VinceMcHugh

Xerox equipment sales drop, as Korea comes on the scene

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Xerox has made no secret of the fact that they want to become more and more of a "Service" based company. That's good for them since their hardware revenue is down. Xerox equipment sales revenue is down 14% over last year. 52% of Xerox's total revenue comes from services, up from 48% the previous year. Xerox seems to be moving into the space that they want to dominate, and out of the hardware business. That begs the question: what will become of Xerox \ Global?

But nature abhors a vacuum. With several of the "established" copier \ MFD companies struggling and even possibly selling their equipment divisions, look who has just entered stage right.... Korea! There are two Korean companies that have recently entered the US Office equipment market place; Samsung & Sindoh.

Samsung has been successful in a number of high tech endeavors, cell phones, chips, TVs, Tablets, Printers; and now they have entered the MFD space.

Sindoh, another less known (at least in America) Korean company has flown under the radar, but recently announced that it too has entered the American marketplace with a small line of A4 B&W MFDs. Ricoh actually owns 16% of Sindoh's stock.

Don't under estimate Korean manufacturing. People laughed when Hyundai first got into the automotive business, but no one is laughing now. They were one of the first to give a 10 year, 100,000 mile warranty. They have made an impact in the US auto market. They were not that different than Japan's Datsun, now Nissan, when they first came on the scene. Reasonably well made products at a low price that became well made products at a good value. While there is no love lost between Korea and Japan, the model works for those who are willing to work it.

Of the two, Samsung is the bigger fish and has already had some success with printers in the US market. Having said that, selling printers that are drop shipped or sold over the internet is very different than selling MFDs. MFDs \ Digital copiers require a dealer network to install, service, and support them. If a printer is down for a week people are annoyed; if their "copier" is down for a day users lose their mind. You must have either a national dealer network or a direct sales organization if you want to successfully sell MFDs. A Dealer network is easier and cheaper to setup since they would be approaching existing dealers to carry and support their product lines. However, convincing long standing copier dealers to carry a new product line is no easy task in and of itself. But that is still a lot easier than setting up a profitable national direct sales organization, as many manufacturers have learned to their chagrin. It is beginning to look like a "Profitable" Direct Sales Branch is as easy to find as a Unicorn.

Our industry is in flux, once again, LOL. With Xerox looking for the exit, and Sharp's future still uncertain, both Samsung & Sindoh see an opportunity. And maybe, just maybe, one of them will succeed.

That's My $0.02
Vince McHugh
vince.mchugh@necs.biz

Updated 01-27-2013 at 08:26 PM by VinceMcHugh

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