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This
Month's Spectrum Summary:
(The
following is an excerpt from the August 2008 issue of Spectrum,
a
proprietary monthly briefing published exclusively for the
clients of I.T. Strategies, Inc. © 2008)
After
the New Wears Off
The Post-Sale Conundrum
New digital presses are masterpieces
of complex engineering that have specific care and feeding
requirements if they are to live up to the hopes and expectations
of owners. Manufacturers must support the machines in a manner
that ensures they will deliver the performance-and profits-required
to provide the necessary return on investment. This is growing
more complicated as the relationships between vendors evolve,
more new equipment is rolled out, and market demand shifts
to take advantage of new technologies.
"Equipment manufacturers are focused
on developing new products and rushing them to market," explains
Marco Boer. "They see the wave is cresting and, like surfers
trying to catch the big wave of the day, don't want to miss
the opportunity for a great ride."
There will still be room for firms
whose products come out later, but market recognition will
go to the companies with products in the market today. And
because no vendor can possibly develop products for every
market, partnering and OEM agreements are becoming commonplace.
For instance, Kodak's NexPress is sold by Ricoh, but Kodak
also sells two presses made by Canon. Ricoh InfoPrint gets
its InfoPrint 5000 ink jet printer from Dainippon Screen (the
TruePress 520), but also competes with Screen in bringing
the device to market. Océ and Konica Minolta sell a couple
of each other's printers and even compete for customers. Meanwhile,
Xerox, Agfa and Océ are selling Mutoh large format ink jet
devices, and Océ is selling HP large format systems in Europe.
In the bigger picture, though, the
story is really about what happens after the sale, which is
why post-sale support is a key element in equipment purchase
decisions. The big companies commonly handle everything from
the moment a call comes in to dispatching service technicians
to performing post-mortems on failed parts to find ways of
improving the parts and the product. They also provide a wide
range of technical and application support services.
Smaller companies with narrower capabilities
are still able to deliver the service and support customers
require and can often develop closer relationships with their
customers. Some OEM arrangements can actually help mitigate
this. For example, a company without the market or service
reach to sell its systems as widely as it would like can partner
with a larger firm that has the reach and support required.
The larger firm benefits from having a product to sell without
a major investment in research and development, and can apply
its go-to-market strengths to roll out the device. The smaller
firm has already done the R&D and can ramp up manufacturing
to meet demand and backstop the bigger firm for support. This
is especially effective when a larger firm wants to address
a market that is fragmented or specialized.
Such arrangements work well in developing
markets. Here again, larger companies have effectively financed
other companies' products or helped bring them to market.
They get a financial return, and there is always the potential
for doing more business. The smaller firms don't get quite
as big a piece of the total business as they would like, but
they are still able to enter a market and extend their global
reach.
This all ties into another element,
which is something of a wild card. "Smaller companies with
innovative products are increasingly absorbed by large companies,
often retaining their original branding," notes Marco. "This
tends to improve distribution and service and grow that brand
even more. This eventually spawns more start-ups, and the
circle of life continues. All we can say for sure is that
it's going to keep changing."
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