PRINTERS: Projected Growth Goes Flat

Some say they had
a negative growth, while others say that they witnessed a negligible positive
growth. DQCI went to the market and found out that the past year was, by and
large, a flat one for printers.

The printer market has grown at a CAGR of over 30 percent in the past five
years. However, the past two years have seen a dampening of this growth.
Recessive factors and the economic slowdown have contributed to the slackness in
demand for printers.

Looking
at the overall printer market growth of 40 percent in 2000-01, most research
agencies forecasted a growth of 35 percent in 2001-02. However, a close look at
the half-yearly figures given by MAIT, shows a negative growth of 18 percent.

While estimates continue to pour in, DQCI did its own round of random survey
among the people who actually bring in business for printer vendors – the
resellers. According to resellers who aired their view on the market position
for various brands, the printer market remained flat for 2001-02.

For the trading community, marketshare of various brands doesn’t matter as
long as it makes its own share. All those who were contacted praised vendors
with whom they dealt. However, a consolidated view shows that many resellers
sold greater number of HP inkjets, though they remained dissatisfied with the
service provided. Many favored Wipro for the DMP and in recent times for lasers
too.

According to them, Wipro is doing a good job when it comes to support and
technology. In high-quality photo printers Epson stood first followed by Canon.

Postive signs for laser

While inkjet continues to hold a larger share, market sources say that laser
printers will pick up in a big way. This is because users have now realized the
low operating cost of laser printers compared to inkjet printers.

Anish Srikrishnan, Country Product Manager-Laser Printers, Samsung says,
"It is too early to derive a trend already - however, the indicators are
clear - customers are finally questioning the running costs of an inkjet
vis-a-vis superior laser technologies."

SMEs have already started to go in for laser printers. "Even government
departments and PSUs have started looking seriously at the operational cost of
inkjet technology," Anish adds.

Nitin Hiranandani, Country Business Manager, Imaging and Printing Systems, HP
India says, "Laser printers are becoming affordable and corporates are
realizing that the total cost of ownership of a laser printer is much lower as
opposed to an inkjet printer. Also it is network-ready." According to him,
with 80 percent of the print volume in offices being black and white, it makes
sense to buy a laser printer."

Share grabbers

The survey brought to light a visible shift in the marketshare for various
brands in the laser printer segment. Samsung and Wipro were seen eating into HP’s
share.

Anish
of Samsung says, "We ended the calendar year 2001 with a marketshare of
over 12 percent. Today, by our estimates, we have a consolidated marketshare of
over 16 percent."

S Raghavendra Prakash, Group Product Manager-Corporate Products, Wipro
ePeripherals says, "In lasers we have gained substantially over last year.
This has been our first complete year in laser printers and we have had an
exponential growth of 10 percent in JFM quarter of 2002 as compared to first 12
months (Jan-Dec 2001)."

In the inkjet segment too, HP lost some of its marketshare. Princy Bhatnagar,
Market Development Manager-Consumer Peripherals, HP India, admits that there
will be a drop in HP’s inkjet marketshare for JFM 2002 when the IDC’s
quarterly figures arrive. According to him the drop will be largely attributed
to HP’s decision to exit from the ‘unprofitable’, less-than-Rs 3,500
printer market.

In DMP segment, Wipro takes the lead over TVSE and Epson.

Betting on price

Most vendors have begun to play on the price factor in order to get a larger
slice of the cake. For some, bigger marketshare is one way of ensuring future
business. By drastically reducing prices for entry-level models, some vendors
have managed to increase volume sales. Some have even resorted to offering free
printers as bundled offer.

Market analysts call this a planned move. According to them every printer
sold or given away free is indirectly ensuring assured consumable business from
that customer.

An entry-level printer costs ar-ound Rs 3,500. If one removes the cartridge
cost (Rs 1,500) out of it, you are left with a printer that costs just Rs 2,000.
Which means consumables take up almost 40 percent of the total cost.

Princy agrees that many vendors are dropping prices in the hope of gaining
market share. "It is a wrong philosophy. With the absence of high growth,
it is absolutely necessary to maintain price-points," he advises. According
to him, the inkjet market is unlikely to see tremendous growth in next six to
eight months.

Anish says, "Selling at a low price today and milking customers later
does not appeal to us as a strategy. As a market leader, we would rather not
look at business from this opportunistic prism. We strongly believe that the
consumer is a smart being who will be swayed by the best value he sees for his
money."

However, Anish agrees that prices have been going southwards on laser
printers. "With competition and new technology, the customer now has a
wider choice and a greater chance of getting value for his purchase. Customers
are also becoming aware that no single company has a monopoly on laser
technology," he justifies.

While every vendor continues to paint a holy picture of its own, the fact
remains that prices for printer have been declining for a long time now. Today
advanced technology-based printers have become immensely affordable.

In a price-conscious market, it may sound easier for a vendor to sell more
volumes at a lower price. But price alone will not drive the market. Many other
factors go into it, one of them being after-sales support.

Customer satisfaction

All major printer vendor boast about wide support network. But, a random
survey among partners show that a lot needs to be done on the support front.
"Boasting about their support network has become a style statement for
vendors. But when it comes to providing the efficient support all are
good-for-nothings," grumbles a reseller.

Let us have a look at the support network of the major printer giants:

Epson,
claims to have about 140 service centers across 70 cities in the country.
"This offers a service point for channels and end-users to take up any kind
of service issues. For corporates we have a service van," says Suresh
Govindachari, Business Manager-Consumer Products, Epson India.

HP claims to have 80 authorized service centers across the country that are
manned by channel partners, and six company-owned service centers. "Our
toll-free support and dial-a-cartridge initiative offers great value to our
customers. Today our call-center handles over 10,000 customer calls a month and
we resolve 93 percent of the issues over phone itself," boasts Princy of
HP.

