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Multi-Function Devices (MFDs) are doing for the printer space something akin to what the Internet has done to empower connectivity across locations. Fiscal 2003-04 saw MFDs coming to age, an index of the same being a recent bit of research by IDC that says that during 2003 around 2.48 mn MFDs were sold in Asia-Pacific alone. Analysts infer two major causes for the growing MFD adoption. For one, their prices have steadily declined in the last two years, with 2003 seeing great price slides that brought an entry level MFD device into the sub-$200 price threshold. While in advanced geographies like the US and Japan, the MFDs or the All-in-Ones (AIO) make rapid strides in challenging the single function inkjet and entry level laser printers, the market in India still displays only a cautious optimism. All the major printer vendors are bullish on MFD adoption, but it is still a value segment in India, though industry sources say that, a few years down the line, MFDs will witness volume growth.

The Market Dynamics
A closer look at the market reveals that A3 MFDs dominate the higher end of the spectrum. These are typically consumed by very large enterprises, which heavily use copying and printing on a day-to-day basis. Meanwhile, the large-enterprises and SMB segments drive sales of A4 MFDs. Says Kuldeep Malhotra, general manger-volume products, Xerox Modicorp, "Today enterprises are increasingly becoming cost conscious and they except more RoI out of their investments. Investing in MFDs is an ideal option from both TCO and RoI terms. An MFD also makes for better asset management as they can handle four critical output needs-print, scan, fax, and copy- eliminating the need to run standalone devices, which in addition to initial acquisition cost, also have AMC costs. The inherent merits of MFD devices will drive the market in India to large-scale adoption in the days ahead." The entry of traditional copier companies like Xerox into the MFD space is a marker of the intense competition in the laser MFD space.

The Indian printer market is unique in many ways. For one, the print technologies used are diverse and range from impact to thermal printers. For instance the impact printing segment market in the west has declined steadily over the years, while in India, on the contrary, dot matrix printing technology is on the growth path, with players like TVSE, Epson and WeP having large mandates. Meanwhile inkjets are a volume segment, and during 2003-04, India consumed around 690,000 standalone inkjets and 155,902 lasers, as against 114,018 inkjet MFDs and 15,980 laser MFDs. This is clearly a huge gap, but it is one that will ultimately narrow down considerably as MFDs cannibalize on the standalone mid-end inkjet and laser printers.

However, some in the industry aver that it is too soon yet to talk about the cannibalization effect in an Indian context. For instance Samir Shah, country category manager, shared printing and connectivity, HP India, says: "At this point in time, all kinds of print technologies are in vogue in the Indian market and it is still early days for MFD devices to pose a major challenge in the printer segment. That said, MFDs will play a bigger role in the coming years, even as other technologies co-exist alongside. MFDs offer more freedom of choice in terms of technology and they are clearly value enablers in an enterprise's output device management strategy. HP's total print management and balanced deployment strategy is all about hastening new technology adoption and optimal printer deployments."

“Multi-function devices (MFDs) are being seen by vendors as the most promising segment in the Indian peripherals space. Top vendors are cashing in on this wave and aggressively pursuing the market”  -Lakshmi Narayan Rao, assistant director, marketing, OSS value chain, Canon IndiaInfosystems “The benefits associated with MFDs, like enhanced productivity, versatility and low cost, have captured the imagination of the users acceptance towards these devices”  -Vivek Prakash VP, IT products sales, Samsung India Electronics “Today enterprises are increasingly becoming cost conscious and they except more RoI out of their investments. Investing in MFDs is an ideal option from both TCO and RoI terms”  -Kuldeep Malhotra GM, volume products, Xerox Modicorp

In a macroscopic market, both inkjets and laser MFD have their place. The inkjet MFDs will be consumed largely by the SOHO segment and corporates will drive laser MFDs. Says Vivek Prakash, vice president, IT products sales, Samsung India Electronics, "Indian enterprises are slowly realizing the strong value proposition that laser MFDs embody. We estimate the market for the inkjet-based MFDs to be about 12-15 times that of laser MFDs, and in the last few months, one is seeing a decline in the growth of inkjet all-in-ones primarily due to the strong positioning of laser MFDs by various vendors."

Given the potential for laser MFD sales, as compared to the short-term gains on inkjet all-in-ones, most vendors are putting in place aggressive strategies for the laser MFD offerings. For instance, players like Xerox concentrate only on the laser segment. Today an entry-level laser MFD is in the sub-Rs 20,000-price range, as against an entry-level inkjet MFD, which costs about Rs 8,000. This, when contrasted to single function inkjets (Rs 3,000) and lasers (Rs 10,000), show that in price-driven terms, the bigger market is, clearly, for inkjet MFDs. But the key question is whether the forces driving demand can be sustained. For instance, SOHO is a very price-conscious segment, and once price reaches a threshold, vendors will find it difficult to sustain inkjet MFD volumes. So in the days ahead, the laser MFD's current aggressive product and technology positioning will put the brakes on the inkjet MFD numbers.

