We are expecting the market to grow between 25-30 percent annually

With plans of adding more partners to gain business from global accounts
present in India, Saxena details Kodak's outlook of the scanning market and
shares the company's plans

What is your take on the document scanners market and what are the factors
driving its growth?

In our estimate, the value of the document scanners market in India is
around Rs 45 crore not counting the entry level flatbed scanners as well as
multifunction devices (MFD). As far as the growth over last year is concerned,
there has been a negative growth of around 4-5 percent as the economy was
experiencing a slowdown and this market was also no different. However in the
coming years, we are expecting the market to grow between 25-30 percent
annually.

The major factor driving this growth forward is the increase in
digitalization that we are seeing pan industry especially with key verticals
like BFSI, government and education being major the contributors. In fact around
40 percent of the market is attributed to demand from the banking and insurance
sectors. Digitalization allows for faster loan processing as the customer
documents received at a branch level can be quickly scanned and sent to the
proper authorizing centers for verification and processing. There are also
several government projects like the Unique Identity Program for instance which
will require key documents pertaining to the individual citizen to be digitized
and stored in government archives.

Another instance of where we are seeing policy decisions propelling demand is
where the HRD ministry has made it mandatory for all government recognized
educational institutions to move various processes like application to a
digitized platform accessible to citizens across the nation. Even corporate
customers are moving towards a paperless office concept and are increasingly
reducing huge backlog of paper documents that are simply eating up vital space
by digitizing the content on the same. To put it simple, convenience is boosting
the demand for these scanners.

How is the microfilm segment doing?

Microfilms as a segment has seen a declining growth. However, we expect this
market to pick up almost three fold with growth rates expected to range between
30 and 40 percent YoY. The biggest vertical demanding for these products is the
government sector. Microfilms is a proven technology and it helps clients save
on space occupied by huge document archives. The advantage of microfilms over
other scanning technology is that the typical lifespan of other scans is around
10-15 years while for microfilms it is estimated to be nearly 500 years.

How is the Document Management Software (DMS) market evolving?

DMS is not something we are very bullish about. The reason is that the typical
Indian IT consumer expects to be provided software bundled with the hardware at
no extra cost. Hence the ratio of paid-for software would be a mere 1:19 or
about 5 percent of the entire software units supplied. There are small
independent software vendors (ISV) who have very low cost solutions that do more
or less the same job that our software does so there is not much scope in this
regard.

What are your channel plans?

We operate through a product-based distribution model wherein we have two
national distributors, viz-Redington and IGS for our document scanners and KGS
Microsystems who distribute our microfilm products. We have a total of around 35
resellers who sell Kodak scanners on a regular basis but if you include those
partners who demand our products on a sporadic basis, then our total partner
base would be more than 500 resellers countrywide. We plan to add more partners
this year and plan to increase the frequency of our partner training programs
from once in every quarter to once in every month. Also having acquired Bowe
Bell Howell last year, we intend to extend our partner's product portfolio to
include Howell scanners as well. With Howell's range of production scanners, we
plan to gain more business from global accounts present in India where we have
not had a presence earlier.

What are some of the key market trends that you are seeing?

For high-end production scanners which have a high capacity output, we are
seeing that the key customer verticals include BFSI, Government and Corporate
segments. As far as geographies are concerned, nearly half of the business comes
from the West, reason being that all major financial institutions are based out
of there. In the North we are seeing good traction coming from government
because that is where the seat of power is located. Price sensitivity among
customers for the entry and mid-level range is high, however for production
scanners, quality becomes the focus and that is where Kodak gains the edge over
others like Fujitsu, HP or Canon. Factors like product sturdiness and our wide
service network spread over 150 locations works in our favor when it comes to
pitching for big deals.

Finally what advice would you give to partners wanting to enter this
space?

It is the right time to enter this market as it is still a niche market and
with the kind of growth projections we have estimated, there is huge potential
for everyone involved. On an average, a partner can make healthy margins of
10-15 percent plus there are up selling opportunities in the consumables and
services space. While consumables and spares make up more than 15 percent of the
total market value, services share is even higher at 25 percent. High-end
production scanners implies massive capex for companies and hence many opt to
get their work outsourced to service providers who can do the digitalization for
them. This is an avenue where partners can enter and make money because there is
big demand for this service.

JOhn Jacob

johnj@cybermedia.co.in