This Month's Spectrum Summary:

(The following is an excerpt from the January 2005 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2005)

Add-On Software for MFPs:
Giving Printers the Intelligence They Deserve

Growing interest in add-on software for mid-range networked MFPs prompts us this month to discuss the significance with Liz Ziepniewski and Mark Hanley. It is seen as strategically significant for a variety of reasons. It is an entryway to vertical markets. It is moving printer vendors toward more partnering relationships. It supports product differentiation. Its growth is linked to the current movement toward open rather than propriety software. And finally, at least conversational parlance on the topic is helpful for anyone in the industry.

We focus primarily on Canon, Xerox and Ricoh. There are packaged and customized software-enabled applications for printer administration, print formats, document management (print, scan, file conversion, store anywhere in the system, etc.), and vertical market systems.

The activity is relatively new, spearheaded mostly by resellers but now engaging most MFP vendors. We have identified over 40 software companies now partnered with the three leading MFP vendors. It is estimated that today around 9% of mid-range MFPs are sold with one or more add-on software packages, and that around 2% of the installed base has add-on software.

Canon and Ricoh use Java-based platforms and license specific versions to selected partners. Marketing the software packages is by the partner, by the printer vendor, or both. Xerox has tended to go direct, based on historical premise. Add-on software activity is so complex, it becomes important to have sales people with an in-depth solution understanding, which will push resellers who want to focus on software for vertical markets. It enables selling value, not price. Printers with application-specific software support large, enterprise level sales rather than fragmented sales.

Since this market is complex, a lot of education is needed and growth will be slower than some predict. It is a sophisticated sell, a value sell which may work for some, but not all. But the issues around today's software soup hold lessons for all of us.