THE OFFICE PRODUCTS ANALYST A monthly publication devoted to the cost performance analysis of office products
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1 PAGE 1 Volume 36, Issue 5 Industry Analysts, Inc A monthly publication devoted to the cost performance analysis of office products MFP Reliability Survey Results Inside this issue: Methodology... 1 Data Analysis... 2 Table Tables 2, and Speed Range Chart... 3 In this issue of The Office Products Analyst, we present our annual Multifunctional Product Reliability Study giving us the dealers perspectives on Multifunctional products that they sell and service. This is the first in a two part series relating to Multifunctional devices. In the second part of this series, we present our annual Multifunctional Product End-User Study, focusing on user trends for multifunctional products. We present two different multifunctional studies because: Not all multifunctional brands would be represented if we presented only a dealer study. Xerox, Océ and others distributing primarily through their own direct sales forces would be missing. In addition, we would be underestimating the impact of dual distribution networks companies that distribute their products through both independent dealers and direct branches. Dealers tend to focus their responses on current products, while users focus on products that may be two years old or more. Tables 3, 4 & Tables 6 & Table User perceptions of reliability, while meaningful for each person interviewed are influenced by their most recent service experience. Dealers, on the other hand, have more objective service data available (service call reports, etc.) upon which to base their ratings. Table Published by Industry Analysts, Inc. The OPA (Office Products Analyst) is published monthly by Industry Analysts, Inc., 50 Chestnut Street, Roch ester, NY , USA, Phone #: (585) , Fax #: (585) , Web: Publisher, Louis E. Slawetsky. This publication is for the exclusive use of our subscribers. The information and opinions in each issue are based on the best information available, but the completeness and accuracy cannot be guaranteed. Subscriptions: $350.00, one year (US); $ overseas and Canada. Prices for multiple subscriptions on request. Reproduction in any form without written permission is strictly forbidden and will be subject to prosecution. Methodology We conducted in-depth telephone interviews with 107 dealer service managers in imaging system dealerships nationwide. Responses encompassed 21,744 multifunctional units. Significant probing occurred in those cases where the data showed inconsistencies. In some cases, we faxed those portions of the survey dealing with model-specific service statistics, giving service managers time to verify the information with actual service record data. In other cases, these portions of the questionnaire were completed through subsequent telephone interviews.
2 PAGE 2 In cases of multi-brand dealers, we asked respondents to focus their responses on the multifunctional brand that accounted for the most revenue from new placements for their dealership (Primary Brand). Our experience shows that focusing on the Primary Brand will limit responses to those brands with which the service manager is most familiar, resulting in more accurate and complete information. One of the difficulties in any analysis addressing the market for multifunctional products is the manner in which one defines those products. The staff at Industry Analysts, Inc. defines a multifunctional product as any platen-based device that can be connected to a computer workstation or local area network (LAN) and which supports at least two of the four traditional office functions (copying, printing, facsimile, scanning). We asked dealers to use this definition when responding to the survey. In effect, this definition results in a device that combines copying (platen-based) with at least one other function. As you review this report, please note that some chart columns have no entries, indicated by. If a particular response category had a statistically insignificant number of responses, we did not calculate the results. This should not be confused with an entry of 0.0 which indicates that there were no responses in a particular cell. We deemed as significant those instances where an item received no response and displayed this result as a zero entry. Data Analysis We first examined