelivering, and ignoring channel and business model issues, HP, Lexmark, Samsung and OKI to varying degrees
gave up or proved ineffectual. And not a single A3 MFP vendor has ever more than halfheartedly put forth an occasional competent
A4 platform without almost immediately disowning it and assuring failure.
So unless some
nervy incumbent vendor goes for broke in the industry’s future waning days, we’re all gonna ride those A3 MFPs
into the sunset. But perhaps it’s time to tone down the smarmy “We’re all about the customer” rhetoric?
“Let the Games Begin!”
Something tells me this time things are different
... real different. I’m talking about the announcement that Fujifilm is sorta-kinda buying Xerox. I expect this deal
— even if it gets modified and perhaps even if it falls through — will prove to be the long-awaited catalyst that
triggers a final round of hardcopy industry consolidation.
Printing has had its share of
boy-who-cried-wolf moments when it comes to predicting the time is nigh for industry consolidation. Previous M&A announcements
never ended up triggering a rash of other deals. Not Konica buying Minolta back in 2003. Not Ricoh purchasing IKON in 2008.
Not Canon acquiring Océ in 2009. And not the twin 2016 announcements that a Chinese consortium would buy Lexmark and
that HP would acquire Samsung’s printing business.
So what’s different this
time? Five things. First there’s the size of the deal. About $8.6 billion will change hands (a big part of that several
times) in order to create the “New Fuji Xerox.” That’s small potatoes in the gluttonous world of corporate
M&A these days, but it’s much more money than in any previous print-related transaction.
Second, there’s the timing of the deal. In some ways, it’s counterintuitive. After a frighteningly miserable
2016, 2017 turned out to be an OK-ish year for the majority of the industry, with improvements in both sales and profits.
And it was an almost good year for a few vendors. But clearly printer companies now see this as just a temporary lull; it’s
the eye of a hurricane. Things will only get worse, so it’s time to hunker down. And vendors see safety in bigger numbers.
Third, there’s the context of the deal. For two decades, there’s been a subtle but significant and continual
shift in the locus of power in the office printing industry from channel players to vendors. But that’s changed abruptly
in the past year or two. While everyone was obsessed with which vendors might buy each other, the real M&A action (and
money) quietly shifted to the dealer side. We’re fast heading toward a much “lumpier” landscape with a lot
fewer, larger and more powerful dealers who together will determine which hardcopy companies win and lose. There won’t
be room for all of today’s suppliers.
Fourth, it’s Xerox. The brand and company
ain’t what they used to be, but Xerox is inextricably linked with office imaging. And when Xerox does something —
anything — it tends to get more attention from both inside and outside the industry. And even in the face of considerable
challenges, the New Fuji Xerox is likely to be a more formidable competitor than the old Xerox.
fifth. There’s a palpable sense of disequilibrium paired with a scent of blood in the water.
So who’s the next contestant on “Let’s Make a Deal?” I don’t know, but I do believe
the industry is coalescing into four distinct groups of companies. It’s the dynamics within and between these groups
that will determine the next dealmakers.
First, there are the Mega Vendors. That’s
HP, the New Fuji Xerox, Canon, Ricoh and Konica Minolta. Their sheer scale ($10-$20 billion in printing revenue), channel
footprint, and breadth of offerings mean they’re here for the duration. They’ll be able to expand into adjacent
“document” services. And more importantly, they’re moving into industrial inkjet printing. These companies
are probably too big and too print-centric to be acquired, although Ricoh might prove to be a wild card. More likely, these
vendors will themselves become serial acquirers, but their prey will be mostly smaller industrial print technology add-ons.
Then there are the Twin Tweens. That’s Epson and Brother. They’re moderate in size, and each performs
pretty well in its own domain. They’re trying to move upstream and into new channels to grab a bigger piece of the office
market. Each has a toehold in industrial printing. While both are somewhat diversified, printing is still their largest business.
And although M&A has not been part of their DNA, Epson and Brother may well confront a new eat-or-be-eaten dynamic.
Next is the Fish-or-Cut-Bait Crowd. That’s Kyocera, Toshiba TEC, Sharp, OKI and also Lexmark. Each is part
of a larger diversified company, although much less so in the case of Lexmark. Their hardcopy revenues range from under $1
billion to over $3 billion. Kyocera, Toshiba TEC and Sharp are decently stable with a good range of office devices, but they’re
not much on the desktop or in industrial printing. OKI is smaller and perpetually struggling. And Lexmark is in its own world
these days. Sharp (with its sugar daddy Foxconn) has spoken of making a big buy that will move it up the printing ranks, but
OKI is likely to wither away. So does that leave Toshiba TEC and Kyocera in a Mexican standoff?
there’s the Industrial Crew. You recognize names like EFI, RISO and Memjet, but there are lots of lesser-known players,
such as Xeikon and Screen, and a panoply of niche vendors in everything from textiles, to labels, to boxes, to signage. They’re
smaller companies who hope that industrial digital printing grows fast enough and soon enough — before their funds are
depleted or their investors grow too weary from the wait.
