Here in the office printing analyst community, few forecast drum beats can be heard as loudly as claims of the imminent consolidation of copier vendors and the looming obsolescence of the A3 format.  These forecasts have gained increasing clout during the last year as the floundering economy expedited Oce’s path to acquisition and the emergence of new A4 MFPs, such as Sharp’s Frontier series, prompted analysts to proclaim that A3s were finally on their way out.  Although there is very justifiable evidence behind each of these forecasts, one of the most compelling arguments that both have come to fruition occurred in February when Panasonic announced that it was finally exiting the A3 MFP-Copier market to capitalize on the growth opportunities that lie in the A4 space.

From a 10,000-foot view it seemed pretty clear.  With one announcement, Panasonic encapsulated two of the most common theories surrounding the office printing space and became the first milestone in a pair of major transitions that are set to change the office printing market forever.  However, as with many apparently clear harbingers of change, the closer you look at Panasonic’s announced transition, the less straightforward the motivations behind it are.

Although Panasonic was never a copier market powerhouse, the manufacturer’s investment into the A3 space was clearly waning for the last five years before reaching its official nadir earlier this year.

On the product side, Panasonic’s actions did not reflect those of a company with intentions of growing within the copier market.  Panasonic launched just 12 new A3 MFPs between 2007 and 2010, all of which were closely based on their predecessors and provided no notable specification or feature improvements.  To put that into context, since December 2009 Xerox, Canon, and Ricoh have launched 13, 12, and 6 new A3 systems, respectively, and Ricoh is expected to launch another four MFPs in the coming months.  Additionally, Panasonic resisted expansion into departmental segments, sat as a spectator as vendors migrated to the light production arena, and never launched a true third party development platform.

Panasonic’s Old A3s

Panasonic appears to have invested even less into the marketing and distribution of its copiers and actually adopted almost the exact opposite channel strategy of the current market leaders.  In 2005, Panasonic bucked the growing trend of direct sales expansion by selling-off its 13 direct branches, in a cost cutting move that was positioned as an attempt to reduce competition with its channel partners.  During the following years, Panasonic’s limited emphasis behind its A3 business resulted in the manufacturer losing a large number of its authorized dealers, almost all mid-market and major enterprise clients, and its entire government sales presence beyond the municipal level.  Perhaps the most telling sign of Panasonic’s lack of commitment to the copier market came in February 2009 when the vendor announced that it would transition its 60 remaining authorized dealers to reseller status.

One year before making it official, Panasonic had essentially ended development of new A3 MFPs and was the only copier manufacturer without a direct sales or an authorized dealer presence.  To put it plainly, Panasonic’s exit two months ago came as no surprise to those that were paying attention.

One thing that may surprise folks in the A3 obsolescence crowed is that Panasonic is not shifting its focus to the type of A4s that will theoretically replace copiers.  Instead the vendor is planning to expand its current SOHO lineup, launching a variety of new desktop models that will sell through IT resellers, its Panafax channel, and will even reportedly include a substantial retail channel push (and they thought direct sales were expensive!).

Panasonic’s New A4s

Given the market share race and manufacturing scale pressures that face current A3 MFP manufacturers and the hardware cost advantages of A4 MFPs, it is almost certain that vendor consolidation and an engine format shift will continue.  However, Panasonic’s exit from the copier space and increased commitment to A4 printers should in no way be viewed as a move from a company that really had a choice.  Going forward there are certainly a handful of A3 vendors with low enough market shares and limited enough manufacturing scale that their future may be in doubt, but none are anywhere close to where Panasonic was in 2005 (nevermind 2010), so its safe to expect a substantial slowdown in vendor consolidation until the next recession.  Meanwhile, the expected transition to A4 MFPs is already occurring, but it will likely take the form of more balanced A3 and A4 product and fleet lineups as manufacturers look to provide the right hardware solutions for their clients’ needs.  It will not be in any way as abrupt as Panasonic’s recent transition – especially not until A4s can rival A3 systems’ usage costs, speeds, and high volume capabilities.

One year ago last week, gap intelligence’s Market Intelligence reports included an industry news brief revealing that two thirds of all former Circuit City customers planned to go to Best Buy and Walmart for their future electronics purchases.  An understandable, but still immense, 55 percent of Circuit City shoppers planned to make future purchases at Best Buy, while a respectable 11 percent of shoppers expected to direct future CE purchases to Walmart locations.  Assuming that a similar portion of former CompUSA shoppers were already transitioning to Best Buy and Walmart, 2009 stood to be a banner year for the retail giants’ consumer electronics sales, regardless of the economy.

Although Best Buy and a number of other retailers certainly benefited from the recent channel consolidation, the redistribution of Circuit City and CompUSA’s sales has been far from one-to-one.  It turns out that much of Circuit City’s $11.7 billion 2008 revenue and CompUSA’s $4 billion-plus 2006 revenue was also consolidated – leaving surviving retailers and CE manufacturers searching for where at least $5 billion in annual electronics sales went.

