A Look Beyond A3 And The Dealer Channel

It’s a given that in this economy, hardly any customers will be purchasing products that they don’t really need.  Purchasing something just because it’s fashionable and/or may be needed in the future just doesn’t cut it any more.  It’s also a given that customers are seeking more efficient and less costly ways to purchase office-imaging equipment.  That brings us to question two entrenched ideas:  that every office needs an expensive A3 printer/copier system, and that a dealer channel is a must-have in order to effectively market office-imaging equipment.

 A3 (11”x17”) Media Capability – Back in the day, people still printed and distributed 11”x17” brochures, sales collaterals and user manuals.  Consequently, all the office-imaging vendors that relied on dealer distribution marketed a host of A3 printers and MFPs that had elaborate finishing options, including folding, page insertion, trimming and saddle finishing—and they continue to do so.

In my opinion, that model may no longer be effective.  Think about it: When was the last time that you REQUESTED that somebody mail you a brochure?  When was the last time that you delivered a printed (non-proof) brochure to a colleague or customer?  When was the last time you received a printed user manual with a product?  When was the last time you could actually locate an existing printed user manual (practically ancient text by this time).  Instead, you probably downloaded and viewed an Adobe PDF of the user manual online.

Of course, there will always be some need for printing A3, for instance, for printing Microsoft Excel worksheets or proofs of product brochures or sales collaterals.  But in those cases, we have always recommended that businesses instead purchase a low-cost A3 printer that’s dedicated to the few users that actually need A3.

Digital Scanning and Document Management – We discuss this issue in detail in a companion piece we recently posted.  The bottom line is that the day of the digital document is already here, so it doesn’t make sense to keep printing and distributing documents, much less re-digitizing by scanning them–with the scanning process resulting in guaranteed lessened image quality.  Most likely, the original document is in digital format; it can simply be e-mailed or shared on a network or an intranet.  There’s maybe some need to print it and distribute it, but since the document’s already probably in digital format, there’s little need to scan it in order to convert it back to digital format.  Many vendors stress the that the A3 scanners that are built into their A3 MFPs are a necessity.  We say that a common paper cutter is a viable alternative for cutting an A4 document in half and scanning on a cost-effective A4 MFP and that there are very few applications that demand an A3 scanner.

The model in the past was “print-and-distribute”–a digital document was printed by a high-volume A3 system and then distributed in hardcopy format.  Today and in the future, the model will be reversing–“distribute and print.”  With this model, the document is e-mailed or shared on a network, Internet, or intranet.  The user then decides whether to print it.

Why do the vendors insist on hammering the market with A3 devices that cost three to four times more than a comparable A4 device that can be purchased business-to-business (B2B) rather than by haggling with authorized dealers?  Why keep hammering every office with the message that they need A3 printers and MFPs?

Here’s why:

• The vendors that distribute through authorized dealers (Canon, Ricoh, Xerox, et. al.) have a HUGE investment in the dealer community.
• Dealers are beholden to proprietary toner sales and service revenue.
• As a result, the vendors build tens of thousands of units that have proprietary toners (that can’t be bought online or via retail) and are designed specifically for distribution by dealers.  These systems are also usually built so that maintenance components can only be replaced by trained technicians, not by everyday users.
• The sales margin for dealer products is exponentially higher than comparable B2B products because dealers demand high profits on sales margins AND elbow room for the inevitable haggling process.
• B2B vendors such as Hewlett-Packard, Brother and Lexmark are not beholden to a dealer community and are content to sell A4 products at low margins and reap the profits from readily available toner, ink and maintenance kits.  They seem to have chosen to leave A3 systems to the dealer community.  But you can be sure that this will change, as they may also likely begin marketing more alternative A3 systems for the office–why should they leave A3 all to the dealer channel?

Granted, high-volume and production devices will likely always need 24/7 attention from a service organization that the dealer community provides—and they may as well be A3 devices.  But how many users actually need to print AND copy A3 documents?  We believe it is a small fraction.  Instead, as we noted, it makes much more sense to equip an office or enterprise with several lower-cost A4 systems, and just a few A3 systems dedicated to those users that really require A3.  But alas, the traditional office-imaging vendors are not providing their dealers with the A4 systems necessary for this model and it seems that many dealers are unwilling to sell them because of their relatively low acquisition prices (and the fact that dealer sales people are compensated based on aggregate monetary sales volume).

However, as we have previously noted, several have demonstrated such foresight:  both Panasonic and Sharp have taken steps to expand their A4 product lineups, and Toshiba has formed a tight partnership with Hewlett-Packard for providing sales, service and supplies for the popular HP LaserJet/Color LaserJet products.

On the other side of the coin, HP has recently struck a deal with Canon to the A3 imageRUNNER line of MFPs—go figure.

Happy reading!
Terry Wirth