Yup, it’s gonna be the
race of a lifetime.
December 2017: “Our Own
At any given moment these days, my inbox seems to be flooded with
results from various surveys and polls conducted by or on behalf of MFP vendors and imaging solution providers. Along with
fact-free blog posts, vacuous tweets, and self-congratulatory Facebook missives, producing data on “what real people
really think” has apparently become obligatory in the cool new world of B2B marketing. But just because this trend is
hardly unique to the hardcopy industry, doesn’t mean we shouldn’t hold our own accountable for jumping on the
“fake news” train.
Here’s a sampling of items that have crossed my desk
in recent months. Canon in December proclaimed that a survey it sponsored found “60% of enterprises will implement digital
transformation strategies by 2020.” HP in September released results from a consumer photography survey that found “Germans
like to photograph a lot.” Ricoh, also in September, revealed results from a survey of European workers that found “81%
believe new technologies such as automation and AI are changing how we work.” In November, a Brother survey found two-thirds
of SMB companies feel they need to do a better job “increasing the efficiency of business processes,” and about
half said “cutting corners on office equipment sometimes backfires.” And YSoft in August determined that 52% of
younger US workers thought their companies had “too many paper-based processes.”
Can you say, “Duh ?” I admit I’m cherry-picking these findings, but such “insights”
are typical of what vendors rush to tell the world. Sadly, these divinations are right up there with “people like mom
and apple pie,” and “most folks prefer lower taxes.” Will these genius revelations never cease?
It’s not that these efforts are necessarily intended to mislead or disappoint, but far too many of these surveys
and polls end up doing one or both of those things because they suffer from two serious and intertwined flaws.
First and quite strangely, there’s often no compelling reason why a particular hardcopy vendor or solutions
company is bothering to sponsor or conduct such an information-gathering activity. All too often, the topic is some variation
of workplace/workforce/workstyle meets technology/solution/service to produce innovation/transformation/evolution. Yet the
questions asked are so vague — and the likely answers so obviously predictable — that one wonders why a company
would go to the trouble and expense.
Other times, it’s like the vendor is hoping
to position itself as a source of “basic research” regarding the IT landscape. Or it expects to discover some
psycho-sociological “truth” that academic researchers have missed. But that thin veneer of pseudo-selflessness
all too often yields “findings” that are of little or no value and have minimal applicability to the vendor’s
present customers or its future business. Moreover, I’ve yet to see a single one of these polls that explicitly —
or even implicitly — tries to answer that most fundamental of all questions: “So what?”
Second, even if the underlying goal or premise of the polling activity has merit, very often the methods employed
by the vendor or on its behalf are somewhere between questionable and laughable. It can be everything from a weak survey design,
to badly worded questions, to poor sampling methodology, to minuscule sample size. For example, one of the snippets I referenced
earlier came out of a mere 100 responses to an online SurveyMonkey questionnaire. Really?
these problems together, and you get our industry’s own version of what I call “fake news.” Vendors produce
surveys that by design are unlikely to reveal any meaningful findings or actionable information. And they compound this by
employing methods and tools that are incapable of assuring the findings are reliable or even real. It’s sort of a new
and unwelcome spin on an old saying. “Those who can, do; and those who can’t, sponsor surveys.”
That’s why in my role as an industry analyst and newsletter editor, I pay little attention to these increasingly
common PR pronouncements. And I have to wonder if anyone else pays them heed. Aside from the vendors who want to create a
vague aura that they’re on the leading edge of momentous change, one has to wonder why the companies bother with these
activities at all.
And then there’s the matter of opportunity cost, which to me is the most
frustrating aspect of these misbegotten polls and surveys. Instead of spending time and money trying to be seen as disinterested
market observers, vendors should be collecting and sharing data on what their customers, sales prospects and channel partners
are doing “down in the trenches,” so to speak.
I’m still waiting for the
first MFP vendor who produces a credible report on why customers chose their products over those of the competition. Or what
about a poll on how low color page costs will really need to go before companies are comfortable shifting en masse to color
devices and output? Or how about a survey on the kind of suppliers companies feel comfortable turning to for ECM, or managed
IT services, or consulting services? These are the kind of results I’m interested in seeing. How about you?
November 2017: “The Hospice Option”
As I’ve often remarked to subscribers of The MFP Report, the editorial page is typically the last, most challenging
and most invigorating part of each issue I write. After more than two decades and over 260 issues, I wonder occasionally if
I’ve exhausted the list of available topics on which to pontificate. To help allay that anxiety, I keep a folder of
possible subjects, tidbits and reminders to inspire me. It’s a simple system that works.
case in point is an article I put aside during the summer. The title was “Why It Might be ‘Dangerous” for
IBM to Turn Itself Around.” It was written by Daniel Howely, and appeared on the Yahoo Finance news page on July 22.