One could easily attribute 2009’s reduced electronics spending to the ongoing recession and they would be at least partially right.  However, I believe Systemax CEO Gilbert Fiorentino has tracked down this missing electronics demand, and interestingly enough, it appears that it never left – it’s just not being addressed at the same rate as before.  In a recent retailer roundtable discussion Mr. Fiorentino cracked open his Marketing 101 textbook and explained this phenomenon in the simplest terms.  With the exit of CompUSA and Circuit City went $800 million in annual advertising, roughly 25,000 relatively knowledgeable sales associates, and nearly 800 retail locations, all of which in their own way spurred demand.  To borrow Staples’s long-retired slogan “It’s that easy.”

The good news for CE manufacturers and retailers is that the potential electronics spending ceiling just increased significantly.  It’s just a matter of creating a need in the minds of consumers, providing inviting and convenient locations to shop, and staffing these locations with a knowledgeable and incentivized sales staff.  These are not new ideas and can certainly be done again.

So now the question is: Who is going to go out and make this happen?

Gilbert Fiorentino

Said this:

“You know how important advertising is – people think they need what they are told they think they need.  It wasn’t just pent-up demand in a world where a guy woke up in the morning and said, “I want to go buy a laptop” or “I want to go buy a TV.”

Don Draper

Said this:

“The most important idea in advertising is “new.” It creates an itch.  You simply put your product in there as a kind of calamine lotion.”

They are both right….

It is no secret that blogs have become a go-to source for topical news and entertainment in recent years.  As both print and online media outlets struggle to monetize their products, the targeted insight provided by some blogs has changed the way that many people, including myself, find their news.  Below is a review of my favorite industry blogs.

MFP Solutions

The print4pay Hotel MFP Solutions Blog embraces the entrepreneurial spirit and channel-eye-view of its writer and creator, New Jersey area dealer Art Post.  I’ve been reading the MFP Solutions blog since I first became gap’s MFP-Copier and Production Analyst and contacted Art for an informational interview as soon as I decided to launch the Gap Dealer Partnership Program.  Without even knowing me, Art sat down and answered all my questions regarding the dealer community, what they want, what might deter them, and it certainly helped me nail down a game plan for launching the program.  Perhaps the best lesson that he gave me on what motivates dealers ($) came at the end of our conversation when he tried to sell me ad space on his blog!  Still mulling that one over Art…

This regularly updated blog provides a variety of content ranging from industry news, product reviews, dealer sales tips, and editorials by both Art and a field of guest writers.  Even a few gap intelligence Pico Letters have made it on there.  One of the most unique aspects of the MFP Solutions Blog is the level of interaction that it allows.  Art regularly creates and posts surveys on major industry events and backs his entire blog with a network of closed message boards.  The dealer-only (primarily) P4P Hotel Message Boards allow members to discuss events, compare pricing, share industry beliefs, and rip their vendors in a closed setting.  Perhaps most noteworthy, the level of vitriolic posts on the P4P boards is far lower than any message boards that I have ever seen.  Backed by his closed message board, Art is provided with an infinite number of nets to capture the pulse of the channel and get early scoops on product and industry news to funnel to his MFP Solutions blog.

This Ain’t Your Father’s Office

There are many qualities needed to run a weekly competitive intelligence service, but two requirements that continue to stand out are establishing a routine and becoming completely immersed into a category.  There is no doubt that KMBS rep Neal Petermann applies both of those qualities to his “This Ain’t Your Father’s Office” blog, which is updated each Monday without fail and features very concise overviews of just about everything that happened across the industry that week.  It is basically a print-focused New York Times for the twitter age:  All the news that’s fit to print, but small enough to read.

The Death of the Copier

Leave it to an HP salesman to create a blog called “The Death of the Copier” right?  Readers of The Death of the Copier of course know that this blog is not meant as a condemnation of copier technology (just the sales methods), and is instead intended to tout the benefits of Managed Print Services and selling solutions, not hardware.  Through a combination of excerpts from industry news publications, brief insights and editorials, and very heated debates in each post’s comment section, the DOTC provides very useful insight into MPS and the direction of the industry.

With the exception of certain consultant blogs with a vested interest in the success of Managed Print Services, The Death of the Copier is about as pro-MPS as they come.  So, depending if you’re drinking the new MPS “Kool-Aid” or consuming the same old hardware-centric “coffee”, opinions of writer Greg Walters can range from being a visionary to being dangerous.  Regardless of the various opinions, Greg should at least be commended for finding so many pictures of women with copiers or women with fish (why fish?) to go with each and every post.  He’s got to run out some day.

