Document management takes the value-added path

Printers, scanners and multifunctional devices will thrive as long as demand for associated products such as PCs, cameras and mobile devices is strong. However, what worries vendors is the volatility of the market impacting the purchase decisions of users, says Shipra Arora

One segment within the Indian peripherals market that is the most talked about is the printing and scanning segment. Just when you thought that the segment had reached the crest of all hype and action after the multi-function devices (MFD) wave and was now settling down, the next trend seems to have already caught on. The reason for such turbulence: Photoprinters. The product mix involving the digital camera and the printer is affecting the inkjet printer category and colour printers within the laser category.

Says Sanjit Sinha, manager, Hardware Research, IDC India, “Photo printers and colour lasers will be the two driving forces and there will be a lot of focus from vendors on them.” He further adds that in 2004, the ‘colour in office’ concept will surface. In 2005, the potential for colour will come to the fore.

Vendors like HP, Canon, Epson, Xerox and Samsung are all driving these trends at full-throttle. In relative terms, the focus on these two segments is going to remain low as compared to the investment focus on other products, considering that currently the percentage share of business coming from them is dismal. However, estimated investments and focus from vendors on these two product categories is expected to be proportionately higher than the revenues they garner.

Printers

According to IDC, the total printer market in India for the year 2003 is estimated at 1.2 million unit shipments as compared to 0.94 million units during 2002, registering a little less than 30 percent growth. During the last quarter of the calendar year 2003, the unit shipment break up between the different printer formats was as follows: Inkjets at 1,46,000 units, dot-matrix printers (DMPs) at 91,000 units and laser printers at 41,000 units. Though the numbers are down compared to the previous quarter, this is largely due to the fact that the last quarter is traditionally a very lean quarter as compared to July-August-September (JAS), according to Sinha. The future growth projections by IDC are pegged at 14 percent CAGR each for inkjet and laser printers and a negative 3 percent CAGR for DMPs till 2007.

Inkjet printers

With photo printers outlined as one of the key focus areas by major inkjet printer vendors, the year 2004 will see a spurt of activity within the photo printing space. According to Rajiv Rao, country category manager, Personal Printing, IPG, HP India, inkjet printer vendors are very bullish on photo printers this year, as these devices make their way into the mature home user market and the specialised photo segment.

Here is an overview on how the top three inkjet vendors are concentrating their energies on photo printers. For Canon, all its inkjet printer models are photo printers and it is even bundling them together with its digital cameras to offer a complete digital solution. Rajeev Singh, senior manager-Product Marketing, Consumer Imaging & Information Division (CIID), Canon India, points out that until now the focus was on text and graphics printing, but going forward photo printing is going to be a big market opportunity. For HP, out of a total of nine products available within inkjet printers, four are photo printers, launched in January and February 2004. Epson has pronounced that as part of its agenda for the year 2004-2005 in the inkjet space, the company will be strengthening its focus on the photo segment. Says Suresh Govindachari, business manager-Consumer Products, Epson India, “There are about 100,000 small studios across India and all these studios are in the process of converting to digital camera usage, a sure volume driver for our business.”

Apart from digital camera users, another emerging trend is towards printers that will support mobile phone camera users. In terms of technology, an emerging trend is the ability of photo printers to take printouts directly from digital cameras and mobile phone cameras. This trend has been boosted by the emergence of the ‘PictBridge’ technology late last year, which allows a digital camera of any make to connect directly with a printer from any vendor provided they are both PictBridge-enabled.

In inkjet printers, the last quarter of calendar year 2003 saw a decline of around 50,000 units over the previous 2003 quarter. But more than the lack of supply by HP during the month of October, the gap is reflective of the trends in the inkjet space in 2004, that of transition from entry-level and mid-end inkjet printers to inkjet MFDs. This movement, which has been ongoing for the last one year is expected to become more prominently visible during 2004. “We see the market increasingly being polarised between low-end and high-end standalone inkjets with the mid-end of the market gradually moving into inkjet MFDs and photo printers,” adds Rao. As a result, growth is not expected to be very high in mid-end inkjet printers.

Some of the other key trends in the inkjet printer space include the emergence of Bluetooth-enabled printers and printers which can print on CDs.

Laser printers

While photo printers drive the inkjet market, colour is splashed over the laser. Mid-2003 onwards, vendors started getting aggressive when it came to promoting colour laser printers. Till some time ago, only large corporates could afford colour laser printers but 2003 saw these becoming more affordable. Today, two of HP’s entry-level colour lasers in this segment come at sub-Rs 50,000 and Rs 60,000 to 70,000 price points. Canon’s entry-level offering comes at sub-Rs 50,000. Greater affordability is now starting to drive the monochrome to colour transition among SMEs during the current year.