The article was inspired by the fact that IBM four days earlier had announced its 21st consecutive quarterly revenue decline.
But what particularly intrigued me were some quotes from Aswath Damodaran, a professor who teaches corporate finance and valuation
at the Stern School of Business at NYU.
Damodaran was quoted stating the following:
“Not all companies last forever. There is a life cycle to a company. They are born, grow and then decline.” He
added that “Trying to force growth in older companies like IBM could actually have a negative impact on them, because
they might end up simply throwing good money away.” Wow! In what other industry have we seen companies experience years
of revenue declines and billions wasted on misguided strategies to reinvigorate growth? As Damodaran concluded, “When
you’re 75, you’d love to be 35 again, but you’re not going to.”
was lacking in the article was advice on what geriatric companies are actually supposed to do when additional investments
made in the hope of rejuvenation simply don’t or won’t pay off. At the risk of sounding tasteless, impractical
or even insensitive, I’d like to suggest an option. I call it Corporate Hospice Care. Absent a competent strategy to
regain growth, aging companies in declining industries at some point will need to come to terms with death. So why not make
it easy, dignified, and as painless as possible?
I speak from some experience. Sort of. In the
past four years, I’ve lost two parents and a dear friend to cancer. In each case, we relied on some form of hospice
care. Although the specifics can vary, hospice care is generally an approach that focuses on palliation of the chronically
ill, terminally ill, or seriously ill patient's pain and symptoms, while also attending to the patient’s emotional
needs. In an era in which the law increasingly ascribes personal rights to corporate entities, why not hospice care for corporations?
Fundamental to the concept of hospice care is the idea that death is just a part of life. At some point, the focus
must shift from remedies and cures, to acceptance and a managed demise. In that context, hospice care for corporate patients
would seem to be a natural and even logical next step consistent with Professor Damodaran’s view that ”Not all
companies last forever.”
It goes without saying the hardcopy companies most vulnerable to
terminal print-itis are those who have the greatest dependence on hardcopy revenue. There’s still a pretty long-list
of vendors who obtain roughly 50% or more of their sales from printing: Fujifilm, Epson, Brother, Canon, Ricoh, Konica
Minolta, RISO, Xerox and Lexmark. And the degree of print dependency becomes more disconcerting as one goes down this list.
Perhaps ironically, while HP is certainly a top-tier hardcopy company, printing generated just 36% of its total revenue in
This is not to argue that all of these companies are doomed, or that each faces
an equal chance of mortality. But it’s certainly true that past efforts by Xerox and Lexmark to diversify away from
printing have not exactly panned out. Indeed, Xerox, Ricoh, Lexmark and RISO presently have shared no significant or credible
path to lessen their hardcopy dependence, except for some efforts to grow industrial printing. Conversely, expansion in the
medical/biological field by Canon, Konica Minolta and Fujifilm seems so far to be more promising.
what might corporate hospice care actually look like? Foremost, it would require acceptance of a continued downward trend
in revenue, quite possibly with an accelerating level of decline after some negative inflection point. It would also necessitate
a laser-like focus on maximizing operating profit. Fortunately, that’s easier in printing than in many other industries.
To accomplish this, one would likely see further slashing of R&D expenditures, even lower capital investment, reduced
headcount, greater outsourcing of manufacturing, and further de facto “outsourcing” of sales to channels. There’s
also something to be said for treating remaining employees with the utmost compassion.
one might argue Xerox, Ricoh and Lexmark are to varying degrees already operating in accordance with such a prescription.
But of course, this kind of trajectory is easier to pursue for private firms than for public companies. Because of that, I
would expect to see one or some hardcopy companies undergo private equity buyouts. Indeed, one might argue it’s more
likely for some print-centric companies to go private than to be acquired by competitors in that oft-predicted final wave
October 2017: “Go Fourth
and prosper? … I Hope Not”
As the old saying goes, “Once is an incident,
twice is a coincidence, and three times is a pattern.” So what do you call it when the same stupid scenario plays out
in the hardcopy industry for the fourth time in 15 years? Well, I call it a fiasco.
talking here about the massive financial fraud that’s engulfed Ricoh India and Fuji Xerox New
Zealand (and Australia) in recent months. But lest we forget, these twin disasters
were preceded by the original “Blame It on Brazil” debacle Xerox revealed in 2002 — which actually entailed
problems across Europe, Latin America and Canada — and the “Pain in Spain” mess OKI confessed to in 2012.
These four events clearly evidence a pattern of inattention at best and malfeasance at worst when it comes to basic financial
controls and fundamental management oversight among multiple vendors in governing various overseas sales subsidiaries.
Just to recap, although none of these disasters alone was life-threatening to the company involved, each was a major
mishap with serious repercussions for the respective vendor. And the implications extended beyond just one territory.
