All-in-one devices always seem like great ideas. After all, they save space, time and money. The Indian peripherals market is now witnessing the emergence of multi-functional devices, which may pose a huge challenge to traditional peripherals in the future. Shipra Arora reports

J V Ramamurthy says MFDs will pose a serious threat to the traditional peripherals market

The traditional stand-alone peripheral devices (printers, scanners, copiers, fax) market now faces a challenge from another quarter multi-functional devices (MFDs), or all-in-ones. With a phenomenal growth rate of about 60-70 percent, the MFD market might well be the silver lining in an otherwise damp peripherals market, but the potential threat that this segment holds to the overall peripherals sector is visible. According to experts, though the MFD market currently is in a nascent stage, as it grows in volumes over the next few years it could eat into the pie where traditional stand-alone devices play today.

Says J V Ramamurthy, president and chief executive-Office Automation, HCL Infosystems, which handles Toshiba’s products in India, “Yes, MFDs will pose a serious threat to the traditional market. MFDs have started affecting the traditional printer and scanner market by way of offering multi-functionality and single vendor solutions.” Ashwini K Aggarwal, country consumer category manager, Imaging and Printing Group (IPG), HP India, also agrees as he points out that MFDs can eat into the market share of stand-alone devices.

“We are likely to see MFDs eating into the traditional pie though not for the next two years, as it will take some time for this market to mature and grow enough volumes to pose a threat,” adds S Magesh, marketing manager, Volume Products-OIP, Canon India. For others like Gestetner and Spicenet, the competition is restricted to specific segments within the traditional market.

Ashwini K Aggarwal says the need of the hour is to overcome apprehensions and misconceptions relating to this emerging technology

Sujit Sanyal, vice president-Sales, Gestetner India, points out that direct competition is largely with network-ready, high-speed central devices like A3 laser printers and scanners, with not much threat to low-end table top, A4 personal systems. However, as Arun Seth, CEO, SpiceNet, points out, while MFDs have eaten into the share of the traditional scanner, printer and fax market, especially in terms of applications that do not require specialised and specific scanning, printing and fax abilities. However, there are companies like HP for whom this trend may have a two-pronged effect. While it brings new challenges on the printer front, it also promises inroads and significant shares in new territories like copiers and fax systems.

Market size and growth
The increasing popularity of multi-functional devices can be considered from the growth that this market has witnessed in the last 1-2 years. According to IDC, while the inkjet MFD market in India has been growing at over 100 percent, the growth in the laser MFD segment has been in the range of about 60-75 percent, though not very large in unit terms. The players operating in the segment too proclaim similar optimism. According to Ramamurthy, the cumulative (inkjet and laser combined) growth in this segment is around 40-50 percent. “Currently worth Rs 70-80 crore, this market is estimated to attain a size of Rs 150-200 crore by the year 2003, thereby growing at the rate of around 60 percent,” he says.

On the other hand, Sanyal pegs growth in the overall MFD market at around 80-100 percent in the last two years. And this sentiment, points out an IDC source, is likely to continue for at least the next one-and-a half years. As compared to this, growth within the traditional stand-alone printer market for H1 2001-2002 has been in the negative range, according to MAIT. Though the comparatively small base of MFDs can be one of the reasons for high growth, the market is also buoyed up by various growth drivers.

Growth drivers

According to S Magesh, MFD prices have fallen by around 20 percent per annum, propelled by factors like cuts in duty rates and international price trends

One of the most significant factors operating in favour of MFDs is the advantage that these devices have over stand-alone devices in terms of a corresponding cost and feature ratio. A comparative analysis of the two throws adequate light on how MFDs are turning out to be cost-effective propositions, especially in the small and medium enterprises (SME) and small office/home office (SOHO) segment, where most growth is expected. And with corporates resorting to cost saving in communications in an increasingly competitive environment the thrust on MFDs is certainly present there too.

Take for instance the combined cost of a printer priced at Rs 6,000, scanner at Rs 5,000, fax machine for Rs 15,000, which comes to Rs 26,000, with an additional Rs 30,000 for a copier. The total cost comes to Rs 56,000. An entry-level MFD, which has all the above features, costs around Rs 20,000, thereby resulting in huge savings. According to Sanyal, the current level of pricing in MFDs is not high when compared to the alternative of having a separate portfolio of products, including an analogue copier with document feeder and sorter + A3 size network laser product + A3 size scanner. Therefore customers, especially those who have a LAN and wish to utilise an MFD more as an IT peripheral than as a standalone copier, do not find price a barrier.

Another key driver has been a downward trend in MFD prices in the last two years. According to Magesh, the fall in prices of MFDs in the Indian market has been around 20 percent per annum, propelled by factors like cuts in duty rates and international price trends. “Two years ago an entry-level MFD used to cost about Rs 35,000, but now costs around Rs 20,000.” On the other hand, Pankaj Sharma, head IT & Channel Sales, Sharp Business Systems, perceives a 5-10 percent fall in the prices of MFDs.

With volumes going up, prices are likely to fall further. “The narrowing gap between analogue copiers and digital MFDs in terms of price and operating cost is one of the key drivers for the MFD market in India,” explains Sanyal. The price gap between analogue and digital MFDs has come down considerably in the last one year. Operating costs of MFDs, which used to be 50 percent more than that of analogue copiers, have now come down to levels which are the same as, and in some cases even less then that of comparable analogue copiers.

These, plus the fact that there are increasing functionalities and feature options in MFDs, which enable customers to get higher productivity, has driven the market in the last one year.

According to Ramamurthy, lower prices also mean that digital MFDs are fighting for the huge replacement market switching over to digital technology. On the printer functionality front, Ramamurthy points out that MFDs provide for low running cost as compared to traditional printers.

Providing further momentum to the growing popularity of multi-functional devices is the growing awareness among customers about the functionality and features of MFDs, with players getting more aggressive in terms of their marketing and branding strategies. According to Ramamurthy, the presence of multinationals in this segment has resulted in immense market awareness, which creates demand for these devices.

Customers have started seeing MFDs as value-for-money products as compared to traditional stand-alone devices, with the convenience of all-in-one features. “Instead of running for different products you have the convenience of the entire lifecycle of the document being taken care of by one product. This helps in saving time and effort, leading to better productivity. Being a single connectivity product also means better work lifestyle,” says Sanyal. Further, Seth points out that by providing a one-stop solution to all business needs, an MFD lends more flexibility to business operations. Further, the space-saving features (by combining the functionality and size of many products into one) has also pushed the entry of these devices into today’s space-constrained offices.

While MFDs have their own obvious advantages over stand-alone devices, driving demand among SMEs, SOHO, senior executives and small departments within large corporates, it is still some time (about two years), believe experts, before the MFD market becomes mature enough to provide serious competition to the traditional market.

Meanwhile, there are a range of challenges, which need to be addressed and resolved for the market to grow stronger and become a mainstream segment. According to Ramamurthy, one of the major challenges will be towards creating demand for more than one add-on functions in MFDs and to overcome resistance to invest in “all-in-one” machines for fear of breakdowns. The initial investment is also lower in the standalone function e.g., a printer. For Sanyal, the challenge is to educate both sets of people in an organisation and to have a common understanding of the benefits of MFDs. “This requires a very high degree of direct and personalised selling, involving a thorough understanding of the customer’s requirements and to be able to propose the correct product as the best solution for the organisation as a whole,” he explains. For Aggarwal, since the market is in a nascent stage, the need is to overcome all the apprehensions and misconceptions relating to any emerging technology. “Finally, success will depend on how vendors market their products in the Indian market,” he adds.