The reality of the Imaging Industry today is that it’s not only dealerships that merge, acquire and fail, it’s distributors, and it’s OEMs. We have already seen it when Lexmark was acquired by Apex, Foxconn acquires Sharp, and even the awkward HP acquisition of Samsung’s printer business. No matter the spin, none of these were really positive developments. They are the result of those at their respective companies, no doubt with the initials MBA after their name, recognizing that in a mature industry the smallest and weakest, do not survive. When you look around at who is left, it is logical to speculate: who’s next? My guess is HP and Xerox. Here’s why.
Apart from HP and Xerox, the rest of the Imaging Industry is mostly Japanese based: Canon, Konica, Ricoh, Toshiba, and Kyocera. Historically, Japanese companies do not merge. In many cases, what we know of their businesses in print and imaging is the tip of the iceberg of their respective product offerings; they likely have more different product lines than similar ones. Who wants Toshiba’s nuclear business? Kyocera stands for Kyoto Ceramics Company. They make, among other things, ceramic steak knives.
HP and Xerox are billion dollar printer and electronics manufacturers. A merger would create better economies of scale, and reduce overlap in terms of sales, marketing, distribution and research and development. Their cultures are similar, they speak the same business language. So what would that do for your dealership? When an industry is in decline, being able to use scale to lower your costs should translate to higher profits. You cannot change that people print less, but you can control your profits by controlling costs. That’s why a merger between HP and Xerox makes sense.
This merger would create a huge overlap in sales and distribution. After the dust settled, it’s likely the combined product lines would be available to everyone, or even a reduced number of authorized dealerships. At the very least, more companies selling the same basic products would lower margins. Many dealers heavily leverage their HP authorizations, but Xerox is likely where the problem would be biggest. Think about the Xerox agent channel, for example. Many of those companies for years have leveraged the Xerox name as their own—and rightly so! It’s an iconic brand. But let’s be honest, there is no such thing as a merger. There is an acquirer and acquiree. Xerox would be acquired by HP. What happens to YOUR brand when Xerox goes away?
Most of us do not think of branding on a daily basis, but I do. Xerox and HP may not merge tomorrow, but it still is a conversation most dealerships need to have with their senior management.
What does our name mean to our customers?
How would our customers describe our business and services?
As many dealers move beyond office printing and into IT, telephony, managed services, cloud computing, and software, does your name follow along with it? When I first started there were 200 companies called “Laser-something”, and another 250+ companies named “Copy-something”. How could they move into the brave new world of technology when their name conjures up an image of technology common 25 years ago?
How customers describe you is really the notion of brand. You don’t get to give yourself a brand. Your customers brand you. They base that on their relationship with you, and your products and services. So, if they brand you as someone that sells older printing technology, then that’s what you are. If your sales reps start jumping onto social media and espousing that you are “all new”. There will be an immediate disconnect.
I talk a lot about websites, digital workflow, and e-commerce. These are as much branding issues as they are of technology. Is your business easy to deal with? Is it easy to buy products and services from? Are you progressive? If you sell technology, do you use technology? If a customer went to your website, what would they find? How would they brand you?
I will leave you with one last thought: the imaging industry MUST change. We are hard to deal with. We make customers feel like buying printing hardware is the most complicated thing on earth. We are now in the Amazon age: anything other than an online option is old and cumbersome. In my experience, when a customer finds a product hard to buy, and a supplier difficult to deal with, they do not persevere, they go elsewhere.
If your sales are declining, it’s not your sales reps, it’s a lack of direction from ownership in addressing the declining market.