the brand distribution in our sample. Table 1 shows Kyocera with the leading sample share (29.0%) followed by Sharp in second place (23.4%). Note that the shares listed in Table 1 are indicative of our sample rather than the actual installed bases for these companies. Xerox, Océ and others, distributing primarily through their own direct sales forces, are underrepresented in the brand breakouts of this sample. Our sample has also excluded those products sold through the vendors own branches. For example, we captured units from the Ricoh Family Table 1 MFP Brand Distribution Kyocera % Sharp % Canon % Konica Minolta % Toshiba % Lexmark % Copystar % Ricoh % Savin % Hewlett-Packard % Lanier % Brother % Samsung % Murata/Muratec % Oki Data % Panafax/Panasonic % Xerox % NEC %
3 PAGE 3 Group (RFG), but not from Ricoh Business Systems (RBS) Ricoh s direct distribution division. Our sample included only independent dealer business activity. We asked service managers to rate the reliability of the Primary Brand multifunctional products serviced by their dealerships. Ratings were compiled using a scale of 1-10, with 10 being the highest possible rating. The ratings in Table 2 include only those multifunctional products for which we received a significant number of responses. Also, please note that the models under RFG are listed in sequence as Ricoh/Lanier/ Savin respectively, as well as, Kyocera/ Speed Range Chart 1 = Less than 15 PPM 4 = PPM 2 = PPM 5 = PPM 3 = PPM 6 = 70 + PPM Copystar. The table also includes the speed range for each model listed. The speed ranges are listed on the Speed Range Chart. Table 2 Dealer Ratings of Reliability Maximum Speed Model Ratings PPM Recommended Volume Configuration Range Canon: imagerunner ,000 Desktop 3 imagerunner ,000 Desktop 3 imagerunner ,000 Console 3 imagerunner ,000 Console 3 imagerunner ,000 Console 3 imagerunner ,000 Console 3 imagerunner ,000 Console 3 imagerunner ,000 Console 3 imagerunner ,000 Console 4 imagerunner ,000 Console 4 imagerunner ,000 Console 6 Konica Minolta: bizhub ,000 Console 2 bizhub ,000 Console 3 bizhub ,000 Console 3 bizhub ,000 Console 3 bizhub ,000 Console 3 bizhub ,000 Console 3 bizhub ,000 Console 4 bizhub ,000 Console 4 bizhub ,000 Console 5 bizhub ,000 Console 5 bizhub ,000 Console 6 Copystar / Kyocera: CS ,000 Console 3 CS-300i / TASKalfa 300i ,000 Console 3 CS ,000 Console 3 CS-3500i / TASKalfa 3500i ,000 Console 3 CS-4500i / TASKalfa 4500i ,000 Console 4 CS-520i / TASKalfa 520i ,000 Console 4 CS-5500i / TASKalfa 5500i ,000 Console 4 CS-620 / TASKalfa ,000 Console 5 CS-6500i / TASKalfa 6500i ,000 Console 5 CS-820 / TASKalfa ,000 Console 6 *INA = Information Not Available Table 2 is continued on the next page.
4 PAGE 4 Table 2 Dealer Ratings of Reliability (Continued) Maximum Speed Model Ratings PPM Recommended Volume Configuration Range Copystar / Kyocera (Continued): FS-1028MFP ,000 Desktop 3 FS-1128MFP ,000 Desktop 3 FS-1135MFP ,000 Desktop 3 FS-3140MFP ,000 Desktop 3 FS-3640MFP ,000 Desktop 3 KM-2560MFP ,000 Console 3 TASKalfa 420i ,000 Console 3 Ricoh Family Group (Ricoh / Savin / Lanier): Aficio MP171 / 917 / LD ,000 Console 2 Aficio MP2550B / 9025 / LD ,000 Console 3 Aficio MP2851 / 9228 / LD ,000 Console 3 Aficio MP3350B / 9033B / LD433B ,000 Console 3 Aficio MP4000B / 9040B / LD040B ,000 Console 3 Aficio MP4001 / 9240 / LD ,000 Console 3 Aficio MP5000B / 9050B / LD050B ,000 Console 4 Aficio MP5001 / 9250 / LD ,000 Console 4 Aficio MP6001 / 9060 / LD ,000 Console 5 Aficio MP7001 / 9070 / LD ,000 Console 6 Aficio MP8001 / 9080 / LD ,000 Console 6 Sharp: AR-208D ,000 Desktop 2 AR-M ,000 Console 3 AR-M ,000 Console 3 MX-B201D ,000 Desktop 2 MX-B ,000 Desktop 3 MX-B ,000 Desktop 3 MX-M200D ,000 Desktop 2 MX-M ,000 Console 3 MX-M ,000 Console 3 MX-M ,000 Console 3 MX-M ,000 Console 4 MX-M ,000 Console 4 MX-M ,000 Console 4 MX-M ,000 Console 5 MX-M ,000 Console 5 MX-M ,000 Console 6 MX-M ,000 Console 6 Toshiba: e-studio ,000 Desktop 2 e-studio ,000 Console 3 e-studio ,000 Console 3 e-studio ,000 Console 3 e-studio ,000 Console 4 *INA = Information Not Available After reviewing the ratings presented in Table 2, we compiled a Recommended Purchase list (Table 3) made up of those models with an average rating of 8.5 or higher. This list is based upon the perceptions of the service managers interviewed who have serviced each model. Note that Sharp has the most recommended models (13).
