Printing World: Mergers Dissolve Competition
The office equipment industry is getting a little tighter.
This is an industry where original equipment manufacturer (OEM) relationships have ruled for years and alliances with third parties continue to grow. However, during the past year, a number of relationships have developed that seem to dissolve many of the competitive boundaries that once existed between entities within the office equipment industry. Some of these relationships are the result of acquisitions and mergers; others are the result of newly forged alliances between former competitors.
Some Strategic Alliances
During the past 18 months, the industry has seen the emergence of Kyocera Mita; an alliance between Xerox, Sharp, and Fuji Xerox; the merger of Minolta with QMS; and a merger between eFax.com (formerly JetFax) with JFAX.com.
Granted, the latter merger is no longer much of a concern to the dealer community, particularly since eFax.com has shifted its focus from fax products to unified messaging services.
Perhaps the most interesting alliances to date are those between Xerox, Sharp and Fuji Xerox, and the alliance between Minolta and Konica. In March, Xerox, Sharp and Fuji Xerox announced an alliance that the companies claim will bring faster, more affordable ink jet printing to the market. Over the next five years, the three companies will invest more than $2 billion in inkjet research, development, manufacturing, advertising and marketing. The companies also are enhancing their worldwide inkjet manufacturing facilities.
Through the alliance, the companies expect to introduce what they say is a competitively priced family of inkjet products that is – at least-50% faster than comparable products from other manufacturers, most notably Hewlett-Packard. The first products resulting from this alliance will likely come to market within the next six months.
Challenge for Biggest Copier-maker
The biggest challenge facing Xerox, says Bob Sostilio, director of CAP Ventures Converging Digital Peripherals Consulting Service Group, is how Xerox intends to boost its name recognition in the retail channel. This is where inkjet products rule and where Xerox has been neither all that active nor successful.
Conversely, Barry Tepper, CAP senior analyst, who has already seen sample prints of the new inkjet technology, says that if production line models using this new technology consistently produce pages like the samples he saw, then this alliance will be serious competition for Hewlett-Packard, Lexmark, Canon, and Epson.
In April, Minolta, and Konica in Japan signed a basic agreement to form a business alliance for cooperation in developing related office equipment, such as digital copiers, printers and multifunction devices, and for a joint toner manufacturing venture.
The alliance is expected to help both companies develop digital copiers and printers, and related software faster. Minolta added that the fundamental goal of the alliance is to offer new and appealing products that have never been available before, enabling both companies to increase sales.
Both companies also intend to work together to bring Konica’s polymerization toner to what they call a “practical, applicable level.” This toner will reportedly improve image quality and costs. Under the alliance, a joint venture startup will be created to manufacture the new toner.
Despite this join effort, both companies claim they will continue to function as separate entities, continuing their respective sales and service activities while promoting the differences between each company’s products.
Tough Decisions for Japanese Manufacturers
CAP’s Sostilio opines that this agreement announcement was not a surprise, although the parties in it were. “CAP has advocated for the last four years that many Japanese copier/facsimile manufacturers face some tough decisions in 2000 and beyond,” notes Sostilio. “They have to start to partner with each other since a single entity can not bring digital products to market fast enough in today’s ever accelerating markets.”
Sostilio adds that historically, Konica has been a company with one or two strong copier platforms but never a complete product line while Minolta has been an early innovator (zoom reduction and enlargement) in the workgroup arena but never strong in the production environment.
Although CAP seems to have seen this coming, Sostilio has some reservations about the agreement. “Minolta has alliances with digital front-end providers that are different than Konica’s. There’s been no mention of facsimile, which Konica OEMs from Sanyo, or any mention about QMS, and if Konica will benefit from that, or about channel strategies.” Sostilio emphasizes that the latter is crucial to the success of the alliance. “All in all this alliance can work to give each company a more complete line of digital products, the only unknown is the long-term effects it will have on each company’s distribution channel and how much differentiation in those channels will be tolerated.”
Don’t expect this to be the last of the industry’s strategic alliances. You can bet the entire office equipment industry will be watching closely what develops with these alliances to learn from their successes and failures. Whether they are successful or not, it’s a good bet that more players will be following suit in the hopes of gaining an advantage in this competitive industry.
Scott Cullen is a free-lance writer and president of Cullen Communications, New Hope, Pa. He has written about the office equipment industry since 1986. You can e-mail Scott Cullen by clicking here (cu****@**************et.com).
Copyright 2000 PrintPlace.com, Inc. All rights reserved.
This article was last modified on January 6, 2023
This article was first published on June 1, 2000
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