The focus on colour laser printers will get further intensified in the year 2004. Companies like HP, Samsung, Canon and Xerox are at the forefront of driving colour. According to Moninder Jain, national product head, Value & Life Style Biz, Samsung India, the focus in 2003 was on bringing better monochrome technology; colour laser is a clear focus area for 2004. Enquiries being translated into sales in a major way is expected to start happening in 2005, owing to more affordable prices. Presently, colour laser printers account for almost 2-3 percent of the total laser printer market.

Says Vibhor Bansal, country category manager, Colour Lasers and Business Inkjets, IPG, HP India, “With falling prices at the entry-level, movement is happening from mid- to high-end mono laser printers towards entry-level colour lasers.” One of the key strategies for companies like HP is driving the message of cost effectiveness of in-house colour printing for short-run prints. Apart from small and medium enterprises, which will be a big focus area, companies will continue to tap large corporates and the print service provider segments with mid- to high-end colour laser printer offerings. “Factors like ease of use, quality of output and the recent trends of usage of business graphics in presentations are catalysing growth in the colour laser printer market,” says Anand Rahalkar, channels director, Xerox Modicorp.

But monochrome laser printers still continue to be the dominant market and therefore cannot be ignored. On the monochrome side, while the market grew across all three broad categories, i.e. 1-20 pages per minute (ppm) entry level, and 21-30 ppm and 31 ppm-plus network printers; it was the 21-30 ppm segment where vendors saw some exciting growth patterns. According to Samir Shah, country category manager, Shared Printing & Connectivity, IPG, HP India, with the increasing reach of information technology and the proliferation of IT hardware, organisations are going the network way and defining the printing strategy for themselves. Similarly, for Xerox, one of the main drivers has been the adoption of the network/centralised printing option vis-a-vis standalone printing.

All this hints towards an increased adoption of network printing in the 21 ppm onwards category during the current year. According to Rahalkar, going ahead, remote printing, network printing and wireless printing are other technologies that will see greater adoption and demand. Besides, with the price gap between entry-level laser printers and inkjet printers to go down further in 2004, one can see a trend where laser printers are slowly replacing high-speed inkjet printers. This will see growing movement into the SME and SOHO market segments in 2004, which started in 2003 itself where the market saw laser print vendors vying to capture the entry-level market in the SME and SOHO market segments, while simultaneously focusing on solutions for enterprises.

In addition to this the year 2004 will see an upward spiral both in terms of print resolution and speeds. In terms of technology trends in case of network laser printers, the standard data transfer speed has now come up to 100 Mbps.

Dot-matrix printers (DMPs)

With DMPs expected to gradually move into a negative growth mode, there is no significant buzz expected around this segment during 2004. However, DMPs will continue to be a volume-driven market next year in terms of unit shipments with demand still coming from the government segment as well as greater penetration into upcountry markets. Players like Epson, TVS-E and WeP are driving their strategies aggressively with offerings like passbook printers, counter printers for retail outlets and customised small bill printers. Hence, DMP will continue to be a market driven by certain specialised applications and the vendors in this space.

Multi-Function Devices (MFDs)

IDC’s Sinha is dubbing MFDs as one of the most vibrant segments within the Indian peripherals market, considering that they are and will continue to be one of the biggest growth drivers for vendors. IDC says that inkjet MFDs are expected to grow at a CAGR of around 82 percent between 2004-2006; laser MFDs will grow at a CAGR of around 40 percent during the same period. The share of inkjet MFDs within the total MFD pie will increase over the next two to three years.

IDC says that growth for the year 2004 over 2003 in the inkjet MFD space is expected to be over 100 percent and in the laser MFD space is estimated at around 55 percent. The home segment, along with the entry-level commercial market within inkjet MFDs is expected to provide the biggest growth opportunity thanks to growing awareness levels.

During the last couple of quarters of 2003 volumes of inkjet-based MFDs have gone up quite significantly. The reducing price gap between entry-level inkjet MFDs and low- to mid-end inkjet printers drives these. Says Rao, “With steps towards greater affordability during Q3 2003 we have seen a dramatic growth in our all-in-one business and things have started moving well after that.” According to Govindachari, in terms of technology, 2004 will witness an addition of more and more value-added features like digicam card slots, photo colour reproduction, superior scanning facilities, etc. While HP provides digicam card slots in its various inkjet all-in-one models, Epson has recently launched its MFD for the photo segment, called EPSON Stylus RX 510.

