MARKETING FEATURE ON MODERN OFFICE

Key to enhancing productivity

The concept of smart office is becomming more and more prominent these days with consumers getting more savvy to adopt quality products, says Atanu Kumar Das.

We want to be at the peak when in come to Office next. We know that we have got the right product mix to attract the cutomers. Sameer Shah Country Category Manager IPG Hp India

Research has proved that an average human spends 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. It is rather a foregone concept. Now you have it all in a small file size laptop. All the old records are digitized and kept in storage boxes to be preserved for ages. Working away from office is no longer a nightmare. It is rather a pleasure with the help of mobile devices like PDAs. Smart workplace actually adds to the efficiency of the workers. 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 addressing 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

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 really 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 peak of things in this category. In HP, we have always believed that if you are giving quality product at 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."

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

According to Kuldeep Malhotra, General Manager - Volume Products, Xerox India Ltd., “The MFD market in India has been witnessing exponential growth triggered by adoption of MFDs in small/ medium size businesses as well as enterprises. It is unanimous that the MFDs will observe 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 for their segment. Be it monitors, MFDs, keyboards or mice, most vendors are very upbeat about the progress of the peripherals market as a whole. In laser MFDs Xerox has grown in sales by 15 per cent (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 is what defines a good office today. It's possibly the last reference that has helped today's offices to be efficient and more superior to their predecessors. New advancements in office automation systems have played a pivotal role in revolutionizing 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 the 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 like virtual mailboxes, remote delivery and scan-n-mail. With growing acceptance and user familiarization, 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 back 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 per cent from 2004 to 2006. Laser MFDs are expected to grow at a CAGR of around 40 per cent 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 color MFD category is also picking up. Earlier, color 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 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 550,00 to Rs 25,00,000. The realization 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 favor of high end MFDs. These machines are typically equipped with functions like 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 on the Office Next concept. Samir says that enterprises today spend a significant amount of time on managing and optimizing 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 utilization.

However, companies have only belatedly begun to appreciate that the manner in which their imaging and printing assets are utilized (or not utilized) has a significant bearing on the overall efficiency of their IT environments. Given the years of inattention, the imaging and printing environments of many enterprises are fraught with high 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 downtimes of imaging and printing equipment and inefficient document workflows. Driven by both senior management and IT departments, 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, organizations 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 per cent of revenues. Additionally, a Gartner study also found that most organizations could reduce their printing expenditures by 10-30 per cent.

Enterprises also incur costs from underutilized 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 underutilized, while there is now a greater need for color printers and multifunction printers (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 specialized 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).

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 optimize imaging and printing asset utilization 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 utilization. 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 color printers organized according to the diverse needs of workgroups, departments and individuals.

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

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 per cent, therefore allowing two people to do what was earlier done by four people. 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 that had adopted balanced deployment models saw average costs savings of 23 per cent.

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 realized 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 like LG, Hitachi, NEC and few others are trying to make the 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 is expected to grow at a rate of 50 per cent for next couple of years. Both the retail and the institution businesses are also picking up."

Hitachi has at total of five model 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 ads the concept 'office next' to any organization."

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 Indian market in to two segment - home and corporate and different distributors are responsible to handle both the segment and we also have area wise responsibility with each distributors," Jain remarks.

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. Sanjay Dhuria Country Manager NEC Solutions

Sanjay Dhuria, Country Manager, NEC Solutions says, “The growth in the plasma category has been very good. We have been growing at more then 100 per cent for the past two years and we are looking to 70 to 100 per cent growth in unit terms for next two years. We have revamped our entire plasma line up last fiscal and launched the new range. We do have separate line-up for commercial and residential markets. We are focused on commercial market as NEC have 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 application 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 per cent for 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 corporate will drive the growth in the commercial segment. Like any other electronics 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 like, 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 per cent 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 that today 80 per cent of the company's sales come from the SMB segments in terms of volume.

Today 80% of our projector sales come from the SMB segments in terms of volume. Sandeep Yederi Business Head LCD/VPS/PDX Panasonic asia Pacific India

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 presentation. 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. 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 market share of 12 per cent in a field crowded by more than 25 players.

"Panasonic has an edge over most of the competitors 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 the customer like 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 very 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 network of service centers 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 to 70 per cent growth in unit terms for 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 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 model 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 SMB segment as this segment have recently come in to 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 IT setup of the companies," he adds.

The company is very bullish on 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 per cent for next two years.

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

Tarun Jain, Regional Manager, Hitachi Home Electronics, Asia, says, "The projector market is growing rapidly and we expect the growth rate to be at least 25 per cent for 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. But soon it will and we will see boom in the market."

According to Hitachi, the current LCD projector market is close to 18,000 units and market is growing at 25 to 30 per cent. The company's objective is to have 15 per cent market share.

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

Jain says that projectors are fantastic presentation devise 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 projector are now picking up in the market and user are mainly research and development institutes, information technology and software companies as well as 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 acre 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 very 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 per cent 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 the dot-matrix printer grew 15 per cent over 2003-04. Sales of inkjet printers grew by eight per cent also led by the households and smaller cities. Laser printers recorded a growth of 42 per cent 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 per cent sales 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 realistic. What is more encouraging is the fact that it is not only the metro and urban cities, which is 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 per cent of the total PC sales, while class B and C cities together accounted for 62 per cent of total PC sales in contrast to 57 per cent in 2003-04. Consumption of notebooks in the businesses segment, in class B cities grew by 43 per cent and that in class C cities by 153 per cent.

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

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.