Plus he starts posts in ways that always crack me up.  This one is classic:

“A couple weeks back, while off the grid, I had an epiphany of sorts.”

You can’t make that stuff up and I am sure he was serious.  I’ve never spoken to Greg, but I can’t help reading that line in a Christopher Walken voice/cadence.

Tough Love for Xerox

I don’t always know what the heck Tough Love for Xerox writer Michael Josefowicz is taking about, but there is no doubt that this 37 year industry veteran is completely focused on the future of production printing.  Especially a future where page growth is driven by personalized newspapers, the “Printernet”, expanded connectivity, and ongoing technological innovation.  No looking back to the good old days on this blog, unless your talking about the stock prices of the companies in Michael’s “Printernet IRA”.

People in the print is dead crowd should add Tough Love for Xerox to their bookmarks.

The Connected Copier

The Connected Copier blog is run by Canon dealer Vince McHugh and features very passionate and lengthy posts on two main subjects, slamming IKON/Ricoh and touting Canon technology.  For those at Ricoh/IKON that are trying to gain an understanding of how Canon’s dealers are going about targeting IKON’s Canon MIFs, The Connected Copier is certainly a good place to start.  Gap Intelligence’s weekly MFP-Copier Market Intelligence Report is good too.  Of course the Connected Copier also covers other major industry events and absolutely makes up for its bias with thorough, insightful, and passionate posts.

Digital Picture Frame Review

Consolidation of digital frame blogs has mirrored levels of digital frame vendor contraction in recent years, making Digital Picture Frame Review the only independent DPF blog in existence.  Good thing for industry players and end users, the team at DPFR produces very good reviews.  Reviews on this blog go way beyond the press release and spec sheet, as the writers actually use frames and evaluate the device’s core features including design, display modes, menu, memory sources, and overall usability to provide very insightful reviews.  Beyond reviews, the site’s content is basically limited to reposted press releases, but it is called “Digital Picture Frame Review” after all… what did you expect?

Bill Simmons / Sports Guys World

My wife likes to remind me that I do not actually know Bill Simmons even though when I quote him I call him “my buddy The Sports Guy”.  What does she know.  I’ve been reading my buddy The Sports Guy for over a decade and I’ve seen him go from absolutely destroying every deserving 1990s Boston sports personality from his one man blog to becoming today’s most influential sports personality.  He is on the front page of ESPN.com, has the number one sports podcast on iTunes, boasts over a million twitter followers, and his new 700-page book, “The Book of Basketball”, is number 14 on the NYT non-fiction list.  Unlike other successful entertainers (Dane Cook, Padma Lakshmi, Kings of Leon, Glenn Beck, etc) it is easy to understand why my buddy The Sports Guy is so popular.  Bill writes like a fan (not a critic), includes pop culture commentary in his content, and has harnessed the power of lists and footnotes to help break-up his articles and concisely prove points.  Simmons may not write about copiers or digital fames, but he has had a greater influence on my writing (at least for blogs) than anyone.

Honorable Mention:

Change Forge
Digital Printing and The Pirates that Sell it!
InfoBlog
Imaging Industry Wall Street Insider
Adventures in Office Imaging

As the world waits for the economy to rebound, considerable attention has shifted to forecasting how it will happen and gauging what awaits us once we’re there.  One increasingly popular theory involves the emergence of New Normal The Pelican and the Snipe dvd

behavior.  Under this theory, consumerism as we know it will undergo a fundamental change as people embrace necessities, spend and borrow less, and view both their home’s equity and their own 401k accounts with increased skepticism.

Although each of the booms that followed previous recessions suggests that Back to Normal is still a viable option, we are already seeing businesses position themselves for whatever kind of normal the future brings.  Embracing their bellwether status, both Microsoft and Walmart have actively positioned themselves for a delayed recovery and the possibility of a long-term shift in buying behavior.  Walmart has reduced inventories and assortments across categories and significantly delayed its holiday product refresh, while placing increased emphasis on its value-oriented message to consumers.  Microsoft meanwhile has increasingly touted the efficiency provided by its products, highlighted by a recent open email from CEO Steve Balmer that introduced the company’s New Efficiency message in response to the possibility of  a New Normal future.

Although established businesses and markets can similarly adjust their strategies, still evolving categories such as digital photo frames face a more difficult task when planning for the New Normal future.  To put it simply, the digital frame market has never really experienced a period of true normalcy that it could refer to when forging a path forward.  The economic downturn occurred at such a strange time for the category as the exponential growth that took place in 2006 and 2007 created a gold rush mentality for 2008 and caught many players off-guard as the recession flattened-out the market’s impressive growth rate.  By most early accounts, meeting demand posed the greatest challenge in planning for the 2008 holiday season and industry players invested heavily to ensure that they would have products on shelves through the end of the year.  Instead, the economic collapse that took place in late 2008 pulled the rug right out from under the digital frame industry, creating a severe glut across component supply and distribution channels and essentially eliminating most sell-in opportunities for the forthcoming Moms, Dads and Grads season.