Wipro ePeripherals claims to have have 150 support partners across 110
locations. According to the company it also has 6,500 trained engineers on Wipro
ePeripherals products. Another initiative from Wipro is the Wipro ‘Peace of
Mind’ centers at Bangalore, Mumbai, Chennai and Delhi for supporting customers
on products, services and consumables.

Samsung claims to have over 100 service centers across the country to support
end-users. It also provides a simple policy on laser printer service to channel–"do
not let the end-user suffer".

Some of the new entrants in the printer business also claim to have support
network of decent size.

PRINTER SEGMENT SHARE (MAIT estimates for 2001-02)

Has anyone wondered, how much does these support network actually help
end-users, or channel partners for that matter, when it comes to out-of-warranty
repairs?

Most companies provide a two-year warranty on inkjet printers. This means
that if something goes wrong with the printer after the warranty period, it is
better to discard it rather than repair it. Because the cost of repair is more
or less equal to a new printer’s cost.

According to printer experts, the life of an inkjet printer
is not more than four years if used regularly! How many vendors educate the
channel partner or end-user about this fact?

New entrants

The short life of printers and a large business potential has almost all the
printer majors of the world present in India. Lexmark, Sharp, Olivetti, Xerox,
and IBM too have entered India with their various printers. Although having a
small marketshare presently, almost all hope to make it big here.

Lexmark which has been doing business in India for quite some
time, initially through TVSE and now on its own, has done pretty well. One
reason for its growth in India is it universal arrangement with Compaq to bundle
Lexmark printer with its PC. Besides, Lexmark has become very aggressive in its
marketing efforts lately. Lexmark recently reduced its prices on a wide range of
products by 15-20 percent.

Another new player Olivetti began operation in July 2001.
Himanshu Hajela, GM-Marketing & Sales, Olivetti says, "Our products
have been well-received by customers and have earned positive reviews from trade
magazines."

Olivetti already has a extensive support network across the
country. Support is being directly provided through a dozen offices and through
more than 50 channel partners in the country. Olivetti’s overall business
strategy according to Himanshu is to focus on upcountry markets including B and
C-class cities; to give value-for-money proposal to the end-customer; and to
give higher margins to the channel partner.

Sharp launched its entry level printer last year with a price
tag of Rs 6,000. Pankaj Sharma, Head-IT and Channel Sales, Sharp Business
Systems, says, "Despite its high price, considering other entry-level
printers in the market, we have got a very good response. This is an indication
that Indian IT customer is educated and price alone does not excite him."

Pankaj plans to piggy back its LCD monitors business through
its printer. "Our key focus will be to establish Sharp as a leading IT
company. LCD monitors will help us establish brand recall and the printers will
move with them," he adds.

Ray of hope

While printer vendors wait for the official confirmation of a flat year from
research agencies, they can still hope for a better year ahead. This is
primarily because visible signs of recovery are being observed in some segments,
like laser printers. A reason to aim for the 35 percent growth rate, as it was
targeted earlier.

NELSON JOHNY in Mumbai with inputs from MOHIT CHHABRA in
Delhi and SUNILA PAUL in Bangalore

VENDORS YOU CAN BUY FROM

HEWLETTT PACKARD

(Laser printers)

Address: Delhi: Chandiwala Estate, Maa Anandmai Marg, Kalkaji, New
Delhi 110019.

Tel: 6826000

Fax: 6826030

Website: www.hpindia.com

HEWLETTT PACKARD

(Inkjet printers)

Bangalore: 29, Cunningham Road, Bangalore 560052.

Tel: 2251554

Fax: 2200196

Website: www.hpindia.com

EPSON INDIA

Address: 301 Prestige Meridian I, 29 M G Road,

Bangalore 560001.

Tel: 5321266-70

Fax: 5581799, 5351095

Website: www.epsonindia.com

CANON INDIA

Address: Neela Gagan, Mandi Road, Mehrauli,

New Delhi 110030.

Tel: 6806572, 6807313

Fax: 6807180

Website: www.canon.co.in

SAMSUNG

Address: 2nd Floor,

47 Ring Road,

Lajpat Nagar III,

New Delhi 110024.

Tel: 6322517-19

Fax: 6322607

Website: www.samsungindia.com

SHARP BUSINESS SYSTEMS

Address: 214-221,

Ansal Tower,

38 Nehru Place,

New Delhi 110019.

Tel: 6431313, 6438866

Fax: 6438748

Website: www.sharp.co.in

TVSE

Address: Plot No. 34, Developed Plots, South Phase Industrial Estate,
Guindy, Chennai 600032.

Tel: 2325506, 2325509

Fax: 2327577

Website: www.tvse.com

WIPRO EPERIPHERALS

Address: 40/1A II Floor,

Basappa Complex,

Lavelle Road,

Bangalore 560001.

Tel: 2270359, 2270360

Fax: 2270378

Website: www.wepindia.com

LEXMARK INDIA

Address: Apeejay Business Centre, 12 Haddows Road, Chennai 600006.

Tel: 8224949

Fax: 8262447

Website: www.lexmark.com/AP/IN

XEROX

Address: DLF Square, M Block II, Gurgaon, Haryana 122016.

Tel: 6561930, 6561940

Fax: 6561255

Website: www.xerox.co.in

LIPI DATA

Address: 1, Mittal Chambers, Nariman Point, Mumbai 400021.

Tel: 6561930, 6561940

Fax: 6561255

Website: www.lipidata.com

SPICE NET INDIA (OLIVETTI)

Address: D-4 Okhla Phase-I, New Delhi 110020.

Tel: 6814542-44

Fax: 6817702

Website: www.spicenetindia.com