Printers may not top the typical reseller's hot technologies list -- but the multifunction variety offers opportunities beyond the box. And face it: Businesses of all sizes need to print, copy and scan documents. Some even still fax.
Multifunction printers (or multifunction devices, as they are also called) handle the aforementioned tasks. The product category includes consumer devices that sell for less than $100. Of more interest to value-added resellers (VARs), however, are office-grade units that sell for thousands of dollars.
There are several ways to slice and dice the business-oriented multifunction devices. From a document size perspective, machines classified as A4 work with letter or legal size documents, while the A3 device can accommodate tabloid-size documents. Products come in monochrome and color varieties and churn out various print volumes depending on the model.
Multifunction devices may rekindle reseller interest in a market that has been less than encouraging. Margins on single-purpose printers have eroded over the years. Low-end models became vendor freebies. And office copiers at the top of the document production spectrum typically didn't flow through the IT channel. Copier vendors, or their specialized agents, sold their gear to an organization's facilities management outfit, rather than the IT department.
But signs now point to new opportunities, observers said. IT managers are the executives making decisions on multifunction printer purchases, and facilities managers running the copy room "don't have the influence they used to," noted James Luquire, vice president of document solutions at Synnex Corp., a technology distributor and service provider based in Fremont, Calif.
Luquire said he's witnessed a shift as VARs sell multifunction printers into workgroups. Resellers who said they couldn't make money selling traditional printers have changed their thinking with the multifunction machines.
"I think they are quickly gaining a tremendous amount of comfort" with the multifunction technology, he said.
Office multifunction devices offer fatter margins
Margin improvement is one source of relief. Multifunction devices cost more than the typical printer, so the margin opportunity increases. An A4 unit runs between $1,000 and $3,000, while an A3 device starts at around $5,000, said Tom Gall, director of value channel marketing at Xerox Corp. The A3 devices traditionally have been sold by Xerox reps or agents, but now more products are going through resellers, Gall said.
"What that opens up is an opportunity for our partners to … broaden their scope in current accounts and get them into accounts they haven't been able to get into," he added.
Xerox multifunction printers sell through the channel with a higher margin model compared to single-purpose printers, Gall said. The percentage of margin increases in light of the longer sales cycle and greater complexity associated with multifunction printers.
That said, industry analysts believe hardware faces a margin squeeze, even in the multifunction segment.
"Hardware margins are under extreme pressure," said Steve Reynolds, senior analyst at Lyra Research Inc. "For this reason, traditional copier dealers have always made their real money on break/fix and supplies."
Players in the multifunction space tend to capture profit in aftermarket sales, added Akia Ramsay, research analyst for IDC's Hardcopy Peripherals Tracker. But margins on aftermarket services are also under pressure, according to Reynolds. Resellers that can tie multifunction printers into broader solutions stand to make the most money.
"Value-added services such as selling and supporting software applications and solutions that involve MFPs are much higher-margin than any other aspects of the MFP reselling business," Reynolds explained.
Lyra pegs the North American monochrome multifunction printer market at $13.5 billion in 2008 and the color device market at $7.1 billion.
Multifunction devices as part of the solution
Dave Dadian, CEO of Powersolution.com, said customers occasionally ask his company to provide individual multifunction devices, but typically such printers are embedded in a broader solution. Powersolution.com's legal customers, for example, typically seek out multifunction printers as part of a document management solution.
Powersolution.com, based in Ho-Ho-Kus, N.J., offers Web development, computer network and managed services and focuses on Hewlett-Packard products.
Dadian said most of the 10- to 15-employee law firms he deals with are gravitating toward converting documents into electronic format. As customers scan years of documents, they will need storage arrays as well as multifunction devices, he noted.
Resellers may also find themselves integrating multifunction devices into various applications, an option not available with earlier-generation equipment. Overall, today's printers are quite different from the "mopiers" of a decade ago.
"Many copier vendors and most printer vendors offer software development kits and other resources to incorporate MFPs in applications such as document management, accounting, workflow, device management, output management and scanning," Reynolds said.
Applications can run on servers using multifunction printers as on ramps and off ramps, Reynolds said, noting that applications can also run on or in the devices. He said the ability to integrate multifunction printers into customers' business processes represents "a great opportunity for resellers."
Managed services offer another source of profit in the printer area, according to Ramsay. Resellers can offer managed print services through some vendors and distributors. Synnex, for example, provides its PRINTsolv solution, which lets VARs assess, monitor and manage customers' printing environments.