As the 2009 holiday season approaches and remaining 2008 inventories finally subside, it appears that the digital frame market has followed the lead of other more established categories with its own version of new normal positioning.  Now more than ever, digital frame manufacturers are embracing a value and benefit-based strategy that Balmer would be proud of.  Meanwhile, changes that have taken place on the digital frame aisle and to the category’s product cycle come right from Walmart’s revised playbook.

Due to a combination of retailer consolidation and a channel-wide adoption of Walmart’s aforementioned assortment strategy, the number of shelf slots devoted to the category has fallen nearly 40 percent year-over year to 217 placements.  However, the effects of the category’s reduced shelf space and extended inventory glut actually benefited most top tier players.  Many of the relatively obscure manufacturers that once dominated the digital frame market have either been forced to exit due to inventory losses or have been unable to secure placements within retailers’ smaller and more exclusive digital frame assortments.  A remarkable 74 percent of this month’s placements came from major brands, while 19 percent of new frames were supplied by retailers’ private labels, leaving tier two and three players with just 7 percent of initial holiday 2009 placements.  This time last year, lower tier manufacturers claimed a 52 percent share of the retail shelf.

Meanwhile, technological advances and component price erosion have allowed vendors to offer a new level of value and innovation.  Most major manufacturers have added new entry level options, while reducing pricing and significantly expanding functionality across existing lines.  Resolution and panel quality continue to improve, multimedia functionality is becoming increasingly standard, and the abundance of low cost memory has propelled common capacity levels from 256MB to 1GB.  Additionally, new functions and applications are beginning to emerge as manufacturers experiment with aesthetics and test the boundaries of connectivity and content.

Similar changes have occurred across countless maturing categories in the past, regardless of economic climates, and these same events would have eventually occurred within the digital frame market without a downturn.  In fact, the effects of the recession and any manifestation of new normal consumerism only hastened the maturation of the digital frame market and may actually serve to benefit its manufacturers- at least those in the top tier.  Although the category still faces numerous challenges and most industry players would have preferred a continuation of previous growth rates, the effects of the recent maturation will immediately benefit each of the major manufacturers’ shelf share, while improving the category’s long-term image.  As vendor consolidation continues, the digital frame market will be limited to a handful of well equipped manufacturers that are devoted to driving product evolution, maintaining price stability, and ensuring the long term success of the category.

Comedian Joe Ancis once said, “The only normal people are the ones you don’t know very well.” Well the same can be said for markets, especially the digital frame market before September 2008.  So welcome to being normal digital frames, not sure if it’s new or old, but at least you’re there.

Hurlyburly full movie The Alamo hd

Joe Ancis on right, Lenny Bruce on left

Inheritance divx

Not to be confused with Joe Francis, Joe Ancis was a very funny comedian, who could reportedly out-drink Rodney Dangerfield and received the honor of being called the “funniest man in America” by the immortal Lenny Bruce Fight Club movie download The Plainsman trailer Down in the Valley divx .

Last week gap intelligence took its annual summer outing indoors, with a trip to the neighborhood bowling alley.  Although we already made it down to a Padres game earlier in the year, we’ve added a few new team members since then (Welcome Gurpreet, Emily, and Laurel !!) so we wanted to show them a good time and make sure they knew exactly how well we bowled.

I must say we had a great time, and although the bowling performances were mixed, there were certainly some standouts among us.  It turns out that we employ several very gifted bowlers and I would remiss I did not recognize them in true gap fashion.

With that, I give you the inaugural (possibly only) gap intelligence Kingpin Awards:

The Roy Munson Award goes to BRIC analyst Nicole Manko.  Not only does Nicole provide as many memorable quotes as Woody Harrelson’s character in Kingpin, it turns out her bowling skills are quite Munson-esque as well.  Nicole led off the first five frames of her second string with four strikes and a nine, ending with a gap-leading 169 final score.  The girl can roll!

Systems Analyst Katie Hess continued to prove that she is great at just about everything, bowling a combined 305 in two strings, and winning herself an Ishmael Award

World Trade Center download

in the process.  Katie bowled with power that would make Randy Quaid’s character proud and consistently pushed 20mph on the alley’s radar gun.  Yes the alley actually has a radar gun for bowling speeds.  They make a pretty good cheesesteak too.

Its All About Love divx Growing Out ipod

Teeth divx

The Easter Egg Adventure rip

Last but not least, the Ernie McCracken Award goes to Projector Analyst Deron Kershaw, who may not dress like the legendary Bill Murray character, but proved that he can bowl with similar style.  The kid can do those open-hand spinning rolls!!!!  He tallied some very respectable scores too, with a total two-game score of just above 250.

