PrintIT Reseller has asked experts from the UK industry for their take on HP’s
acquisition of Samsung’s print business and we will be publishing their/your thoughts in the next issue. In the meantime, here are extracts from an interview conducted at June’s Samsung European Partner Summit with Dr. KiHo Kim, Executive Vice President of Samsung Electronics Co., Ltd and Head of the Printing Solutions Business, and Paul Birkett, Sales and Marketing Director for the Samsung European Printing Business. In light of subsequent events, some of their comments make interesting reading. And, of course, they are still pertinent to the many people who sell and buy Samsung printers and MFPs and will continue to do so whatever badge they carry.
Setting the scene
Before interviewing Dr. KiHo Kim, PITR asked Paul Birkett about Samsung’s recent performance.
He said: “Our market share is increasing quickly. We are in double-digit growth in Europe, and all of that revenue growth is coming from our higher end products – our A3 products and our higher end A4 products. It’s compensating for the planned decline in our consumer business, because nowadays people buy a printer and never replace the cartridge, so profitability in that market is questionable.
“We aim to offset the planned decline in that market with growth in our B2B platforms. We’ve had a huge swing in profit as we move from consumer to higher end B2B products. We are still establishing ourselves there and have had a 4,000+% increase in profit so far this year.
“Samsung entered the printer market 20 years ago. It is now Number 2 worldwide in terms of units shipped, but these are consumer products. They are small A4 personal printers in segment 1 and 2. We really only entered the B2B market with our A3 portfolio four years ago. Since then, we have revised those products three times – that’s the pace of innovation. By 2020 we have an aspiration to be Number One in printers overall, and that requires a lot of work on our B2B portfolio in order to catch the more traditional players.
To achieve this, we have to recruit more dealers. We are under-distributed at
the moment, so having the ability to attract more dealers is really important to us. We are going to be investing heavily in our partners over the coming years. We are not just going after the traditional print and copier dealer partners. We believe there’s a whole market in the IT reseller channelwhich is under-served at the moment by printing. They provide printers, but they don’t really do anything else with them. We think there’s an opportunity with some of the things we’ve been talking about (our solutions platform and apps) to link into the core business they operate.
“In the UK we have thousands of registered dealers, but we have a small number – significantly less than 100 – that transact a majority of the business. That’s where our focus has to be – how do we enable those thousands to start selling print? If we can do that, that’s where we’ll get the step change in our market share and growth.
“What do we have to offer partners? Number 1, we hope our innovation is going to be attractive. Number 2, we have a universal partner programme called STEP, and it’s the same programme for mobile as it is for display as it is for print, with tiered rebate mechanisms etc.. The final piece of the puzzle that we were always missing is our services programmes. We lacked servicing capability for partners that couldn’t do their own Samsung service and that meant that only partners that were willing to invest heavily in Samsung could sell Samsung. With the new channel MPS
offering all of that changes. Any partner can sell any product and be confident that the service is in place, with NCR as the service partner. We thought it really important to choose a service partner that did not compete with any of the channel in terms of resale. They are a pure service provider.”
The view from the top
Next, PITR spoke to Dr. KiHo Kim, Executive Vice President of Samsung Electronics Co., Ltd and Head of the Printing Solutions Business.
PITR: Is there still a good market in print?
Dr. KiHo Kim: Maybe not (laughs). I think we should admit that. In the A3 copier market demand is steady. In the A4 printer market demand has increased in developing countries, but in developed countries the market is shrinking. For two reasons: one, the market for our A4 Segment 1 and 2 devices has moved from SMBs to home users, and they don’t print; and the second reason is the smartphone. People just consume information on-screen; they don’t print it that much.
For these reasons, the printing boiler room of Segment 1 and 2 entry-level A4 devices keeps decreasing. That’s the biggest problem. HP, as you know, created a printer business model where the machine is not so expensive. They don’t make money out of printer sales and compensate for this with toner sales. I recently investigated what was happening in Segment 1 and 2 and more than 20% of users have a monthly print volume (MPV) of less than 40 pages. The initial toner is enough for their whole period of ownership. For four years, they don’t have to buy another toner cartridge. So vendors like us cannot make money by selling those Segment 1 and 2 printers today.
And the worst thing is non-genuine toner cartridge vendors, mainly from
China. They are killing us – they are killing Samsung, killing HP, killing Brother and so on. So the market perspective in the A4 entry business is terrible. I have many friends in HP, Brother and other vendors are they have all given up in Segment 1. That is what is happening.
