MULTI-FUNCTION DEVICES: It's All About Color, Honey

Multi-function devices (MFD) have taken the market by storm in the year gone
by, this despite the fact that it is more expensive than an inkjet printer. This
is because the MFD replaces the printer, scanner and copier, which was earlier
required in an office environment. All these machines also used to occupy a lot
of space, whereas an MFD comparatively takes smaller footprint.

Earlier, the MFDs were not as powerful in terms of scanning and copying; and
the range was not so comprehensive. Today, there are a series of models, which
adjust themselves to various market segments and budgets.

Besides the SMB and corporate segments, there is an emergence of new buyer
groups. These could be replacement buyers, who would like to move up from an
inkjet printer to an MFD. There are first-time home buyers who want an MFD to
suit their limited needs. There are also photo enthusiasts who want borderless,
high-quality photos from an MFD.

SELLING MFDs

Selling an MFD is not like selling an inkjet printer, as the latter is a
dumb product. But MFDs sell only on the touch-and-feel concept and sell
much better on the retail counter. People have to appreciate the features of the
product; its printing, faxing, scanning and copying capabilities.

Buyers want to see various kind of MFDs under the same roof and how they
differ from one another. This would help buyers make an educated decision on
which product they should go for. There is a need to have an office automation
kind of selling strategy for MFDs too. Such a retail approach is required for
selling MFDs as it is a need-based acquisition.

This is where evangelization of the product is required from the vendor as
well as the partner. They have to make the customers realize that this buy is a
space and cost-saving option. They have to educate the buyer about the software
and the features it sports.

EATING INTO THE INKJET PIE

MFDs is where the future is headed. I expect it to gain at least 30% marketshare
of the inkjet printers, if it has not already achieved this mark yet.

This does not mean that the inkjet market will cease to exist. Entry-level
inkjet printers will always sell in the market, because of its price advantage
over MFDs. Historically, people don't buy printers with the PC due to budget
constraints. A printer is a need-based buy and always bought as a peripheral to
the PC. This is true, especially of the home segment.

MFD DRIVERS

Lucrative margins: Rs 150-200 for dealer sale, per product. Rs 800-900 per product for end-user sales Growing awareness: SOHO and home users becoming aware of falling prices, smaller foot-print and combined functionalities Target buyers: Customers wanting to replace or upgrade their stand-alone devices

But things have changed now with the increased usage of the Net, mobile
phones and digicams. These factors have been fueling the growth of printers. The
current ratio of the printer and PC buying has gone up.

Printers are no longer unaffordable. Also, there is a lot of OEM bundling of
printers with their PCs. So, the inkjet market will survive in unit terms,
though its marketshare might not increase much.

HEADWAY IN LASER

Besides inkjet, MFDs are also making headway in the laser segment,
especially with entry-level models available in the sub-

Rs 17,000 range. But again, laser MFDs will not be as popular as color inkjet
ones.

One reason for this is because at sub-Rs 17,000, it is still a high price to
pay for a machine which gives black and white output. Also, fax is going out of
fashion and now MFDs are available with fax to email function. So why would a
buyer pay for a laser MFD at such high prices?

Corporates might go for MFDs as their duty cycles are higher. But in the home
or SMB segments, laser MFDs can't compete with their inkjet counterparts.

This is because of color. Every device you notice these days has color
output. Black and white output has been relegated to official documents only.
Also, inkjet lends itself to so many different applications.

CONSUMABLE PRICES GOING SOUTHWARDS

With the growing acceptability of MFDs, the prices of consumables have also
gone down. A four-color cartridge which used to cost Rs 1,800 now costs Rs
1,200. And, also technological advances now offer customers with photo-quality
prints at less than Rs 1,000.

Recently Kodak partnered with Lexmark to offer digital prints on the latter's
MFDs. Also Nokia too has tied up with photographic companies where the Nokia
mobile user can click photos on his mobile and get a print from the photoshop.
All these prints are taken from MFDs which offer exceptionally good output.

All in all, we have witnessed just the tip of the iceberg when it comes to
MFD sales. Better days are yet to come.

PG KAMATHis General
Manager of Lexmark India