Rocky Balboa hd

• Maradona by Kusturica

Extract trailer

There are really only three bowlers in Kingpin, so these awards should be viewed as quite an accomplishment.  Congratulations to the Kingpin Award winners of 2009!Tenacious D in The Pick of Destiny download

I’ve never considered myself a poetry buff, but I recently came upon a collection of six-word poems

• Autopsy movie download

• A Dogs Breakfast psp

The Breakfast Club dvd that were both understandable and stirring.  This is more than I can say for most of the poems that were forced upon me back in school and given the recent emergence of the 140-character Twitter age, the six-word poem may enjoy a brighter mainstream future.

Although many of these poems are far too tragic and off-topic to make it onto the gap intelligence blog, I thought I would sum up a recent trend in the Copier-MFP space with my own attempt at a six-word poem.

“For Sale: barely used copiers, cheap” It’s All Gone Pete Tong dvd

During my daily correspondences with current or prospective members of the Gap Intelligence Dealer Partnership Program one major trend is becoming very clear.  Now is as good a time as any to be in the used and refurbished copier business.  Although well-connected dealers are still successfully selling respectable volumes of new systems, dealers’ response to the standard “how’s business” small talk commonly involves the strength of their refurbished MFP sales.

The recent growth of the refurbished copier market can be explained by basic supply and demand economic principals.  In addition to the natural lease expirations that traditionally provided dealers with a stream of used models, loan defaults, company downsizing, and ongoing bankruptcies have helped to create a near-oversupply of lightly-used and low-cost copiers.  Meanwhile, the “new frugality” and “eco-sustainability” ideals that have taken hold of the US consumer and corporate psyche has generated increased demand for refurbished systems from an even wider user base.

By many our of dealer partners’ accounts, the used systems that they receive have never been of higher quality or less expensive, while the demand for refurbished systems (vs. demand for new systems) has never been stronger.

Although dealers still have to push new systems to maintain their authorized status, many see little reason to resist this trend if their prospective clients are deterred by up-front costs and do not require next-generation technology.  A dealer can acquire a lightly used Segment 2 monochrome system through an auction or wholesaler for roughly $1,000, refurbish it in house for under $300, and sell the same model for a gross margin that often surpasses 60 percent.  On top of that, refurbished systems generally carry 20 to 40 percent higher maintenance and service costs than new models and often end up generating the same net revenue as a similarly-equipped new system after four years of use.

This is the Global Imaging sales and service business model on steroids!  Used systems provide these dealers with low-priced differentiation from their extremely aggressive direct branch competitors, while guaranteeing a very respectable (and high margin) post sale revenue stream.

Although Canon and Oce have both expanded their roles within the refurbished markets, the increased relevance and improved status of refurbished copiers should be seen as very real a threat to sales of all vendor’s new models.  Manufacturers can find solace in the belief that the eventual economic upturn will have a reverse effect on these same supply and demand factors.

However, below are a collection of six-word poems to consider in the mean time:

“Manufacturers should adjust production capacity accordingly”

download See Spot Run movie

“Make generational upgrades a must-have” Fool’s Gold download Shoot on Sight trailer

download Watchtower / Cruel And Unusual dvd

“Incentivize dealers to sell new systems”

“Follow Canon and Oce’s refurb lead” Kiss the Girls

• Flying By

Untraceable video

You don’t have to scroll too far through one of our Market Intelligence Reports to get a clear picture of the struggles that manufacturers are facing.  Overwhelming uncertainty has caused consumers and businesses alike to find new ways to extend the life of the products that they already own, delaying purchases and creating huge drops in demand.  I know that this is not new news and I’ll leave the economic rebound timelines to someone else, but I thought I would share a story from back in the day that includes a promise of better things to come.

For nine months while in college I visited the gas station just about every day.  Although I squeezed pretty decent MPGs out of my little four cylinder sedan, my front right tire featured one of the most prolific “slow leaks” since the Apollo 13, making the need to refill my tire far too common.  Nearly every day I would pull into my neighborhood Shell, give the attendant the “turn on the air switch” gesture, fill my tire, and go on my way.

Nine months!!! Between the time my tire started leaking and when I finally gave in, the Patriots won their first Super Bowl, China joined the WTO, Enron dissolved, Pope John Paul II sent his first email, and I filled up my tire about 250 times.

download A Stranger Is Watching

Jungle Cubs film

download Neon Maniacs movie

Sahara trailer

Virginia City rip

Taking Chances ipod

download Little Black Book movie

• download The Warriors dvd

St. Trinians download

These days I would put up with that level of inconvenience for about nine hours (nevermind months), but those were lean times.  Eventually summer rolled around, I was able to take on more hours at work, and by the time my own personal economic downturn subsided I was rolling on four new wheels.

