After several months of anticipation, Samsung last week officially announced the US launch of its new range of A3 MFPs, more than doubling its ledger-size lineup and giving the vendor one of the widest Segment 1 through 3 A3 assortments in the industry.
Samsung’s three new 20ppm to 30ppm A3 color MFPs and two new 23ppm and 28ppm A3 monochrome MFPs are a pretty big deal on their own, and gap intelligence provided full analysis on the new lines in Monday’s MFP Market Intelligence Report. However, this blog is dedicated to a component of this announcement that we at gap commonly ignore – the executive quote.
In the new line’s announcement, the Samsung Enterprise Business Division’s still-new Senior VP Tod Pike correctly noted that having a solid balance of A4 and A3 MFPs is a requirement in today’s marketplace, and then likely raised quite a few eyebrows with this statement:
“With our increased investment in A3, we are confident we can become one of the top global A3 producers by 2015.”
It could be easy to chalk this quote up as typical product launch hyperbole, but some may remember Samsung Electronics’ Executive VP of IT Solutions, Nam Seong-Woo, made essentially the same A3 leadership claim in support of the line’s Korean launch in May, leaving little doubt that Samsung is serious about this goal.
I couldn’t agree more that Samsung was in need of a major A3 push if it ever wanted to expand beyond its role as an A4 supplement brand and break away from its SMB focus. However, Given Samsung’s lack of a direct sales presence, limited channel, and role as many dealers’ A4 supplement and second or third brand, these market share claim can be hard to swallow. After all, there is a big difference between aiming for a balanced lineup and targeting a spot among the current A3 market leaders.
During my four years focusing on the office and production printing market I have seen far more attempts to grow A3 market share than I have seen actual changes in market shares. I’ve seen vendors try to expand their A3 lines to drive growth. I’ve seen a handful of extremely disruptive direct acquisitions in the name of growth. Heck, I’ve even seen vendors expand their A4 lines with the primary goal of protecting and propelling A3 sales. Yet the top four players in the A3 market are still the top four players and overall market share distribution has only seen marginal shifts.
So why is it that after all the failed A3 share growth attempts that I’ve witnessed, I can’t help but think that this time when Samsung aims for the stars, they’ll at least reach the moon?
There are a couple reasons:
Know Your History – Not only has Samsung ascended to the top ranks of the laser printer and A4 MFP market, the vendor has made a habit of targeting what many perceive as unattainable market shares in very established markets and either reaching its goals or coming pretty darn close. While Samsung has fallen short of more than a few market share forecasts, all you have to do is take a walk down Best Buy or Walmart’s TV, PC, digital camera, or mobile phone isles for proof (or take a look at the gap intelligence data) – Samsung is a force and is very capable of gaining share in mature product categories.
Follow the Money – While many of the A3 leaders are shifting R&D investments to develop new non-printing products and services (not bad ideas), Samsung is significantly expanding its investments in the category. Reports from Korea indicate that the already well-diversified vendor is re-directing revenue from its laser printers and other categories to its A3 business, and whispers from a big name Japanese OEM revealed that Samsung has been actively (and successfully) recruiting key engineers to jump ship for Samsung. Meanwhile in the US, Samsung appears to have opened up its checkbook and signed a number of competitors’ channel managers not to mention Samsung Enterprise Business Division’s new leader, Tod Pike.
The Pike Effect – There were a lot of theories regarding why Tod Pike would leave his comfortable role at imaging powerhouse Canon for Samsung’s less established Enterprise Business Division. While it is possible that the move was helped by Canon’s decision to keep CIIS outside of Canon Business Solutions or Pike’s desire to avoid what could be a messy Oce integration (both justifiable), one thing is certain, Tod Pike could have gone to a number of vendors and he would not have decided to join Samsung if he did not see legitimate opportunities to do big things there. In fact, I’m actually pretty confident that Pike believes Samsung “can become one of the top global A3 producers by 2015″ and I’m quite sure Samsung is similarly confident. In the three months after Samsung made Pike’s appointment official, word on the street is the new EVP has already taken a page out of the Jerry Maguire playbook and reconnected with many of the Rod Tidwells he’s worked with over his long career, bringing Samsung into some very high profile dealers and clients.
True Balance – One week ago today, I sat around a hotel banquet table eating chicken with a bunch of analysts far more seasoned than myself (more seasoned than the chicken too) and each that cared to comment were quick to question why Samsung would even bother with the A3 market. The consensus was: Samsung has seen very strong acceptance as many dealers’ go-to A4 MFP provider and considering that pages and devices are trending to A4, why doesn’t Samsung just let the market come to them. While I respect each of these analysts very much and their reasoning is based on some solid facts, I am also quite certain that nearly every traditional “copier” vendor’s aggressive expansions into the A4 space will make the role of the A4 supplement brand far less important in the future than it is today, making Samsung’s need to diversify its hardware lineup more necessary than ever. With Samsung’s A4 heritage and newly-respectable A3 line, the vendor can now truly implement a balanced fleet strategy without bias, which is something most A3 vendors say they are doing, but are more often just relying on their A4s to protect and supplement their A3s. And if pages and placements really do increasingly shift to A4s, Samsung will be ready with a very robust A4 line anyway.
Dealers are Getting it – A number of members of the gap intelligence Dealer Partnership Program that initially relied on Samsung as an A4 MFP supplier have embraced the vendor’s first A3 models, while reports from the channel suggest that Samsung has been tallying a number of new larger multi-state dealer partners that most established BTA-centric OEMs would be pumped about. As shown in the chart below, Samsung has continued to grow its share of A4 sales submitted by members of the gap intelligence dealer program, while our dealers’ sales of Samsung A3 MFPs have shown a massive spike since late last year. It should be noted that our dealer sales volumes are impacted by the mix of dealers participating in the program at a given time, but our longer tenured dealer partners have shown that much of this Samsung A3 growth has come at the expense of very established A3 brands.
I understand that this blog may come off about as biased as any I have ever written. I also understand that Samsung’s channel and lineup challenges likely outweigh its advantages as it relates to actually becoming a leader in the A3 space. However, after several years of watching the A3 market leaders battle it out with minimal gains, I don’t necessarily see Samsung’s A3 newcomer status as a disadvantage, and I believe market players would be wise to monitor this vendor’s activities.