Reflecting on this trend, an IDC report says that the inkjet MFD market is expected to grow at a CAGR of 82% between 2004-2006. During the same time laser MFDs will grow at around 40% CAGR. But in value terms, laser MFDs will take a bigger share. Says Lakshmi Narayan Rao, assistant director, marketing-OSS value chain, Canon India, "We are betting heavily on laser MFD devices, and here, almost 50% of the business comes from solution-based devices. Canon is also preparing a very aggressive marketing strategy to push its value range of converged communications devices into the enterprise segment. To this end, the company is working on a strategy called Canon to the Max."

Value for Money
From an enterprise standpoint, how does a CIO look at these devices? Says Arun Gupta, senior director-business technology, Pfizer India, "MFDs are a good option for small offices and active home users. They are good devices offering value for money while also cutting down on the clutter due to their compactness and multifunctionality. As the prices keep dropping, they will end up cannibalizing the low-end laser printer markets. We have deployed these devices at our regional offices, as well as in some remote clinical trial locations which need more than just a printer."

However, in most Indian enterprises, single-function inkjet and laser printers still monopolize the current print infrastructure, but any new buying will tilt the balance in favor of MFDs. Pfizer in India has around 30 inkjet printers, 20 laser printers and some DMPs: this showcases the diverse varieties of technology used by Indian enterprises. This poses a huge challenge to vendors putting forth the MFD value proposition, which the vendors link to TCO and RoI. Here, laser MFDs score over their inkjet counterparts. The ownership costs for standalone print devices add up to Rs 53,000 with the following breakup: an entry-level laser printer at Rs 10,000, a scanner at Rs 3,000, A4 copier at Rs 30,000 and a fax machine at Rs 10,000. Contrast this with the cost of an entry-level laser MFD, which costs just about Rs 18,000, or one-third of the cost of equivalent standalone output devices. Thus, MFDs are indubitably a value proposition.

Once an enterprise is convinced that it would rather own a MFD, choosing the right MFD technology is also vital. For instance if the enterprise has large print and copy volumes, then a laser-based MFD will address its requirements best. For instance, currently, it costs on an average about Rs 3 per page on an inkjet MFD, while the corresponding costs for output on a laser all-in-one will come to just Re 1. So, if an enterprise that has, say, an overall output demand of 2,000 impressions per month, migrates from inkjets to laser MFDs, it will end up saving Rs 48,000 a year, and, as its output-demands increase, it obviously stands to save still more. However, the point to be factored here is that laser MFDs can yield maximal gains only when print costs are going overboard due to the sizeable consumable and AMC costs associated with running single-function output devices. Hence, the CIO should clearly map the output strain areas, and induct MFDs in those departments that have a large copying and printing requirement.

Sea Change
The evolution of MFDs is creating a new equation in the print landscape. In addition to the expected cannibalization of inkjets, standalone laser printers will also witness tough competition. However, companies like HP strongly believe that, unlike standalone inkjets, single-function lasers will continue to have a good market. Meanwhile the laser MFD space is heating up, as all the major vendors are trying aggressively to garner a major slice of the pie. Players like RICOH and Toshiba are making the market extremely competitive. Says Gunjan Sahni, product manager, Ricoh India, "We have already introduced 12 models of MFDs, and these devices will add great value to enterprises due to the convergence of print, scan, copy and fax. We provide, with these output devices, tailor-made solutions to meet the various multi-tasking demands that enterprises have. And with quality outputs being a necessity in today's competitive environment, MFDs will have a good market." Meanwhile Canon's roadmap for laser MFDs is aimed at capturing a 20% market share. To this end, the company recently launched IRC 3100, a multimedia imaging system aimed at large enterprises. HP, on the other hand, through its Total Print Management (TPM) initiative, is hard selling its balanced deployment strategy. Vendors like Samsung are also creating huge awareness exercises on the laser MFD front: Samsung has a broad MFD portfolio with six key models that are expected to drive most of its laser MFD sales

What emerges at the end of the day is that enterprises stand to gain tangibly by adopting MFDs. New technology adoptions will also be further hastened with output device management getting due attention in organizations in recent times. Analysts believe that by 2005, the cannibalization of standalone print devices by convergence technology will become more evident, with the laser MFD, leading the charge against all other print devices, whether inkjets printers or scanners, by virtue of its versatility.

Shrikanth G in Chennai

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