Even after fifteen years, the Xerox situation remains the mother of all messes. Issues in Brazil
and other overseas sales subsidiaries were at the heart of Xerox being forced in 2002 to restate its revenue for 1997 through
2001 downward by $1.9 billion, with a corresponding $368 million reduction in pretax earnings. Meanwhile, Xerox was dealing
with its “unsustainable business model” and was nearly on the brink of collapse.
Five years later in 2012 — and at the other end of the printer industry — OKI had to restate its results
for the prior six years because of irregularities in Spain. OKI took a hit of nearly $400 million on
net income and $100 million on sales.
In contrast, the messes at Ricoh India and Fuji Xerox New Zealand remain “works in progress.” Both
vendors would like to think all the bad news is out and accounted for, but no one really knows. What we do know is that between
last fall and next spring, Ricoh could end up taking a hit well in excess of a half-billion dollars to address years of fraud
in India. And Fuji Xerox has already taken a $340 million charge to net income
for six years of fraud in Oceania.
a combined total of more than $1.6 billion in reduced earnings just for these four incidents! And that doesn’t include
the consequences of reductions in stock prices, market cap, headcount and sales. What’s so striking is the common themes
I see across these four situations. Despite different eras, vendors and locales, so much of what happened, why it happened,
and how it was handled is strikingly similar.
Consider that in each case, the underlying malfeasance
was widespread, long-standing, and significant in scope. The overstatements to sales and income were so egregious as to very
clearly be “too good to be true.” Yet even when employees raised questions — as they did invariably in each
instance — their concerns were easily and quickly ignored. In effect, the key constituencies in both the local sales
companies and the corporate headquarters were so vested in assuring that the subterfuge continued, it was nearly impossible
to recognize the underlying fraud and address it.
Of course, one could argue that for each of
these vendors, the particular problems were geographically isolated and have not been repeated ... at least as far as one
knows. Indeed, it’s tempting to believe that hardcopy vendors both individually and collectively have learned the requisite
lessons from these past blunders. But one wonders why the first one or two instances would not already have been sufficiently
didactic. So I’m left to ponder. Who’s next? Where? And when?
Putting that worry
aside for now, there remain far more pressing questions that the hardcopy industry as a whole must consider. From my perspective,
the egregious lapses that transpired at Xerox, then at OKI, next at Ricoh, and then at Fuji Xerox reveal three disturbing
First, we’ve witnessed excessive readiness by management to accept unreasonably
positive outcomes as evidence of superior operational performance. Second, we’ve seen a willingness by executives to
brush aside uncomfortable information when it’s conveyed by outsiders, from those in the field, or from those who are
lower down in the organization. And third, we’ve observed how an underlying current of desperation during difficult
times can cause leaders in effect to say “Don’t look a gift horse in the mouth.”
We’ve also seen the same tendencies play out in situations that didn’t involve fraud but still proved
to be very detrimental. Look no further than Xerox’s unwillingness to confront the big problems in its former BPO business;
Lexmark’s failure to realize it was overspending to buy underwhelming software firms; or the refusal by Dell or Panasonic
or other vendors to admit their total irrelevance to the hardcopy industry.
At a time
when the industry and every hardcopy vendor must truly question old assumptions, diversify in uncomfortable new ways, and
pursue change sooner rather than later, it’s time now to consider the lessons from this sordid history.
September 2017: “Buy, Buy EFI”
Let’s face it. We’re well into the “everybody needs somebody” stage in the printing industry.
Acquisitions and diversification are the name of the game. But consolidation is proceeding at a glacial pace. Vendors are
more interested in businesses that are further afield. That can be good news (Canon and medical) or bad news (Xerox and BPO).
But there’s a much closer-in company that hardcopy vendors are ignoring at their own peril as possible prey. And that
company is EFI.
I’m not putting on my financial advisor hat. I don’t even own one.
But what I am saying is that from a strategic, tactical and competitive point of view, EFI could be a very logical acquisition
for almost any print vendor around today.
Folks who think of EFI mostly as that pricey
Fiery supplier for color office and production MFPs might be surprised to know those RIPs are rapidly declining in importance
at EFI. Fiery generated just 27% of EFI’s revenue in the most recent quarter, and Fiery revenue was flat in the first
half of the year versus three years ago. It’s just that the rest of EFI has been growing so much faster, both organically
and from acquisitions.
As a result, 2017 is expected to be the year EFI finally surpasses
a billion dollars in revenue. The company now gets twice as much revenue from its diversified industrial inkjet hardware and
supplies business as compared to the Fiery business. The rest of EFI’s sales are from its vast collection of software
used by all sorts of print providers to run their day-to-day operations.
All three of EFI’s
businesses present interesting opportunities for hardcopy companies in the context of a would-be acquisition. Let’s
start with the Fiery business, since it’s the most familiar to MFP vendors. EFI is on track to do around $250 million
in Fiery sales this year. And with a 70% gross margin, the Fiery unit performs more like a software operation than a hardware
business. Not only are Fiery RIPs used by nearly every maker of A3 color MFPs, EFI has gradually expanded its Fiery sales
into the world of digital presses and inkjet devices, not to mention supporting its own diverse industrial printer lineup.