So everyone is working on the A4 mid to high-end segment and A3 business and they are trying to expand their business into services and solutions. This business is not all about paper; it is about the office. We call the A3 copier business office automation; it is all about office and documents. The printing industry should cover a bigger area than just printing, including workflow solutions and services and maybe document display.
PITR: Apart from smartphones are there any other areas of Samsung’s business that are influencing printer development?
Dr. KiHo Kim: Our strategy is, instead of providing closed printers and copiers, to provide an open platform for printing, for copying, for scanning, for documents. As I mentioned, the paradigm is changing from a paper-based, paper processing business to a document business. People are consuming documents, not only in paper, but also on-screen; and not only in the office, but also on the move. The industry should follow that new paradigm. That’s why we provide a so called open platform so that they can connect with mobile devices. The smartphone device is the primary device people use to get information, to save information – not only consumers but also office workers using BYOD devices.
(Answering the question more directly,Paul Birkett referred to the future launch of the Smart Security Manager app incorporating KNOX, Samsung’s security platform for mobiles, which has now been extended to other product areas including print. He said: “In this context, KNOX for printing is actually quite a big deal, because KNOX is the most secure mobile device platform on the market today. We have implemented a lot of the same capabilities that exist in KNOX around ARM DPM, around BIOS protection, around malware protection, and made it simple and not hidden behind some obscure IT management platform. Anybody can press the big green button to secure their device. I think we have potentially done something that takes the whole security headache away. We have done our own research and we believe we easily match the best on the market, which will be HP.”)
PITR: Samsung has been expanding its solutions and services, for example with the acquisition of PrinterOn and its relationship with Nuance. Are you going to pursue a strategy of alliances and acquisitions in the future?
Dr. KiHo Kim: Our strategy is to provide a global platform for copiers and printers, like MX4 and MX7, but the solution on top of it is not global but localised, because the right solution and service varies depending on the region and country and the vertical market. Even in the same vertical market, companies will have different applications and need different solutions depending on their size or speciality. One company cannot provide a solution for all. That’s why we have open platforms, so that our partners can easily programme and provide a customised solution for the end customer. We cannot do that. PrinterOn is basic technology. That’s why we acquired it; it’s more bread and butter. In each market the local reseller or local dealer knows their customers very well and already has strong relationships. We provide them with the tools so that they can provide solutions, in a better way with less cost.
PITR: A lot of your competitors are moving into 3D printing. Is this technology of interest to Samsung?Dr. KiHo Kim: Yes, but in the long term. Right now, we are watching and preparing for it. 3D printing is in the early stages and needs to overcome the gap between market expectations and current technology. They haven’t crossed that chasm yet, but they are working on it. We think it is interesting technology and our R&D centre is working on it. But right now we are waiting.
(Perhaps shedding light on the large number of inkjet patents Samsung has been accumulating, a Samsung marketing executive added: “3D printing is an interesting area, but in terms of business we are not considering it yet. But, as you may know, Samsung has a huge R&D organisation and some of our engineers are doing research in that area and some have secured patents relating to 3D printing.”)
PITR: A lot of 3D printing is inkjet technology. Are you interested in developing inkjet technology for office machines as well or are you focusing entirely on laser?
Dr. KiHo Kim: I don’t want to talk about inkjet. Samsung’s main business was laser entry-level – Segment 1 and Segment 2. We expanded into the A4 mid to high end segments and introduced our first A3 laser machine in 2010. It’s only been five years since we introduced our first copier in the A3 market. Instead of doing all those other things we would like to focus on laser. Even in the A3 laser market, we are not the first mover; we are just a follower. In those markets, in relation to printing engines, including printing and scanning, we just follow. Instead, we are focusing on the open platform, on solutions and services. We are trying to differentiate in that area – programmable solutions and programmable platforms to replace older localised solutions and reduce hosting and service requirements.
(Dr Kiho Kim’s comments about being a follower in print engine design notwithstanding, Paul Birkett then highlighted one area in which he believes Samsung has taken a lead, which HP subsequently alluded to when announcing its intention to buy the Samsung print business. He said: “Samsung engineers its devices to a level I just haven’t seen before. We did something called the 1 million page test. As an example of the reliability of the device, it failed just once, a paper jam, in one million pages. That level of reliability is unheard of; no other product has achieved that, so I think our hardware actually has an advantage in something that is hard to communicate to the customer until they experience it, and that’s reliability. Samsung engineers its products to work and they are very simple for a service technician to manage. When they take the covers off our hardware, there’s only like three things. If you take covers off another piece of hardware, you have gears, levers, belts. That doesn’t exist on our hardware; it’s a very modern, clean sheet design and that gives a huge advantage to the dealer, and eventually the customer will feel the benefits of better device reliability.”)