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Paper usage and A3/A4 shifts – Part 2

1st part available here.

Let us talk about Scandinavia. These countries as a whole have a small number of large corporate accounts and a large quantity of SMBs.

Let us pick a 20 people company as an example.

20 years ago, when paper usage was 1,000 sheets per employee per month, it would have needed an installed capacity of 20,000/month and various industry vendors would usually have oversold this company. So, there would have been anything between 10 and up to 20 printers (one per desk) and a copier in the corridor.

10 years ago, the wave of consolidation started. The copier had become networked. The printed volumes had dropped to 600 pages/month/employee so in our case 12,000 pages/month. A nice MFP was priced with an attractive “per page click” and duly installed in the corridor. The personal printers were withdrawn. This was hardly ever an A3/A4 decision; it was based on the economics of the time.

But today in Scandinavia, linked to newer business practices and user behaviour, the massive use of smartphones, the e-government initiatives, etc.… this company now only prints 6.000 to 7.000 pages per month as a whole. It does not need anymore the 12,000 pages capacity where an A3 device was very well positioned. The clients have seen the installed device running under its optimal specs and becoming too expensive. In between A4 devices have improved (they have scanners and displays, their reliability has improved, they come with similar service contracts, they use less of the expensive office space and foremost their economics at 5 to 7K pages/month are good.)

We are seeing the swing back of the pendulum towards a leaner device away from the consolidation that used to be. It does not happen overnight as A3 copier sales teams know how to offer intelligent contracts. In Northern Europe we do see this happening.

At what speed will the great replacement wave of 12K devices (read A3) by 5k devices (read A4), coming from the North, travel throughout Europe?

We asked our IMPSGA members to check their fleet statistics for the past year. Remember that, as a whole, they manage over half a million devices. So, this is not the perfect sample for seasoned statisticians, but it gives a level of indication.

The response was unanimous all over. Pages produced on A3 devices are diminishing significantly faster than pages produced on their A4 counterparts. This came as a surprise to some of our members who thought genuinely that the decline was average all across.

 We think we do have a more hidden trend behind the general page decline that could reconfigure the industry.

This sets a series of big questions out if this trend continues and as explained above, we have valid reasons to think it will.

What will Japanese A3 based vendors do in the future if their pages volumes are declining faster than planned in the average?

Is there a brighter future than generally acknowledged for A4 based vendors like Brother and Lexmark?

What should happen to a company like Xerox? If HP wants to acquire it (or parts thereof as the rumour mill was going), what future revenues should it bet on? HP has already invested a lot in A3 and is that enough to capture this market, which has been their publicly announced intention? And of course, in between we will follow closely the takeover fight taking place.

And to complicate the decision process, we have talked here only about page volumes.

As corporate M&A and companies rely on financials and not just on volumes, we all need to have a deep understanding of colour vs. mono pages and dig one level deeper in the analytics. A colour page sells on typically at 6-8 times the cost of a mono page.  So, within these A3 /A4 dynamics, we need to have a full understanding of the evolution of A3 colour vs. A3 mono as well as A4 colour vs. mono pages. Food for thought at our next IMPSGA meeting due to take place in March 2020.

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This article was written on 19 Nov 2019, and is filled under Non classé.