The benefits of a printer vendor taking control of the Fiery business would be twofold. It would cut out the middleman
and some markup, and it would put all competitors at a worrisome disadvantage. And those other vendors couldn’t simply
stop buying Fiery controllers. They have no ready alternatives in the short term, and perhaps not even in the longer run.
Over time, a new owner could even create differentiation between the features in its own Fiery RIPs and those available to
competitors. And a new owner would be ideally positioned to leverage all that Fiery technology for its own industrial printers.
Then there’s EFI vast and growing array of industrial inkjet and LED printers and supplies. It’s everything
from signage and labels, to textiles and tiles. And it should produce $600 million in sales this year. That’s a lot
more than small industrial digital print competitors like Xeikon, and it’s arguably more than any of the big diversified
hardcopy companies are doing in the industrial market. Adding EFI’s industrial printing revenue would catapult Xerox,
Canon, HP or Konica Minolta to the very top of the industrial print world.
And then there’s
EFI’s easier-to-overlook “Productivity Software” business, which will do around $150 million in sales this
year. While this is EFI’s smallest business by far, it does have the highest margins. More importantly, these tools
put EFI in the enviable position of enabling industrial print providers to go digital, and wedding them to an EFI print ecosystem.
There are also very important but less quantifiable pluses for EFI as a potential acquisition. Both the company and
its management are exceedingly well-known to hardcopy vendors. Moreover, EFI has demonstrated an effective and reassuringly
conservative ability to make one acquisition after another ... and leverage them. The deals have mostly been small, and all
of them were paid in cash. Yet EFI still had $431 million in cash on June 30. There have been no big failures on the list,
and all these deals have helped EFI grow 2.5x in size since the Great Recession. Talk about reducing the risk in a deal.
Still, EFI remains barely a mid-cap company in a stock market in which investors like large-cap firms. Moreover,
one has to ask how truly disruptive or dominant a company with $1 billion in sales across three businesses can be in a truly
massive industrial printing market transition.
Of course, timing can be everything, especially
since EFI has an awkward history of pretty big swings in its stock price and valuation. For the past five years, the stock
has mostly bounced between $40 and $50. But this year, the stock has careened from a high of $51, to a low of $26. A day after
EFI scared the bejeezus out of investors on August 3, when it warned of revenue recognition issues that turned out to be nothing,
the stock plummeted 45%. That gave EFI a market cap of just $1.2 billion. By the end of September, the share price was back
up, pushing EFI’s valuation to $2 billion. But that’s still below a recent peak of $2.3 billion back in April.
So who’s gonna open up the checkbook? You?
August 2017: “Healthy Choices”
good reasons, there’s been more than a little handwringing amongst hardcopy vendors, investors, analysts and others
when it comes to figuring out if, when and how these companies will proactively plan for their “next act.” The
context is a printing industry that on an overall basis is slowly declining. Understandably, the concerns are greatest for
the largest vendors and for those vendors who are most dependent on printing for their current revenue and profit.
I, too, have worried that I don’t see enough of these vendors taking sufficient actions to create new businesses
with adequate scale and financial attributes to offset the decline in printing. Eventually, they’ll have to replace
the bulk of what they get from printing. I see three plausible explanations for these vendors’ slow response.
First, there’s the addictive nature of the supplies-and-service annuity business model. It’s like asking
why a drug addict doesn’t stash away some money for a rainy day. The second issue is the self-soothing way vendors tend
to believe all they need to do is gradually move into comfortably adjacent markets, whether that’s production and industrial
printing, or document management and IT services. They tell themselves the transition will be natural, comfortable, uneventful.
And the third and perhaps biggest roadblock is a combination of plain old fear and denial, plus a belief there’s still
plenty of time to plan.
But the past year has somewhat surprisingly provided evidence vendors
are waking up to the dangers and recognizing new possibilities. And some of them have decided their “next big thing”
will be healthcare. I’m not talking about healthcare as an interesting vertical in the world of printing, document management
or IT. No, I’m talking about horizontal healthcare as in medical equipment, allied software and services. You know,
the kind of healthcare that’s designed to help make people healthy ... or at least healthier.
In less than a year, we’ve seen two top printing vendors make pretty important acquisitions that are likely
to set them on paths that will make healthcare an increasingly larger and transformative part of their respective businesses.
First, we saw Canon complete its $5.6 billion acquisition of Toshiba Medical Systems Corporation (TMSC) late last
year. I’d like to think this reflected a strategic awakening at Canon, but the deal was probably justified as much or
more to help a fellow Japanese corporation in dire financial straits, than to bolster Canon’s long nascent efforts in
diagnostic medical devices. After all, Canon had been talking about expanding further into healthcare for years, while giving
no indication it planned to do anything that was either tangible or timely. However, owning TMSC for just six months has worked
wonders for Canon’s financial results. It can’t be lost on management that TMSC is by far the best thing that’s
happened to Canon’s financial health in quite some time. So look out for even more deals.
a few weeks ago, we saw Konica Minolta announce its billion-dollar purchase of US-based Ambry Genetics. It’s the biggest
acquisition since Konica and Minolta came together in 2003, and the most diversifying as well. Like Canon, Konica Minolta
had been talking about expanding its tiny healthcare business for some time without doing anything much to make that happen.
