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Printer manufacturers increase the intensity in the battle for Managed Print Services customers

Issue #0922/2 – With the economy hitting the bottom lines of corporations and SMEs hard, large printer manufacturers are increasingly targeting the MPS arena as a means to build their own annuity revenues while companies look for ways to reduce costs. For instance, Hewlett-Packard and Oki Printing Solutions have recently announced measures to encourage new customers to sign up for their MPS offerings while Xerox has pulled its enterprise MPS offering down to be accessible to small and medium-sized companies.

Oki has turned towards a flat rate offering in its drive to help customers reduce print costs. Targeted mainly at SMEs, Oki’s package is designed to help companies running just one to five Oki printers or MFPs – a shrewd move considering the vast number of SMEs in the market.

Rather than helping with the running costs of existing customers with existing machines, the Oki Flatrate Package is a variation on the hardware purchase model that is claimed to enable companies to save 24% on their print costs.

Oki Flatrate Package

This is achieved by developing an estimated monthly print volume usage plan and applying a fixed monthly cost with a fixed per page surcharge for additional pages printed.

There are four main benefits customers can derive from the Oki Flatrate Package.

Firstly, as with all offerings in the MPS-style market, customers will have a much better idea of what print costs to expect over the three years of the contract – although pages printed above the agreed monthly level will continue to add a degree of uncertainty into the monthly budget.

Secondly, part of the budgetary predictability is due to the fact that there will be no variation to page costs based on page coverage. No doubt, average page coverage will be taken into account when establishing the initial parameters for the usage plan but at least the customer will not need to worry about toner coverage from that point on.

Thirdly, the package cost is inclusive of service and support, with a next-day on-site service level to minimise downtime and a dedicated web site for ordering supplies and logging support requests.

Finally, A3 users will be able to choose from three plans: Office Plan, expected to be appropriate for the majority of customers; A3 Plan, for customers where A3 accounts for a high proportion of output; and a Graphics Plan, for the graphic arts market and other heavy graphics users.

On the downside, Oki is making this package available with purchases of new colour or high-volume mono printers and colour MFPs. In other words, the company is looking specifically for those customers with high print volumes, and especially A3 and colour, potentially ruling out the entire lower end of the SME market.

Because this package is only available on new hardware purchases, no existing Oki customers will benefit unless they upgrade their hardware, meaning that this is a clear sales promotion.

Thankfully, Oki is working with the channel on this scheme – at least to a degree. Flatrate customers will purchase their hardware through the approved Oki dealership network but the Flatrate contract is then made directly with Oki. Furthermore, requests for toner and support are made directly on the Oki website. What is not clear is to what extent dealers might lose out in terms of ongoing contact with their customer.

Hewlett-Packard, for its part, has launched what it terms the Printing Payback Guarantee. This is a scheme, also for new customers, where Hewlett-Packard takes the risk for any inaccuracy in the assessment of print savings achievable by entering into an MPS contract with Hewlett-Packard.

Essentially, when the print assessment is made, and a plan proposed to the prospective customer, Hewlett-Packard guarantees the saving for the first 12 months. In practice, this means that if the customer does not achieve the projected savings in the first 12-month period, Hewlett-Packard will ‘make up the difference’.

HP Payback Guarantee

Putting the onus on Hewlett-Packard to get its print assessments correct at the outset, this is a sure-fire way for a company to enter into an MPS contract with absolute knowledge that there can be no nasty surprises in the billing. As a result of the first year’s experience, of course, the contract would be modified to reflect reality more closely but, even then, the customer has a clear knowledge of what costs to expect and is able to budget accordingly.

As a guarantee, the scope is very wide-ranging. The Hewlett-Packard print assessment covers all aspects of printing, not just hardware and supplies. The full range is: hardware; supplies; replacement parts; service and labour; repair costs; paper; and kilowatt usage.

Hewlett-Packard can be fairly sure that it is on safe ground here, with considerable experience in the field and many customers demonstrating savings of up to 30% and one quoted as making a saving of 75% on energy consumption (see below) – mainly thanks to the ‘instant-on’ fusers incorporated in Hewlett-Packard’s laser equipment (potential savings on print costs and energy consumption are also accessible by switching appropriate print environments to Officejet Pro inkjet technology).

By way of illustrating the potential savings to a global enterprise, 3M has been able to reduce its device fleet by 47%, its energy consumption by more than 75% and cut paper consumption by 353 million pages over three years. Overall cost savings were in excess of $3m over a two-year period.

On top of the energy savings achieved through ‘instant-on’ fuser technology, 3M made huge savings in its carbon footprint and avoided around 17,000 print cartridges being sent to landfill. Paper savings were largely thanks to the use of duplex printing.

In addition, Logica: is projected to achieve overall Total Cost of Printing savings of 39%; is consuming 32% less energy in its printing activities; has reduced paper usage by an incredible 60%, projected to save 1,200 trees per year; and is benefiting from the flexibility and security afforded by FollowMe printing.

Impressive!

And then, earlier in the year, Xerox launched a version of its enterprise Managed Print Service geared to the needs of small and medium-sized businesses. The key to this offering is that the channel is intimately involved with the customer throughout and the programme allows channel partners to support the customer with a device-independent service.

Xerox’s motivation here is to provide a set of tools for the channel partner to use to make the print assessment and enable the customer to manage its print environment, while Xerox provides all the background support and supplies, regardless of hardware brand. In this way the company is in a position to capture Managed Print Services from any company without the need to recommend a change of hardware as part of the contract.

With Xerox claiming cost savings for customers of 30%, it is clear that any company moving towards a Managed Print Service is doing so with the expectation of obtaining cost savings or at least to peg costs into a known budget that can be controlled. Xerox aims to facilitate this process for the widest range of organisations possible.

So, while hardware sales are under pressure across the market and around the globe, printer manufacturers see MPS as a prime means of securing revenue and, for some, a means of also securing additional hardware installations, leading to ongoing supplies revenue. Managed Print Services will feature highly in the hard copy market in coming years and, as witnessed by the Oki and Xerox offerings noted here, as printer manufacturers increasingly get to grips with the concept, offerings will extend lower down the market to help smaller organisations.

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