5 PAGE 5 Table 3 Recommended Purchase List Canon: Ricoh Family Group (Ricoh / Savin / Lanier): imagerunner Aficio MP171 / 917 / LD imagerunner Aficio MP6001 / 9060 / LD imagerunner Aficio MP7001 / 9070 / LD imagerunner imagerunner Sharp: MX-B201D Copystar / Kyocera: MX-B CS MX-M200D CS MX-M CS-3500i / TASKalfa 3500i MX-M CS-4500i / TASKalfa 4500i MX-M CS-6500i / TASKalfa 6500i MX-M KM-2560MFP MX-M FS-1028MFP MX-M FS-3140MFP MX-M FS-3640MFP MX-M AR-M Konica Minolta: AR-M bizhub bizhub Toshiba: bizhub e-studio bizhub e-studio bizhub bizhub bizhub bizhub bizhub Table 4 shows the overall rating by brand for the multifunctional products included in our survey. We used a 1-10 scale, with 10 representing the highest rating and included all the models for which we received responses. Note that we have not listed all of these models in Table 2, since, for some individual models we did not have a statistically significant number of responses. When we examine the overall average ratings, we find that Konica Minolta received the highest score of 8.7. Table 5 shows each model that received the highest rating by speed range. Each of these models was judged to be the most reliable by the dealers that service them. Konica Minolta and Sharp rated highest in two out of six speed categories with models that ranked the highest in those respective categories. The Konica Minolta bizhub 601 and Sharp MX-M700 rated the highest of all units with a rating of 9.4. Table 4 Equipment Reliability Ratings by Brand Universe Canon Konica Minolta Kyocera Ricoh Family Group Sharp Toshiba Table 5 Top Reliability by Speed Range Speed Range Brand/Model Rating 1 NA 2 Sharp MX-M200D Copystar CS-3500i / Kyocera TASKalfa 3500i / Konica Minolta bizhub Konica Minolta bizhub Konica Minolta bizhub Sharp MX-M
6 PAGE 6 Table 6 summarizes the responses given by dealers when asked to what extent, if any, they purchase Non-OEM parts. Of the dealers responding to this year's study, 41.5% indicate that they purchase parts from Non-OEM sources, decline from last year s response (58.3%). The dealers that reported purchasing Non-OEM parts indicated that 13.0% of the parts they purchase are Non- OEM. The average percentage of market share lost for OEM parts suppliers is 5.4% (41.5% x 13.0%). Table 6 Non-OEM Parts Konica Kyocera/ Ricoh Universe Canon Minolta Copystar Family Group Sharp Toshiba Percent Of Dealers Buy Non-OEM Parts 41.5% 47.4% 45.5% 25.9% 57.1% 55.6% 38.5% Percent Of Parts Are Non-OEM 13.0% 7.3% 4.6% 31.4% 8.8% 13.4% 12.0% Non-OEM Share 5.4% 3.5% 2.1% 8.1% 5.0% 7.4% 4.6% Gross Margins Manufacturer Parts 41.9% 39.9% 39.7% 45.0% 46.4% 35.2% 52.9% Gross Margins Non-OEM Parts 51.8% 46.7% 52.0% 52.8% 63.8% Of the dealer population interviewed, Ricoh (RFG) respondents indicate the highest percentage of dealers purchasing Non-OEM parts 57.1%. Kyocera dealers that purchase Non-OEM parts indicated that 31.4% of parts they purchase are Non-OEM the highest of all brands represented. Consequently, Kyocera Primary Brand dealers showed the highest percentage of OEM market share lost 8.1% (25.9% x 31.4%). Konica Minolta Primary Brand dealers retain the most OEM market share with 97.9%. We asked our respondents to provide us with the same information relating to copier supplies. These data are summarized in Table 7. As with Non-OEM parts, we see a broad range of Non-OEM supplies participation across brands. Table 7 Non-OEM Supplies Konica Kyocera/ Ricoh Universe Canon Minolta Copystar Family Group Sharp Toshiba Percent Of Dealers Buy Non-OEM Supplies 37.1% 31.6% 9.1% 51.9% 15.4% 61.1% 30.8% Percent Of Supplies Are Non-OEM 24.2% 11.2% 27.9% 25.3% 26.3% Non-OEM Share 9.0% 3.5% 14.4% 15.4% 8.1% Gross Margins Manufacturer Supplies 36.4% 34.6% 40.2% 32.8% 48.9% 33.2% 43.8% Gross Margins Non-OEM Supplies 53.1% 51.0% 50.5% 56.9% In this year's study, we see that 37.1% of dealers are purchasing Non-OEM supplies with at least some frequency. Sharp dealers show the highest percentage (61.1%). Kyocera shows the greatest loss in OEM market share (14.4%). Gross margins for Non-OEM supplies (53.1%) are higher than is the case for OEM supplies (36.4%). Non-OEM supplies, with their higher margins, play a