The moral of my story is that even the most durable of goods are only usable for so long and any suppressed demand will almost always result in a future surge of purchases.  Right now millions of purchasers are cursing their camera’s stuck shutter, rebooting their crashing servers, and trying to figure out why their MFP isn’t responding to their print request. And most of them are avoiding a replacement purchase this year if at all possible.  However, like me and my tire, these purchasers may be able to put up with these issues for the time being, but as soon as the money starts rolling-in most won’t wait long to trade-in and trade-up.  Meanwhile, owners of products that naturally expire or decline during the expected rebound period will have far less reason to delay their purchases, combining to create an unprecedented increase in demand for durable goods.

Returning to my tire analogy, this may be a good year to be in the air machine business, but it would be advantageous for manufacturers to make sure they are prepared for the imminent surge in tire demand.  This goes for printers and cameras too…

Blues Brothers 2000 ipod

• The Water Horse: Legend of the Deep dvd

• Home Room film

• My 5 Wives dvdrip

• Thunderball hd

Random Hearts ipod

High Noon dvd

In recent years digital photo frames have been increasingly identified as the fourth screen of the modern home.  The evolution of this title was largely propelled by vendors and content providers, who supported the theory with forecasts of new applications and rapidly improving capabilities.  By many accounts, digital frames were well on their way to outgrowing their role as a simple photo display and would eventually serve as a go-to source for content, communication, and entertainment.

As we continue through the category’s third year as a relevant mainstream product, digital frames have truly emerged as the fourth most common screened device in US households.  The rapid influx of digital images has led to a transformation in how people store, share, and display photographs – creating considerable demand for digital frames as well as an array of online photo applications.  Armed with the growing demand and increasingly reasonable pricing, sales of digital frames skyrocketed and estimated US household penetration rates reached an impressive 22 percent.  Although televisions, computers, and mobile phones maintain an undeniable command as the top three screens, digital frames have successfully established a competition-free presence as the home’s fourth most common screen.  Mission accomplished!!!  Right???  Sort of…

The idea of digital photo frames as the household’s fourth screen has always involved usage and reliance that went far beyond showing photos that were transferred from a memory card.  And although digital frames are expected to continue their dominance as the fourth screen in terms of presence, most of the category’s previously-forecasted uses remain unrealized.  Despite ongoing advances in digital frame technology, consumer acceptance of the wireless functionality that is required to perform most fourth screen-oriented applications has remained low and the actual implementation of these functions is even lower.

When I first covered the prospect of digital photo frames as the fourth screen in 2007, it was easy to be optimistic regarding the evolution of the product, its technologies, and most-importantly its users.  Wireless models already enjoyed a 7.7 percent share of all digital frames in retail, surpassing many more-established peripherals including digital cameras and printers.  Processor manufacturers were rapidly raising the category’s wireless and multimedia functionality ceilings and widely quoted forecasts claimed that wireless frame shipments would surpass 12 million units worldwide by 2010.  Less than two years later, manufacturers continue to make impressive technology improvements, but the retail share of wireless digital frames has dropped to just 3.18 percent, and boastful forecasts of the wireless frame revolution has given way to whispers of existing inventory levels.

While existing inventory concerns can be attributed to the new economy and overly-ambitious forecasts, the digital frame consumers’ slow embrace of wireless functionality and more-complex applications are not as easily explained.  Beyond simple “chicken and egg” reasoning, digital frame manufacturers need to ask themselves some very serious questions regarding the direction of the category and the fourth screen movement.

What do consumers need that is not already offered in the first three screens? download montana sky

• Austin Powers: The Spy Who Shagged Me video

Reefer Madness: The Movie Musical movie

• Showdown in Little Tokyo dvdrip

Center Stage: Turn It Up dvdrip

The Da Vinci Code film

Not only do the first three screens have entertainment, connectivity, and communication mastered, their role in consumers’ everyday lives is incomparable.  Televisions are everyone’s go-to entertainment and news source and completely ubiquitous.  Not only do computers dominate communication and content distribution in the home and workplace, they are the fastest growing utility for entertainment and still hold and display far more photographs than digital frames.  Mobile phones combine many of the qualities of televisions and computers, but provide added convenience through portability and will likely succeed computers as the fastest growing entertainment and content delivery medium.

How actively do users want to be with this historically passive product type?

Indiana Jones and the Last Crusade psp Just Before Dawn ipod

Framed pictures have adorned walls and desktops for hundreds of years, achieving penetration rates that would make the top three screens sheepish.  Throughout their extremely successful existence, standard picture frames required almost no user activity and commanded very little attention once mounted.  To a degree, this has translated to a very small number of power users within the digital frame market, as encouraging consumers to embrace even standard levels of functionality has proved to be an obstacle.  Remote controls are collecting dust, memory cards go unchanged, and an alarming number of gift recipients never actually put their frames to use.  With this in mind, the prospect of mainstream consumers relying on digital frames to communicate with friends, receive news, and enjoy entertainment-based content is difficult to imagine – especially given how well the first three screens have these covered.

