Marketing Feature on Modern Office

Key to enhancing productivity

The concept of smart office is becoming more and more prominent these days with consumers getting more tech savvy and opting for high-end products, says Atanu Kumar Das

We want to be at the top when it comes to Office Next. We know that we have got the right product mix to attract customers Sameer Shah Country Category Manager IPG Hp India

Research has proved that on an average a human spends a majority of his life at work. Fuelled by massive competition and the race to stay ahead have completely redefined the way we work. Present day work culture is completely different from what our last generation had experienced. Keeping pace with the changing working atmosphere and rising stress levels, the mundane offices are being quickly replaced with convenient, smart and technology friendly workplaces.

Office today no more consists of bulky and dull wooden fixtures and heaps of unorganized files on the table. Now you have it all in a laptop. All the old records are digitised and kept in storage boxes to be preserved for ages. Working away from office is no longer a nightmare. It is a pleasure with the help of mobile devices like PDAs. Smart workplace actually adds to the efficiency of workers and the average per capita productivity turns positive. Devices like multi functional devices (MFDs), projectors and plasmas are really creating an enviable office environment for the competitors.

Here, we try and look at the various vendors who are trying to address the office next concept market. Players like HP, Xerox, NEC, Hitachi, LG Panasonic, Toshiba and Samsung are now getting more aggressive to market this concept of Office Next. In this feature, we are address the multi-functional devices (MFDs), plasmas and projectors, which are turning out to be the key ingredients for today's office environment.

MFDs gaining ground

New advancements in office automation systems have played a pivotal role in revolutionizing the office space in India. Kuldeep Malhotra General Manager Volume Products XEROX India Limited

Being one of the market leaders in the MFD space, HP has really come a long way to realise the dream of Office Next. According to Samir Shah, Country Category Manager, Shared Printing and Connectivity, Imaging and Printing Group, HP India, "We have doubled our growth in the MFD segment if compared to the last fiscal. We know that laser MFDs are really gaining immense ground in the country and we want to be at the top of things in this category. In HP, we have always believed that if you are giving a quality product at a reasonable price, there can be no dearth in growth. This is the reason that we are gaining more and more market share in this segment."

According to Kuldeep Malhotra, General Manager - Volume Products, Xerox India “The MFD market in India has been witnessing exponential growth triggered by adoption of MFDs in small / medium -sized businesses as well as enterprises. Experts opine that MFDs will have a steep growth in the coming years. IDC estimates that by 2008, more than 50 per cent of the market will be dominated by MFDs."

According to IDC, the overall IT market is expected to grow by over 35 per cent in 2005. Peripheral market vendors expect similar growth. Be it monitors, MFDs, keyboards or mice, most vendors are upbeat about the progress of the peripherals market as a whole. In laser MFDs, Xerox has grown in sales by 15 percent (unit terms) as against a market growth of a negative 17 per cent (fourth quarter of 2004 / first quarter of 2005).

The new office concept

Malhotra adds that today the concept of "Office" has undergone a sea change. An efficiently managed office with smaller space and state-of-the art office automation systems defines a good office today. These systems have helped today's offices be efficient and more superior to their predecessors. New advancements in office automation systems have played a pivotal role in revolutionising the office space in India.

From its earlier fax-copier-printer varieties, the office automation sector has absorbed its new age front runner systems called multi functional devices (MFDs). Today's MFDs, unlike earlier versions, can perform a mix of functions that include copying, scanning, faxing, printing, sending e-mails and faxing over the Internet. Some of the newer, smarter versions also offer innovative features such as virtual mailboxes, remote delivery and scan-n-mail. With growing acceptance and user familiarisation, MFD's have begun to emerge as the communication hub for networked offices and have taken the concept of "Office Next" to a higher level.

MFDs have made inroads into the market that had been dominated by standalone devices ever since they first hit the shelves in 1999. From its earlier fax-copier-printer varieties, the office automation sector has now absorbed these new age front runner systems.

IDC says that Indian MFDs based on inkjet technology are expected to grow at a CAGR of around 82 percent from 2004 to 2006. Laser MFDs are expected to grow at a CAGR of around 40 percent during the same time period. In terms of value, laser MFDs corner a big share of the pie with the ratio being 60:40 of a nearly Rs 600 crore market in 2005. The colour MFD category is also picking up. Earlier, colour printing was 20 times more expensive when compared with black and white MFDs, now it is affordable and the ratio is 4:1.

High-end MFDs

There is a growing need in Indian enterprises for high-speed printing coupled with excellent quality of output. This has led to the deployment of high-end MFDs inspite of the high cost of the machines. High-end MFDs start from 35 pages per minute to 105 pages per minute and cost between Rs 55,000 to Rs 25,00,000. The realisation by enterprises that having one vendor for all functions and having to manage fewer devices with better TCO (Total cost of ownership) has worked in favour of high-end MFDs. These machines are typically equipped with functions such as document storage, integrating scanned and printed data with other documents, e-mail alerts and password protection.