Within the laser MFD space, 2004 will witness a growing trend towards adoption by SMEs. The likes of HP are aggressively eyeing SMEs and the self-employed professional space. During the current year the affordability factor of laser MFDs is likely to increase, allowing further penetration into the SME space. Says Shah, “The challenge here is to make this technology more affordable. If we were to increase the penetration of laser MFDs one obvious thing is to make the technology more affordable. So, you will see some changes in price points by virtue of which the technology becomes affordable.”

In terms of technology, Rahalkar feels that the laser MFD market in India is witnessing a transition from sheet-fed to flatbed technology, with the share of sheet-fed printers in unit terms dropping consistently. The period of July-August-September 2003 indicates that growth is coming from the flatbed category while the sheet-fed MFD market is declining fast. The same holds true for inkjet MFDs, where IDC’s predictions for 2003-2007 estimate almost 119 percent CAGR for flatbed MFDs as opposed to 21 percent CAGR for sheet-fed inkjet MFDs in terms of units.

Scanners

While the scanning function itself is on the rise the standalone scanner market will see a southward trend during the year 2004 owing to the fall in unit shipments on the low-end scanner side. This is due to MFDs heavily eating into the low-end scanner market. According to IDC, the scanner market in India grossed 1.37 lakh units in 2002 and is estimated unit shipments of 1.8 lakh units for 2003, a growth of over 30 percent. However, the trend will reverse during 2004 with market size heading southwards. According to Barkha Deva, country category manager, Digital Imaging Products, IPG, HP India, last year was the swansong of the low-end scanner market where adoption has already happened to a large extent. As a result, in 2004, vendors are aligning their strategies in line with this trend. The focus for them is now shifting towards the mid- and high-end scanner segments and driving convergence towards all-in-ones at the low-end. According to Singh of Canon, the positive aspect is that the need for the scanning function in itself is growing, and so the market will not vanish but rather give way to all-in-ones.

In 2004 companies are investing their resources in driving an up-sell initiative from the channel dynamics and demand generation perspective. Though the low ends are not likely to be phased out completely, their percentage share is on the decline, giving a larger share to the mid- and high-end. According to Deva, the year 2004 will be significant in that it will mark the threshold year for the transition in the percentage share of low-end and mid- to high-end scanners. Rajeev Singh of Canon points out that though the high-end scanner market is presently very limited it is growing fast.

Apart from mid- and high-end scanners, another factor that will drive sales among standalone scanners is the trend towards the scanning of negatives, which will catch up during 2004. Singh foresees that the feature of scanning still photograph film negatives is gaining ground and will be one of the major drivers in this segment. Furthermore, scanners will be reaching higher scan speeds and resolutions during the current year. Vertical scanning is being pitched as another emerging trend in standalone scanners.

shipra@expresscomputeronline.com

Estimated CAGR till 2007
Inkjet printers	14 percent
Dot-matrix printers	-3 percent
Laser printers	14 percent
Source: IDC

Printer shipments in unit terms
	JAS (2003)	OND (2003)
Inkjet	1,99,000	1,46,000
Dot-matrix	99,000	91,000
Laser	43,000	41,000
Source: IDC

Estimated CAGR in Indian MFD market between 2004-2006
Inkjet MFDs	82 percent
Laser MFDs	40 percent
Source: IDC

Photo printer market trends

Vendors are focused on expanding the market by offering consumers a complete digital photo experience. They offer a complete range of solutions to cater to consumer requirements at all levels—entry-, mid- and high-level. Vendors are offering best of technology at the most affordable prices. Companies are looking at bundling their photo printers with PCs or with cameras. Both acquisition as well as running costs are very critical in the entry-level product segment. Photo printers will boost the consumables business.

Advantage colour

Promotes a positive atmosphere Increases productivity Adds interest and individuality Increases perception of energy and warmth Elevates self confidence Attracts people to business Identifies market niches Presents the correct image for the product Improves concentration Generates interest and sales; increases the impact of communications

Scanner market trends

Total Scanner Shipments in 2002 — 1.37 lakh units

Total Scanner Shipments in 2003 (estimates) — 1.8 lakh units

Source: IDC

Major trends in MFDs

The purchase and ownership of a colour laser MFD will ultimately end up within the domain of the IT manager. The sales approach by vendors in this market is also developing into more of a consultative selling approach. Rather than selling a box that will print a document, vendors today are more likely to assess the document workflow and offer a solution that will see colour deployed intelligently across the organisation. It offers ease of use, time and cost savings to the user as the demand for more complex workflow and applications grow.