Is this a decorative product, a photo accessory, or a multifunctional device? Yoga Unveiled psp

• The Shipping News trailer

Threat of Exposure divx

Digital photo frames fall into all thee categories.  However, with a few exceptions, current usage is still centered around displaying photos and providing decoration.  As previously noted, framed pictures have been a household mainstay for hundreds of years, providing almost no functions beyond holding a picture and decorating a wall.  Categories do evolve, but given how frames are used, where they are placed, and what their traditional role is, full evolution beyond serving as a photo device will take time.

What other product categories have successfully made this transition? How? Vacancy 2

The household’s very own third screen, the mobile phone, is a prime example of a product that evolved beyond its core functionality and has emerged as a true multifunctional device.  Capitalizing on a combination of portability, connectivity, and a massive user base, mobile phones have rapidly emerged as a main source for content, information, non-vocal communication, and entertainment.  However, mobile phones did not achieve these advances by beating televisions and computers at their own games.  Instead the evolution of handsets’ has been largely driven by the convenience provided by their portability, while offering “lite” versions of traditional computer and television features.

Where is this category’s sweet spot?

At gap intelligence we like to say that we are the “best in the world at providing timely and accurate industry vitals in actionable solutions.” With that in mind, we ask ourselves a two-part question before launching any new initiative or program:“How does this align with our strengths and can we also become the best in the world it?”

Digital photo frames are the best photo displaying device in the world and if gap were a frame vendor, you could bet that all of our fourth screen-oriented applications would either improve or enhance the photo viewing experience.  Sure providing news or allowing instant messaging through a frame will help raise some eyebrows, but a digital frame isn’t even the best application for these functions in the average living room – nevermind the world.

Like mobile phones, which expanded on their role as the best mobile communication device in the world, the emergence of digital frames as a mainstream connected product will only be achieved through building on the category’s strengths.

Despite the slowed-momentum of the fourth screen movement, the emergence of digital frames as a wireless category is inevitable.  The number of wireless households continues to grow, reliance on photo sharing and networks sites is increasingly dominant, and all major frame vendors either offer or are planning a wireless model.  With that in mind, perhaps the next two questions that frame vendors should ask themselves is if their fourth screen strategy aligns with the category’s strengths and how can they become the best in the world within this new arena.

Notes:

1)

Taken by Nicéphore Niépce’s in 1826, “View from the Window at Le Gras” is the earliest surviving photograph of a scene from nature.  Sure it’s famous, but it can’t give me traffic updates or the Snapple fact of the day.

2) The following is a list of my favorite fourth place finishers in no particular order:

* Butch Hobson’s 1994 Red Sox – Run by the toughest manager in MLB History Roadgames film The Ferryman trailer
* Digital Photo Frames – Take that Netbooks!

* Paul Tsongas – Actually third place in primaries
* The Flint Tropics in Will Ferrell’s “Semi-Pro” –They targeted fourth place too!!!

Growing up, my family used to joke that the first sign of spring was the heater turning on in our house.  Sure the rest of the world relied on more popular indicators like Punxsutawney Phil’s shadow or pitchers and catchers reporting to spring training, but when my dad gave in and finally fired-up the furnace, you could bet that the outside thermostat had past its nadir.

Eleven years and 2,582 miles later, temperature control plays a much smaller role in my everyday life, but I’ve come to realize that the importance of energy efficiency is here to stay.  Energy efficiency has become a dominant theme in nearly every product announcement I cover, trade show I attend, and annual report that I review.  Although there are surely altruistic forces involved in this trend across most industries, you can bet that office machine manufacturers and dealers are primarily motivated by a more established reason – increasing sales.  Like my old man, bill-payers across the country are determined to reduce the role that energy-use plays into their ownership costs and are far more likely to be persuaded by a device’s energy savings if presented to them in dollar terms.  This is especially true among small and medium-sized businesses, where the vast majority of green initiatives have nothing to do with carbon footprints or polar icecaps and everything to do with controlling expenses.

MFP manufacturers and dealers have increasingly touted energy-saving features in recent years, but none have effectively translated lower energy consumption into true cost savings – until now.  Mixed into the procession of sustainability forecasts and overwhelmingly-vague savings claims, Riso released a report boasting that its devices offer 95 percent energy cost savings compared to copier-based MFPs.  Although Riso’s energy savings claim is open to debate, the duplicator manufacturer introduced a pretty slick calculator to back it up.  By entering a given MFP’s market segment, energy consumption specs, and device usage levels, along with your local KW/hour rate the Riso calculator will tell you exactly how much you can save by switching systems.  Not since ESPN launched the NBA Trade Machine has a tool come out that combines so many variables and creates such tangible results.  The Riso calculator also comes in excel-form, clearing the vendor from any allegations of fuzzy math and allowing manufacturers, dealers, purchasers, and analysts alike to make the calculator their own.

