Unless you’ve been hiding under a stone (or stranded in a snow drift) over the last ten days, your more than likely heard about Morgan Stanley’s Valentines Day “present” to the printer industry – a 96 page Blue Paper entitled “Tablet Demand and Disruption – Mobile Users Come of Age.” In it, Morgan Stanley’s crack team of CFA’s, PhD’s, and other informed prognosticators point out the eye-popping expectations for growth in the mobile tablet PC market, and in the process, begin to paint a “sky is falling” scenario for companies such as Lexmark and Ricoh whose businesses are heavily exposed to the printing sector. Tablet PCs, they say, are the fastest growing mobile device category ever, and those who buy them may never print again (alas, I paraphrase for dramatic effect…)
Here’s a snapshot from Morgan Stanley’s Blue Paper:
The impact of tablets on pages printed is the most underappreciated cannibalization story. CIOs in the enterprise space already expect to cut spending on printer supplies in 2011. As the installed base of tablets—a digital document viewer that reduces the need to print both standard black and white documents and expensive color presentations—grows, we expect printed page volumes to shrink. What’s more, 90% of iPad users already believe they would print less with access to work documents on their tablets. Given high earnings exposure to sales of printers and related supplies, we highlight Lexmark and Ricoh as potentially challenged due to rising tablet adoption.
Specifically, the report predicts that tablet adoption could reduce supplies revenue by 1-2% in 2011 and 2-5% in 2012, in developed markets. Given that the global printing industry is north of $100 billion by many estimates, the potential impact of tablet growth on the printing industry would reach into the billions of dollars just over the next two years. Did that grab your attention yet?
But Morgan Stanley’s conclusions are not without their faults. Much of its argument is based on anecdotal data or informal studies, such as the one quoted in the Blue Paper where the writers asked 215 Morgan Stanley employees if they would print less in the office if they had a tablet. The vast majority said they would, including the 48 respondents who said they already had an iPad. Of course, if we’ve learned anything over the last 15 years of studying the impact of the Internet on printing behavior, what people say they would do and what they actually do can be two totally different things.
That said, the Morgan Stanley analysis on Tablet PC growth is eye-opening, if nothing else, and the printer industry must not only take notice, they also must take action. Interestingly, the authors of the report mention potential offsets to their predictions, chief among them being that Tablet PC owners – shockingly – are clamoring for ways to print. When Apple first launched the iPad, users generally loved it but loudly criticized its lack of printing support. Apple then launched AirPrint with its iOS 4.2 update in late November, finally (though in a limited way) addressing a persistent customer need that, no matter how often the prognosticators predict a paperless office, just doesn’t want to go away. At least not yet.
But the truth is, AirPrint alone is not the answer. Nor is Google Cloud Print, nor HP’s ePrint, or any of the other proprietary or limited mobile printing solutions available through printing vendors’ various enterprise and consumer offerings. The real truth is that if there was ever a need for an industry standard for a ubiquitous, cloud-based mobile printing solution, this is it. Given that Tablet demand is expected to reach 100 million shipments by 2012, the printing industry simply does not have the time, nor can it afford to plod along pushing proprietary mobile printing apps or awaiting the release of Google Cloud Print sometime in mid-2011 (and of course, Google Cloud Print will only work for Tablets using the Chrome browser).
The industry is about to reach a major fork in the road. If an easy, convenient way of printing is available to these 100 million Tablet users by 2012, then the explosion in available digital content could easily increase pages printed during this period. But if the industry is unable to align itself with this new, potentially disruptive technology, we could see the beginning of a major turning point for print, and the predictions in Morgan Stanley’s report could very well turn out to be true.