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How will you change your sales model?

11 May 2017 | NORM MCCONKEY

 

 

 

When HP launched its next generation of PageWide ink-based office printers on March 8, 2017, it could have been passed over as just another new product launch. It wasn’t. PageWide MFPs will have the same game-changing effect that their LaserJet ancestors caused in the late 1980s—only these products will deal a serious blow to traditional BTA partners that do not recognize what just changed. You can now buy a color MFP that prints 70 pages a minute, that costs $2,000 to own, and 3 cents a page to print in color. How will the other OEMs react? How will you change your sales model?

A few years ago, I worked with a great bunch of people that pioneered Memjet printers and MFPs. Now it’s fair to note that the product never took off and had some design flaws, but they did show that ink had tremendous advantages over laser. Keep in mind that laser technology has been around for four decades, and it has been engineered to death. It is difficult to imagine how it could be made faster or less expensive after billions had already been poured into research and development. Ink was simple and cheap. A printhead that spits out thousands of instantly drying ink droplets on paper that flies by underneath, no heat, and a few moving parts. As well as a supply that more closely resembles a chocolate bar instead of a small suitcase that can print 10,000 pages. Color vs. mono printing have always been an economic decision: the lower the cost of color, the more people will migrate away from mono pages. So when you add the functionality of a low-cost MFP, a legendary brand like HP, and a cost that is tough to touch, then you have a powerful disrupter.

I don’t think this product will increase printing, but it can increase revenue by moving pages from monochrome to color. The real issue will be that HP has a tremendous network of value-added resellers (VAR) to sell this product. VARs are content to make 20 points of margin all day long, whereas the BTA channel demands a higher piece of the pie. HP is spending millions to promote these products and they are already a well-established entity among the IT folks that make technology decisions.

 

HP Printers

 

The Fallout?

1. Not that the traditional A3/BTA players like Canon, Ricoh, and Xerox don’t have their own strengths, but selling $7,000 MFPs that print at 6-7 cents a page is going to be difficult. The whole service model is also in jeopardy. These devices require little to no service and are designed to print up to 10,000 pages per month for a few years. That’s the sweet spot or lifeblood of the BTA channel.

2. The face-to-face sales model. Selling devices and leases with multiple add-ons is a complicated business. How much selling needs to be done face-to-face to convince a company to buy one of these? A solid brand name, little to no configuration, and a low acquisition cost are all attributes of a successful online sale. It’s not an accident! HP just launched a product that may be the first one specifically made for online sales. Little wonder HP is taking a large interest in dealer websites. Do you want to be HP authorized? You better sell their products online. HP is even helping to fund these efforts.

3. Compatible Supplies. This part of the industry has been challenged by many things over the years—lockout chips, chemical toner, lawsuits, and Chinese conglomerates have all had a run at it. It will survive, but the value proposition when OEM supplies cost pennies make it difficult to justify the risk of using compatibles.

 

What Can You Do?

This will affect your strategy for sure. The impact will come, but the timing is the real question mark. It can be compared to Amazon and its effect on retailers. It took a few years for the once strong retailers to be driven out of business by Amazon. Some have adapted and compete like Walmart, others like Sears have been crushed. Many BTA dealers still scorn HP and mock its product launches with the old chestnut “remember the mopier and edge line?” This time it’s different. Manufacturers are building products that can be sold online.

 

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About the Author

Norm McConkey

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.

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