Now, there’s a good chance Ambry will have the same kind of fortuitous financial impact on Konica Minolta, and prove
to be a strategic catalyst for additional healthcare investments.
And it’s not
just these two hardcopy vendors who are making “healthy choices.” Consider that the company which had been bidding
most aggressively against Canon to buy TMSC was none other than Fujifilm, which owns three-quarters of Fuji Xerox. Like Canon
and Konica Minolta, Fujifilm already has a smallish medical business that it’s looking now to nurture and grow.
Other hardcopy vendors’ plans are more aspirational. Sharp wants to use its display technologies in the medical
field. Kyocera already has a medical and dental division. Xerox PARC is partnering “to tackle healthcare challenges
through collaboration in medical technology, engineering and robotics.” And both HP and Funai have spoken of leveraging
their inkjet technologies for biomedical and pharmaceutical purposes.
lots of technological or even business synergies between printing and healthcare beyond some underlying commonality in optics
and digital imaging. The true impetus has much more to do with growth. Healthcare and allied medical fields will be among
the most dynamic and fast-growing sectors in the global economy in coming decades due to technological momentum and demographic
And I also see a healthy difference in the mindset hardcopy vendors are bringing
to this field. In businesses closer to office and production printing, hardcopy vendors display a distinct sense of unearned
entitlement. It’s sort of “Don’t you know who I am?” But with healthcare and medical technology being
so much further afield and also exceptionally dynamic, these vendors seem to sense they’ll actually have to earn everything
they want. And that’s a healthy choice.
2017: “Sure, We Can Do That”
Sometimes we Southern Californians
take for granted the inherent differences that come with living on the Left Coast, like year-round sunshine, great ethnic food, and day laborers. That last one refers to the couple dozen immigrant
workers in any Home Depot parking lot every day of the year. They’re new to the country or down on their luck, and are
willing to help with almost any task for a reasonable cash payment. It’s sort of like the work I used to do as a kid
for my dad ... except there was no cash payment.
I’m starting to see
the makings of an analogous trend in the US office MFP business. It’s too soon to say if this
development has legs, but it’s worth a look ... and some cautionary advice. What I’m talking about are a couple
of recent announcements from Ricoh and Konica Minolta. They’re about how both companies want to leverage their MFP service
people and infrastructure to pursue opportunities in new, not necessarily adjacent markets. My concern is that these initiatives
are very simplistic and not terribly sound.
In May, Ricoh announced Service Advantage, which
it described as a “substantial addition to its services suite.” The mission is “to help businesses accelerate
their core strengths” and “enable a significant competitive advantage.” To do this, Ricoh is offering a
wide range of businesses access to its global network of 25,000 skilled and certified service employees. Ricoh says they possess
“extensive market knowledge and distribution networks” and “understand the business conduct and laws”
in 200 countries and regions.
Ricoh boasts that its MFP service techs can provide “cradle-to-cradle”
services. That’s not babysitting, although I’m sure Ricoh would do that too for the right price. It’s just
another bit of undefined industry argot. Ricoh touts its expertise in device lifecycle management, distribution, installation,
maintenance, training, and physical asset retirement. But Ricoh never really pins down what exactly any of these services
are; how many or what kinds of employees provide the services; or any options for service delivery.
Then in June, Konica Minolta announced it is investing up to $3 million in Knightscope, a Silicon Valley maker of security robots. This follows a small initial investment in 2014. It’s the rationale that’s
interesting. The focus isn’t on robotics technology or the security market. Rather, it’s “to leverage Konica
Minolta’s service technicians.”
The common thread in what Ricoh and Konica Minolta
have announced is a parallel quest to find new things for MFP service technicians to do. When you break it down, the message
is really pretty simple: “We have lots of service techs who do lots of stuff, so why not let them do stuff for
you?” We’re not talking here about MFP vendors advising other companies on service infrastructure design, field
service systems or software, or best service practices. This is about providing MFP service tech bodies and hours far and
wide so that other companies don’t have to hire, train, deploy and maintain service techs of their own.
This type of offering is new in the MFP world, but the practice has a long history in the IT market. Today, field
service outsourcing is just another link in the booming logistics support and supply chain management business. In some cases,
it’s closely intertwined with IT outsourcing.