Based on the Riso Energy Savings Machine, the average Segment 4 MFP that produces 25,000 prints per month will accrue over $255 in energy costs per year.  Meanwhile, a Riso system with the same usage levels will consume just $16.55 worth of electricity over the same period.  Our sample Segment 4 MFP’s annual energy costs are greater than ten percent of the device’s annual service and maintenance fees and after five years of use, the MFP’s accumulated energy costs can equal roughly 20 percent of the system’s original purchase price.  Combine that with Riso’s claim that office machines are responsible for 7 percent of all commercial electricity costs ($1.8 billion annually) and energy consumption quickly becomes an undeniable metric for corporate purchasers in all segments.

Not surprisingly, it took a duplicator vendor to fully incorporate energy consumption into the MFP cost equation.  Duplicator manufacturers have long embraced claims of low system and usage costs as selling points against MFPs, while glossing-over the print volumes that are required and the flexibility that is sacrificed in order to achieve these savings.  And based on its recent efforts, it is clear that Riso has adopted energy savings as yet another competitive metric to use in its apples-to-fruit salad comparisons.  That said, translating energy costs into dollars proves more useful when comparing mainstream office imaging devices.  After all, even the NBA Trade Machine limits possible trades to players that are in the same league.

While copier dealers will still embrace the principles of products, solutions, pricing, service, and relationships as keys to selling, the peripheral costs associated with energy consumption provide significant opportunities from both sides of the bargaining table.  In an industry where deals are made and lost over a mil, one system’s $0.0001 per-click energy savings over another’s – multiplied across a fleet’s worth of clicks and five years of use – will translate well with any purchaser that also pays the electric bill.  Energy Star certifications and sustainability claims all help to support an energy efficient message at a superficial level, but you can bet your last carbon credit that purchasers from Main Street to Wall Street will be better persuaded with actual dollar values.

Additionally, energy costs can be applied to a wide variety of products, solutions, and selling situations.

Lady in the Lake movie download
• Dealers attempting to replace an underutilized workgroup MFP with a desktop model only have to compute standby energy costs accrued during downtimes to add another layer to their value proposition.

The Dark Hours movie full

A Night at the Roxbury divx
• Managed print service providers that are trying to sell an IT manager on a fleet consolidation can easily utilize energy savings figures to compliment their efficiency-based message.

Mamma Roma The Namesake full movie

• Dealers looking to upgrade a client’s antiquated copier can supplement their performance claims and offset any sticker shock with the promise of ongoing energy cost-savings.

download Spy Game dvd

• Even when comparing largely identical machines, applying a dollar amount to energy consumption specs, sleep times, low-temperature toner technology, and scan capability creates tangible cost differentiation.

download Money from Home dvd

Blown Away psp Cop Dog aka Marlowe film download The Red Baron dvd

Bubble Boy full movie

Although the adoption of energy costs as a recognized pricing metric is still nascent, a growing number of manufacturers and purchasers are utilizing consumption tools in their processes.  Xerox’ consulting arm includes an eco-friendly component and provides a sustainability calculator Postal divx

of its own.  Ricoh plans to commercialize an energy consumption and monitoring solution that uses IBM’s Tivoli software later this year. The state of Massachusetts

• buy My Dinner with Jimi
  • Far Cry divx

requires itemized energy costs for each MFP offered through its pricing agreements, holding state agencies responsible for controlling both traditional and power-based imaging costs (MA’s energy CPCs are way higher than Riso’s).  Even Colombia University provides its purchasers with an energy calculator that includes general costs for a variety of office equipment types, as well as data on the products’ annual carbon output.

At a time when the word “savings” is as attractive as ever, the opportunity to fully embrace a cost-centric energy message has arrived.  Now it’s up to manufacturers and dealers to seize this opportunity.

I hate to pick on the Big 3 US auto makers when they are down, but it is no coincidence that the best-positioned car manufacturers today were also the first to address consumer demand to improve their vehicles’ miles-per gallon.  Just saying…

• L.A. Confidential dvd

Bubble, Bubble, Bubble.. The aftermath of the last big bubble, analysis of the current bubble, how to guard against the next bubble. There is no avoiding it. Every time we turn around it seems we’re inundated by bubbles. Speculative bubbles are both everyone’s favorite scapegoat and next great opportunity. From Holland’s Tulip Mania American High School film

• Blade ipod

Love’s Unfolding Dream dvdrip Rush Hour 3 move