The verticals, which will drive the growth in MFD segments are banking, finance, insurance, BPOs/ITeS, software, education, telecom, government, construction and utilities. These verticals offer tremendous opportunity to be tapped to generate higher levels of growth.

Balanced deployment

HP has worked out a strategy that ensures that they are able to cash in on the Office Next concept. Samir says that enterprises today spend a significant amount of time on managing and optimising

there IT environments. Since IT is a major enabler for most businesses, it has become necessary to pay attention to all the elements that make up an enterprise's IT infrastructure, including network bandwidth, applications, storage solutions, servers, and imaging and printing assets and utilisation.

However, companies have only belatedly begun to appreciate that the manner in which their imaging and printing assets are utilised (or not utilised) has a significant bearing on the overall efficiency of their IT environments. Ignored in the past, the imaging and printing environments of many enterprises have legacy costs, both direct and indirect. Direct or material costs include the maintenance, repair and replacement of expensive copier/printer equipment. Indirect or hidden costs, which may often be higher than material costs in the long run, include losses in employee productivity due to frequent downtime of imaging and printing equipment and inefficient document workflows. Driven by both the senior management and the IT department, some enterprises are now undertaking efforts to redress these costs.

According to a survey on the imaging and printing infrastructures of major enterprises carried out by IT research firm IDC, organisations incur excessive costs for extra supplies, maintenance and help desk support when printers, copiers and fax machines are not managed or fully leveraged. The survey found that direct hardcopy costs including hardware, supplies, maintenance and IT support, cost between 0.1-0.2 percent of revenues. Additionally, a Gartner study also found that most organisations could reduce their printing expenditures by 10-30 percent.

Enterprises also incur costs from underutilised hardcopy devices. This is especially so because there has been a paradigm shift in the manner in which information is distributed. Since information is now electronically distributed and printed only as and when required, copy volumes have decreased. At the same time, the explosion of information available to employees has led to an escalation in overall print and scan volumes.

Hardcopy devices such as fax machines and copiers are increasingly underutilised, while there is now a greater need for colour printers and multi-functionprinters (MFPs).

There is therefore an urgent need for enterprises to restructure their imaging and printing environments in order to lower costs and improve employee productivity. With more and more enterprises today preferring to outsource their printing and imaging infrastructure needs to specialised vendors, the biggest challenge for market leaders such as HP is to offer total print management (TPM) solutions that raise productivity and lower the total cost of ownership (TCO).

Plasmas are growing very rapidly and are expected to grow at a rate of 50 per cent for the next couple of years. Tarun Jain Regional Manager Hitachi Home Electronics, Asia Ltd.

One of the most important pillars of TPM is the strategy of balanced deployment, an innovation from the HP stable. Balanced deployment is a model (or strategy) through which enterprises can optimise imaging and printing asset utilisation while reducing TCO. Through balanced deployment, an enterprise can strive to strike a balance between operating costs, user satisfaction and increased productivity. In an environment of balanced deployment, an enterprise will enjoy the right mix of desktop and network printers, MFPs, copiers and fax machines and also their efficient utilisation. With HP's formidable product portfolio and range of management solutions, companies are sure to get the most reliable infrastructure, unparalleled connectivity, intelligent printers and MFPs and strong remote management tools.

An enterprise's balanced deployment strategy choices will depend on its exclusive needs, while aiming to achieve maximum productivity at minimum cost. In a maximum productivity model of balanced deployment, every employee would have an all-in-one printing and imaging device on his/her desk. While this would eliminate time and productivity losses, it is a costly deployment strategy. On the other extreme, a minimum cost model would have only one MFP for every department. While this does save a lot of money, there are costs associated with productivity losses, because employees will be forced to walk greater distances to a device that is not conveniently available or will have to wait in a queue for their output. Balancing the deployment of imaging and printing devices therefore requires a careful understanding of an enterprise's work patterns and preferences. Interpreting the needs of employees correctly is crucial in order to consolidate devices and suggest the right mix of single-function, multifunction and colour printers organised according to the diverse needs of workgroups, departments and individuals.

The benefits of balanced deployment are many, and accrue to users, IT administrators and to the enterprise. Since the introduction of a balanced deployment strategy involves a consolidation of devices, and the replacement of old devices with new single -function devices and MFPs, it follows that maintenance costs will drop, while printing and imaging speeds increase. For IT administrators and support desks, the remote management by the solution vendor (such as HP) reduces the time taken for printer management by 50 percent, therefore allowing two people to do what was earlier done by four. The use of new machines can also bring down IT support costs. For instance, in one of the companies surveyed by IDC, IT support costs fell by 30 per cent after new machines were brought in. On average, the IDC survey found that companies which had adopted balanced deployment models saw average costs savings of 23 percent.