Now for the cautionary advice. Look back to
the early days of field service outsourcing in IT in the 1980s, and see who was doing it. And why. I stumbled across a “leaders”
list IDC had prepared over 30 years ago. It’s a veritable who’s who of old, largely forgotten mini and mainframe
companies like DEC, Prime, Data General, Tandem, Wang, Burroughs, Microdata, Basic Four, etc.
think back to what else was happening in the ‘80s. The PC market was exploding, and these mini and mainframe computer
companies were getting slammed. They too had lots of service techs and were looking for a new way (or any way) to make money.
Does this sound at all familiar? Nearly all of them got into field service outsourcing, and it was a decent business ... for
a while. But it wasn’t enough to help most survive. In fact, only a few in that business managed to hang on (e.g., IBM,
HP, Unisys, Honeywell), and none of them still do field service outsourcing.
early interest among two MFP vendors who want to leverage thousands of service techs warrants some critical thought. Let’s
start with the most fundamental question. Either these vendors have too many service techs; or they think their techs can
easily take on totally new tasks; or they’re expanding their service forces to gain new outsourcing work and customers.
I have concerns with each of these scenarios.
MFP service needs are declining, which means
fewer techs. If a vendor has too many techs, downsizing is the prudent choice. However, if the idea is to build an outsourced
service business, then the economics, competitive dynamics, prospects, and business model for that endeavor deserve a harder
look. Field service outsourcing faces a lot of pressure on pricing, margins and profits. And the barriers to entry are hardly
insurmountable. Ask Xerox about its experience with complementary services. Just because a vendor can stretch the services
it offers, does that mean it should?
It’s been quite a while since I’ve
editorialized about what it’s like to be a print industry analyst. The last time was back in September 2010 (“That
Raised Eyebrow”). Then, the introspection had been brought on by the untimely death of a dear colleague. As I stated
at the time, “No one likes to defend what he does for a living, least of all an analyst who’s accustomed to examining
others.” I also emphasized the value of “inherent and inerrant skepticism.” As I said, “To be a thoughtful
and well-grounded skeptic is the epitome of what it means to be a strong analyst.” I still stand by those words.
But much has changed since then in printing, and more generally in the way people today look at news and unvarnished
analysis. In our own industry, too many vendors now act as if all they need to do is string together trendy argot and add
a few aspirational “change the world of work” statements. They equate those modest efforts with actually delivering
tangible news. And they look daggers at anyone who doesn’t drink their hardcopy Kool-Aid. For some vendors, any contrary
assessment that an analyst or a member of the press publishes is treated as if it were “fake news” and a deep
Here’s a case in point. I was recently admonished quite harshly by a vendor
for certain statements I had published months earlier about that company. The vendor complained long after my words had appeared.
Only now was I being told those words “were not necessarily interpreted as a token of trust or an interest in building
a good relationship.” If I knew it were a date, I would have brought flowers. I won’t say who the vendor is as
THAT wouldn’t really be newsworthy. In this instance, I choose to side with Shakespeare’s Henry IV. “The
better part of valor is discretion.”
And that wasn’t the worst of it. This
wasn’t a case in which the vendor actually disagreed with my assessment. Indeed, the vendor had long ago made very clear
in a phone call that it agreed with me completely. During the call, the vendor had told me other analysts and press people
shared the same perspective. But now, many months after the fact, I was informed the real problem was that I had had the temerity
to express my views publicly and in writing. Quelle horreur! I was to be punished because my feedback shouldn’t ever
have gone beyond our call.
I’m not one to let sleeping dogs lie — especially not
when there’s an opportunity to enlighten and to be snarky all at the same time. Indeed, one of the few perks of publishing
is getting to have the last word. So, I asked this vendor a simple but telling question. Was his company equally offended
and morally pained when on several occasions since that fateful commentary I had dared to put in print certain genuinely positive
and occasionally even glowing assessments of other things the same company had done. The response? ... nothing but crickets.
And that’s precisely my point. I’m not here to be a cheerleader. I don’t do rah-rah. Not for any
vendor, not for the industry, not for a product category, not for a technology, not for a particular channel, not for any
program. Nor am I here to serve as a mere conduit. You know. You put your carefully crafted “news” in one end,
and wait to see it pop out from the other end. Nope. Not gonna do it.
and responsible executives have to understand they can’t have negative feedback shared quietly behind the scenes, with
only positive feedback deemed suitable for publishing.
In the abstract, I believe most
vendors agree with me ... most of the time. And all vendor certainly agree with me all of the time, as long as my critiques
are focused on their competitors, or they relate to a segment of the industry in which they don’t participate.
But as soon as I call YOUR baby ugly, all hell breaks loose. And as often as not, it’s not really that your
baby is ugly. It’s just that you’re marketing and ability to communicate are lacking. You’ve failed to convey
sufficient content and enough context in order to persuade and enlighten me. And as I always tell vendors, if you can’t
convince me, when I’m devoting time and effort to understand what you’re saying, how are you ever going to use
that same approach to win over customers or partners? I’m you’re off-Broadway, out-of-town reviewer. Think ahead
about how I’m going to react, take to heart what I say, and act accordingly. It’s the things no one else bothers
to tell you that will really hurt you.
