Here’s Why Blind Faith in OEM Leadership is a Bad Idea
14 March 2018 | Norm McConkey
When Xerox launched 30 new hardware products in Q2 2017, we should have known something was wrong. It was heralded as the biggest product launch in Xerox history. How could a company with shrinking sales brought on not by competition, but by a fundamental shift in user behavior, think more products were the answer to lower sales?
Consider where Xerox gets its sales from in North America: direct operations, Global Imaging, Xerox Agents, and some channel business. Did the world need 30 new Xerox SKUs? Was more product variety the reason sales were declining? Do you think they could have achieved the same results with 10 new products? With a mostly closed sales channel, adding so many SKUs is more competitive to yourself than it is to your competitors.
It has 3 variants, A C400N, a C400DN and a C400DNM. This is an entry level color printer. Why not just have one great SKU instead of engaging engineers, calculating production runs, and managing inventories of three different products? Should a customer really pay more to duplex in 2018?
This is an easy example within our industry, but Xerox is not alone. I see these decisions being made across OEMs. Canon just released a line of A4 MFPs, that are almost devoid of finishing capabilities. No vendor will ever say it, but this tactic is geared toward pushing customers to buy the A3 with all the bells and whistles. This is a common approach by A3 OEMs. It assumes competition does not exist among other vendors, only within its own product line. These products aren’t built to be sold, but more as “cannon fodder” for their big brothers and sisters. It probably works in some cases, but when compared to similar devices from HP and Lexmark, it makes that OEM vendor appear expensive and lower functioning.
The implications of ignoring this reality are costing your business. Having too many hardware SKUs causes inventory, supply, parts, and service issues, more importantly, they cost more. How can a vendor compete in the new market with the likes of HP when they need to allocate R&D, manufacturing costs, logistics, and marketing over a much smaller unit base? They can’t. You are left selling a more expensive, lower functioning device.
I cannot think of any good reason to supply a customer with a monochrome single function printer. You should remove those SKUs from your arsenal. Do not give your sales team the option to sell the minimum. Selling a monochrome printer takes no skill whatsoever. I also cannot think of why you need to be three or four SKUs deep on printers that fit the same business use case. Having speed and feed conversations with customers is not winning new business.
- Customers will not print more if they have a faster printer
- They won’t print more if they can duplex
- Scanning to email and SharePoint are not features, they are requirements
- Security is expected, not an option
These issues are important, but not urgent for your business. Having all these redundant SKUs will not bury your business today, but the notion of blindly accepting the dumb things your OEM is telling you will eventually hurt you—A LOT.
IT budgets get reallocated constantly. How much did companies spend five years ago on cloud storage, and on network security? Nothing. How much did they spend on an in-house Microsoft Exchange Server? A lot more than today. Office printing is making way for spending in other IT areas. You can lead that conversation, or you can be a victim of it. Either way, that conversation is happening.
About the Author
Norm McConkey has been involved in the print, imaging, and software/tech business since 1993. Holding executive level positions in a number of emerging technology firms, he founded PrintFleet in 2003, and Tangent MTW in 2009. A founding member of the MPSA, an award winning author and presenter, Norm has spoken at various industry events around the world including the Lyra Imaging Symposium, Photizo confernece, ITEX Tradeshow, Regional BTA conferences, Remax Europe, and World Expo. He has been contracted to consult and build go to market and sales training programs with several OEM manufacturers such as Canon USA, and HP, and distributors such as Parts Now and Supplies Network, as well Resellers including Office Depot. Norm’s current project, MPSToolbox (www.mpstoolbox.com), is a software platform which helps technology dealers develop and maintain e-commerce websites.