7 PAGE 7 pivotal role in Managed Print Services (MPS) strategies. It is the primary strategy employed by dealers to reduce the cost of these contracts. The major service cost component for dealers is the labor cost of their service representatives. Therefore, we track the productivity of the service representatives to measure the effectiveness of their labor that cost. Table 8 highlights the methods most used by dealers to track the productivity of their technicians and the average values for each of those productivity measures. We find it significant that only half (50.5%) of our dealer sample uses any methods at all to measure service tech productivity. Of those who do, Calls per Rep was used with the greatest frequency (63.0% of dealers). The average call back percentage is 13.0%. In Table 9, we asked the service managers in our survey sample to rate their Primary Brand models in each of 39 critical areas. We used a scale of 1-10, with 10 representing the highest rating. We have separated the features into four primary categories Products, Service Support, Product Reliability and Inventory. This will allow a more complete overview of how the brands compare with one another within the various groups. Service managers rated Konica Minolta first in 21 of the performance categories. The company also placed first in every service category Products, Service Support, Product Reliability and Inventory. Consequently, we find that dealers rate Konica Minolta first, with an Overall Average of We congratulate Konica Minolta for their outstanding performance. Table 8 Service Technician Productivity Dealership Tracks Service Rep Productivity: Yes % Calls Per Rep % Call Back Percentage % Copies Per Rep % Copiers Per Rep...5.6% Parts Usage Per Rep...0.0% EM vs. PM Ratio...0.0% Revenue Per Rep...0.0% Multiple Responses Allowed Productivity Rates:* Calls Per Rep Call Back Percentage % Copiers Per Rep... Parts Usage Per Rep... Revenue Per Rep... Monthly Copies Per Sales Rep... *Median Values Used
8 PAGE 8 Table 9 Ratings Konica Kyocera/ Ricoh Family Universe Canon Minolta Copystar Group Sharp Toshiba Products: Image Quality for Prints Rate Printer Reliability Network Compatibility Scanning Reliability Image Quality for Copies Ease of Installation Rate Copier Reliability Ease of Connectivity Function Contention Fax Reliability Overall Product Reliability Ease of Operator Maintenance General Ease of Maintenance Rate General Application Compatibility Cost of Service AVERAGE Service Support: Effectiveness Of General Service Communications Effectiveness Of Advanced Product Training Program Effectiveness Of Controller/Software Upgrades Effectiveness Of Basic Service Training Program Effectiveness Of Internet Support Effectiveness Of Software Support Retrofit Announcements Effectiveness Of Engineering Support Availability Of A Manufacturer's Troubleshooter In The Field Effectiveness Of Service Hotline Availability Of Remote Diagnostics AVERAGE Product Reliability: Product Service Profitability Reliability Product Reliability When First Introduced Ongoing Product Reliability Retrofit Reliability AVERAGE Inventory: Parts Availability Parts Delivery Time Order Processing Product Availability Accuracy of Orders Availability of Supplies AVERAGE OVERALL AVERAGE
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