I understand vendors and their employees aren’t
dumb or lazy or uncaring. And I know every company is under pressure to do more with less and do it faster. But no other important
constituency cares enough to dissect what you’re doing.
I’m not going to change.
I’m too old and cranky, and I’m way too cynical to move toward lighter and brighter. I’m gonna keep saying
things — sometimes mean and hurtful things. I’ll criticize you when I understand you, but I don’t agree
with you. I’ll explain why I don’t agree. Then you decide if you disagree with me. You’re free (even encouraged)
to pick apart my rationale for disagreeing. Whether you share that with me isn’t the point. It will make you a better
vendor. It’s the circle of life ... or at least it’s how I think life should be for an industry analyst like me.
May 2017: “In Search of Goldilocks”
There are some big similarities between where hardcopy vendors should look to go from here, and the ongoing quest
by astronomers to locate habitable planets somewhere out in the universe. MFP industry executives and stargazers alike are
focused on identifying what’s known as the “Goldilocks Zone” — not too near and not too far, not too
hot and not too cold. Everyone is anxiously seeking a new place that’s just right.
astronomy, that means pursuing rocky planets in the so-called habitable zone. They’re not too big or small and not too
close or far from their star. Temperature and atmospheric pressure there coincide to maintain liquid surface water.
And in the hardcopy universe, logic and experience prescribe an equally narrow habitable zone. Those new business
opportunities must lie adjacent to the company’s current print technology or leverage its current business practices.
And that basically points toward two options.
A vendor can use its inkjet technology to move
into industrial printing. It can be anything, from labels and packaging, to signage and wall coverings, to textiles and ceramics,
and even additive manufacturing. Because high-speed, high-quality inkjet printing is a complex and narrowly held technology,
there are pretty good barriers to entry. And one also shouldn’t underestimate the comfort factor for vendors who want
to stay in the “printing” business. So it’s not surprising that industrial inkjet printing is becoming the
preferred path. But there’s not room for everyone.
The alternative is to make the
big leap from managed print services in the office, to a more broadly — but not too broad or distant — set of
services for workflow, business process improvement, or managed IT. While demand exists for all of these varied kinds of services,
the risks are pretty high when expanding into these new arenas. Above all, one can’t just ignore all the competitors
who didn’t come from the hardcopy world, as MFP vendors have been wont to do.
just as astronomers have found that being even a little bit outside the Goldilocks Zone has profound implications for the
chances of life to exist, so too do the odds of business success appear to dissipate rapidly the further vendors in our industry
stray from their core business.
For better or worse, the experiences over the past half-decade
at Xerox with BPO services and at Lexmark with ECM software have closed the doors on areas that initially had seemed quite
reasonable to pursue. It doesn’t matter now if one argues the real problem was Xerox’s or Lexmark’s management,
the companies they acquired, or the prices they paid. No reasonable investor or lender is ever going to fund a repeat.
Even if one puts aside these two particular failed efforts to buy one’s way into a diversified future, there
are other examples playing out among top hardcopy companies today that have nothing to do with recent acquisitions. And what
they show is that different is not always synonymous with better. Look no further than HP’s ordeals in the PC market,
or Canon’s huge problems with cameras, or even the obstacles confronting Toshiba TEC in the POS business. Not only is
each of these product domains fraught with challenges, they all have much worse profitability than the hardcopy business.
Yes, I know it’s easier for me to cajole, caution and criticize vendors than it is for those companies who
are dependent on the printing business to make such a huge leap. At the same time, I just don’t see a lot of other options.
Most vendors who choose not to move toward industrial printing or a broader services portfolio are left only with different
versions of what amounts to giving up.
Sure, a weak or small printing vendor can try to
sell itself to a larger or stronger one. But this is really just doubling down on print. One better hope the buyer is doing
a better job planning for the future than the seller did. Yet this is also the most likely outcome for several vendors today.
Or a vendor may be able to sell itself to an investment firm in what amounts to nothing more than a financial transaction
devoid of interest in technology or products. The buyer will gut R&D; slash administrative and operational costs; perhaps
undercut the competition on price; suck off the profits for five or so years in order to make the deal pay off; and then let
the doors close.
Or a vendor might try to find some IT-oriented buyer who sees value in a high-touch
direct and indirect B2B sales and support operation. Perhaps a printer company can be rejiggered and redeployed in another
product or services domain. But such buyers are bound to be few. And given the high degree of risk, the price a vendor would
obtain in such a deal is likely to be low.
The only other option is really nothing more
than the default choice. It’s a non-decision decision to stay the course. No vendor is ever going to admit that’s
the plan. But the financial results we’re seeing today tend to indicate this is indeed what’s happening inside
many firms. They’re still talking about change and transformation and plans and finally “getting it.” But
they’re really just hoping for a very gentle decline in the printing business over an extended period of time —
preferably until management is able to retire.