Considering that HP is one of the clear Managed Print Services leaders, at first glance it can be amazingly hard to envy the vendor’s role in the MPS market because of its massive install base of easy-to-manage and often-consolidated printers.
In a best case scenario, HP or one of its channel partners wins an MPS account that mainly uses non-HP devices, leading to net new hardware placements and pages. However, in basically every other MPS win scenario, the client already has a fleet of HP printers and MFPs installed, so the win really consists of converting some legacy products to its latest models, supplying remaining HP printers with genuine toner, and eventually installing new HP systems as the legacy devices expire or as the client’s needs change. With that in mind, and given HP’s install base before the MPS phenomenon hit, it’s hard not to view HP as having the most to lose from MPS and the least to gain.
In a conversation last year, one of HP’s copier vendor competitors put it this way: “HP may be the MPS market leader, but their problem is they had to eat their own young to get there and will have to continue to do so to keep their share.” Ouch…
However, HP surely views these zero-sum gains as a far better alternative to MPS deals won by competitors, which often begin with an overhaul of the client’s HP install base, followed by supplying remaining HP printers with non-OEM toner and a drawn-out cycle of replacing these legacy devices with MFPs from the competing provider’s brands until the conversion is complete.
This cycle has become so common in MPS that a number of A3 vendors have swallowed their pride and partnered with their natural enemies, the non-OEM toner suppliers, to ensure that their dealers and branches have a reliable source of knock-off HP cartridges. For the same reason, companies have lined up to support MPS dealers’ additional HP-related needs, including service training, helpdesk support, and third party maintenance – providing many of these dealers with a level of support that they don’t even get for their “primary” brands.
Meanwhile, copier vendors are hurriedly developing their own A4 lines to consolidate a nation of HP printers on MPS life support, which will theoretically open the door for them to place their prized and profitable A3 devices. It’s a hard reality…. Just ask anyone at Xerox that was around following the opening of its patent portfolio in 1975. HP is working like heck to maintain its install base and dodge the massive target aimed its back, knowing any misstep means the loss of supply revenue and more of its printers heading to the recycling pile.
However, unlike Xerox’s situation 36 years ago, HP has one very notable and unique advantage. The very forces that are working to steal away its install base have created a nationwide network of LaserJet experts that have grown very comfortable supporting HP technology. Meanwhile anecdotal evidence is piling up that many of these MPS converts are now looking to HP when demand for new A4 MFPs arise.
And why wouldn’t they?
HP’s massive install base did not happen by accident and its brand and technology reputation remain unmatched in many IT departments across the country. MPS providers already have the service and supply infrastructure in place to efficiently and profitably support HP devices. And as of right now, most copier vendors have not been able to provide their dealers with sufficient A4 solutions or have simply brought enterprise A4s to market that completely missed the point of the segment’s hardware-based TCO proposition.
So here we are, in their haste to capture all the HP pages they could, copier vendors have let HP’s Trojan Horse through their gates, and are too busy trying to replace their legacy HP fleets to notice what’s happening. And if they didn’t notice HP’s Trojan Horse roll through the gates, you can bet they didn’t realize that Lexmark, Samsung, and the other printer guys all have their own Trojan horses spread across the channel. Not only that, but it only took me ten paragraphs to work in my title!
I’ve had the pleasure of flying around the country for trade shows and dealer meetings during the last few months and was able to run this theory by some of my friends and colleagues in the industry. And as expected, responses varied according to each player’s role in the MPS equation and provide a solid explanation as to how HP got there.
Below are a few of my favorites:
Copier Manufacturer #1: “It really doesn’t matter because HP will not receive supply revenues from most of these placements anyway”
Correct, but I don’t see that helping this copier vendor as it tries to transition its MPS install base to its own hardware and consumables. Even if HP loses in this scenario, the copier vendors certainly don’t win.
MPS Pundit: “Both sides have it wrong anyway. MPS is not about hardware or brand, it is about managing document workflows and processes, while reducing printing costs”
This person may be right regarding the definition of MPS, but my grandfather would call him a hippy, my dad would call him an idealist, and I would say he didn’t answer my question and isn’t taking the manufacturers’ goals into consideration at all.
Dealer: “I can offer my clients A4 MFPs from other brands for far less and will generally suggest those models, but if a client requests HPs, we can certainly sell and support them.”
MPS Consultant: “HP printers and MFPs are rarely leased, so dealers that do this would have less control over their MPS accounts and have a harder time negotiating longer contracts.”
My first thought was, you can tell he used to be a copier dealer. My second thought was, you can tell he provides consultation to dealers – not end users. My final thought was, as long as this client also has this dealer’s copiers installed, I don’t see why this is a problem.
Copier Manufacturer #2: “If the dealer choses to continue to offer HP printers, they expose their MPS accounts to too much competition. Anyone can support HP, but once they have their own brand MFPs and printers installed, their hold in the account is much stronger.”
No argument here…. Point taken.
The situations described above are really not as dire for either side when viewed outside of the baby-eating and Trojan Horse analogies. The truth is, nothing is decided. The growth of MPS certainly does not mean the end of HP’s printing market dominance and given the importance of transitioning to a service-led business model, it’s a good idea for copier vendors to do a bit of hand-holding as their dealers evolve from pushing boxes – even if that means (hopefully temporarily) turning them into HP experts.
While HP does not have to venture too far from its IT channel comfort zone, the vendor should certainly try to partner with this growing army of MPS-created HP experts and provide them with a profitable way to become authorized HP experts who buy new HP systems and use genuine toner and parts.
Copier vendors can rest assured that most of their dealers will not immediately become HP resellers just because they now know how to fix them. But that doesn’t mean that they shouldn’t double down on their A4 R&D investments to make sure these MPS providers have a variety of appropriately-equipped and-priced A4 solutions to choose from when it comes time to consolidate their HP fleets. It is also a good idea for them to start looking at A4s as a device that best fits many of their clients’ needs and will continue to do so – not just as another way to either secure or expand their A3 base.
Considering the growing number legacy MPS install bases that will soon transition to branded fleets, the opportunities available to both the Greeks (copier OEMs) and Trojans (printer vendors) are undeniable. Now it’s just up to them to dictate how this story goes down in the history books.