For an enterprise that employs a balanced deployment strategy, there is therefore a high rate of return on investment in IT, both in terms of lower TCO and higher employee productivity. Significant cost savings can be realised through consolidation of assets, building space, supplies, IT support and services. Costs attached to downtime, capital, infrastructure and operations will fall. At the same time, worker productivity increases because devices are now placed at locations convenient to all workgroups and there is a much more efficient workflow process. Finally, lower TCO and higher productivity can translate into better decision-making for senior management, further yielding greater market effectiveness.

Plasmas are hot

Plasmas are also gaining momentum and it falls quite aptly in the 'Office Next' concept. Vendors such as LG, Hitachi, NEC and few others are trying to make customers aware of how important plasmas can be for office environment. According to Tarun Jain, Regional Manager, Hitachi Home Electronics, Asia, “Plasmas are growing very rapidly and are expected to grow at a rate of 50 percent for the next couple of years. Both the retail and the institution businesses are also picking up."

Today, all sizes of plasma are bought by users as there is no running cost and the latest NEC plasmas have a 60,000 hours half panel life Sanjay Dhuria C ountry Manager NEC Solutions

Hitachi has at total of five models for home segment (plasma TV-32", 37", 42" & 55") and three Models for corporate segment (42"-2 Model & 55"). Jain mentions that today many offices are using the plasma for presentations, video conferencing, display and other useful functionality. "Plasma definitely adds to the concept of 'office next' to any organisation."

Hitachi makes high-end plasmas with patented technology (1024x01024 resolution, power swivel stand, photo-input etc). "We are selling this superior product all over the world including India. We have divided the Indian market into two segment—home and corporate—and different distributors are responsible to handle both the segments. We also have area-wise responsibility with each distributors," Jain remarks.

Sanjay Dhuria, Country Manager, NEC Solutions, says, “The growth in the plasma category has been very good. We have been growing at more than 100 percent for the past two years and we are looking at 70 to 100 percent growth in unit terms for the next two years. We have revamped our entire plasma line-up last fiscal and launched the new range. We have separate line-up for commercial and residential markets. We are focussed on the commercial market as NEC has a very strong presence in that segment. Plasma display today forms a critical part of the total office set-up as it can be used for multiple applications including reception, video conferencing, meeting room, boardroom, employees information display, cafeteria, employees entertainment and others.”

Dhuria adds that the plasma market has took off most in the last six to nine months after drop in prices, but the tax effect (duty + VAT) is still a very big hindrance. This market is expected to grow at 50 to 70 percent for the next two years.

“All size of plasma are today bought by users as there is no running cost and latest NEC plasma have a 60,000 hours half panel life, so more and more people are now looking at this option. Hospitality along with MNCs and large corporates will drive the growth in the commercial segment. Like any other electronic product, service forms an essential component of the overall set-up. We have a two-tier service set-up in India that helps us reach the desired customers," Dhuria adds.

Projectors making inroads

Like the MFDs and plasmas, projectors are also making their presence felt in an office environment. Players such as NEC, Hitachi, Panasonic and few others are cashing on the growth in the projector business. According to Sandeep Yederi, Business Head, LCD/VPS/PBX, Panasonic Asia Pacific Pte. Ltd. India, "Projector sales have been growing at 100 percent for our company. Faster growth is expected for the next two years because of price points reducing, products coming with improved features (Value For Money - A dream for every customer) & the booming economy of India." He pointed out that today 80 percent of the company's sales come from the SMB segments in terms of volume.

Panasonic has recently launched the LM series and the LB series of models to specifically cater to the SMB segment. Apart from this segment, the company has come up with models for the home cinema, entertainment business as well as for large venues as a part of the systems installation.

Today, the adoption of projectors has been an absolute must for the offices that want effective communications, meetings and presentations. For any inter-office and intra-office applications, the projector definitely aids in making true the concept of 'Office Next' with more reliable features, quality products, aesthetically presentable and at affordable prices. The Indian market is one of the largest growing markets in the world for projectors. Not only the SMB segment, there are lots of activities that can be actually witnessed in the entertainment as well as the solution business. The official market is about 24,000 in units and Panasonic has a sound marketshare of 12 percent in a field crowded by more than 25 players.

"Panasonic has an edge over most of the competitors in that the heart of the LCD (that is the lamp) is our own manufactured and not OEM. Therefore, it gives a huge advantage in offering many features to customers such as two seconds speed start, direct power off, daylight view, blackboard mode and host of other features," Yederi mentions.

High-end projectors are slowly being accepted in the market as the market is now opening for various applications. Having a wide range to cater to the various segments of customers, Panasonic is very well poised to take on the lead in new market segments. "Service is one of the most important parts of the marketing strategy. Though our products are highly reliable, we have dedicated a network of service centres across India to take care of the same," he sums up.

Sanjay Dhuria, Country Manager, NEC Solutions, says, "The growth had been very good. We are looking at 70 percent growth in unit terms for the next two years. We launched True 16:9 Home Theater projectors with HT410 & HT510 series. We have also launched our feature-rich ultra portable model LT245 & 265 in the last fiscal. These projectors are now equipped with high-speed wireless LAN conforming to IEEE 11g standards."

NEC have entry-level SVGA projectors for SMB segments. The models VT37 & VT470 offer excellent value for money. The VT37 street price is Rs 59,900 with three years limited warranty & 4000 hours of lamp life.

"We have not done any specific analysis of business from the SMB segment as this segment has recently come into focus with lowering of projector prices. But the net effects of taxes (duty & value-added tax) still make it a costly proposition. Projectors should be covered with IT products as it is a part of the IT set-up of the companies," he adds.

The company is very bullish on the projector market in India. In percentage terms, this is one of the fastest-growing markets. There is no study conducted on the exact market size, but it is expected to be in the range of 30,000 to 40,000 thousand units in 2005. The market is expected to grow between 30 to 40 percent for the next two years.

"We had some good success in high-end projectors in India. Large corporates and the government are the normal verticals for these systems. For the general market, IT/BPO, finance and education vertical will play a major role in market growth," Dhuria comments.

According to Tarun Jain, Regional Manager, Hitachi Home Electronics, Asia, "The projector market is growing rapidly and we expect the growth rate to be at least 25 percent for the next few years. This is still a virgin market with many areas yet to be developed. Worldwide, education institutions are major consumers of projectors but this concept is yet to pick up in India. However, soon it will and we will see a boom in the market."

According to Hitachi, the current LCD projector market is about 18,000 units and the market is growing at 25 to 30 percent. The company's objective is to have 15 percent marketshare.

Hitachi introduced five new models in this financial year, starting from entry-level SVGA (1200 ANSI) to 3200 ANSI XGA. In total, Hitachi has 10 models in the LCD projector range.

Jain says that projectors are fantastic presentation devises and gives any office the 'Office Next' concept. Projectors are becoming very common in offices all over the world and so is the usage. "High-end projectors are now picking up in the market and users are mainly research and development institutes, IT and software companies, and the educational/training segment," he remarks.

As projectors are now integral parts for the offices and users, so service is the most important aspect. Hitachi is providing services to projectors through their channel partner through back-to-back support from Hitachi. "We have four distributors to take care of all India, as the market is growing and Hitachi may think of expanding the distributors network in the near future," Jain sums up.

Conclusion

As more and more vendors are getting excited by the fact that "Office Next" is a pie where everyone have their share, the only way to enhance their profitability is to enrich more features into their devices.

The next few years in this country is really going to be exciting as the IT industry is expected to grow at an exponential rate. Be it the MFDs, projectors, plasmas or any device, which makes the office look more attractive.

As per the study by MAIT - IMRB, overall printer sales grew by 12 percent in 2004-05 over the same period in 2003-04. The resurgence in the market for the dot-matrix printers as witnessed in the last fiscal continued undiminished in 2004-05 due to increased consumption in the households and smaller markets. Sales of dot-matrix printers grew 15 percent over 2003-04. Sales of inkjet printers grew by 8 percent, also led by the households and smaller cities. Laser printers recorded a growth of 42 percent due to increased consumption in the manufacturing industry and the retail/outlets segment. The growth projection for 2005-06 for overall printer sales is 19 percent and they are expected to cross 14 lakh units.

If this study is anything to go by, then we can well assume that more and offices would try and adopt the latest technologies and adhere to the ‘Office Next’ concept, which has become more and more realistic. What is more encouraging is the fact that not only the metro and urban cities are adopting this concept. More B and C-class cities today are getting aware of the benefits of ‘Office Next’ and this gives immense opportunities for the vendors. The MAIT study highlights that in 2004-05, sales in smaller towns and cities continued to fuel IT consumption.

For the first time, Class C cities accounted for over 50 percent of the total PC sales, while class B and C-cities together accounted for 62 percent of the total PC sales in contrast to 57 percent in 2003-04. Consumption of notebooks in the businesses segment, in class B cities grew by 43 percent and that in class C cities by 153 percent.

Class C cities accounted for 34 percent of the total notebook sales. In the printers market, class C towns accounted for 72 percent of the dot-matrix market growing 37 percent; in the case of inkjets, class C accounted for 55 percent of the market, growing 29 percent. While in the case of laser printers, class C accounted for 52 percent of the consumption with a growth of 67 percent.

These are mind blowing figures, and they only highlight the that fact that IT has reached almost every part of this country and more and more companies in these B and C-class cities are adopting the ‘Office Next' concept.