The following appears in The MFP Report by Brian Bissett (bbissett@mfpreport.com)

Just like in the world of economics, politics and elections, most vendors in the MFP market are neither exclusively “makers” nor “takers” — they’re both. Surely, many in the industry know of HP’s three-decade relationship with Canon, which has supplied the engines for nearly every LaserJet. And some folks can instantly spot a rebadged MFP in a vendor’s product line. But I don’t think the full extent, present dynamics, and potential changes in strategic sourcing and selling of MFP hardware are yet fully appreciated.

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It’s important to consider there’s almost no hardcopy vendor today who doesn’t already supply devices or engines to another company, or who itself isn’t already selling models with a high degree of product or engine content coming from someone else. In fact, the only vendor I can come up with who presently can say “no” on both counts is Panasonic, and I’m not sure that’s an MFP company others wish to emulate.

Granted, the nature and extent of OEM’ing in the MFP market has changed. It’s certainly less pronounced now than back in the days when Pitney Bowes and Lanier slapped their names, respectively, on lineups of Minolta and Toshiba machines. The last companies that OEM everything are Dell (with mixed results and an uncertain future) and tiny Olivetti (who can’t last much longer).

Instead, what we see today are vendors who rebadge or customize one or a few models to address certain product segments or geographic markets where they have a gap. Most vendors who do this presume the arrangement is temporary — only until homegrown models are ready.

As for product segments, we’ve historically seen the most OEM’ing at the two extremes (low-end and light production) or when fundamental changes in technology have emerged (digital in the 90s, color a decade ago and A4 today). However, as digital became the norm, as vendors got on top of color, as production matured, and as A4 caused less indigestion, vendors have fielded their own MFPs and OEM’ing greatly declined.

That leaves us in today’s market, where there are new twists and explanations for OEM’ing in the MFP business. Look no further than this current issue of The MFP Report to see what I mean.

First, there’s what I characterize as OEM’ing bred from weakness. A great example is OKI sourcing another pair of A3 color MFPs from Toshiba. These vendors are collaborating more and more closely, but this is a marriage of weak and even weaker. This kind of sourcing — Toshiba also OEM’s multiple OKI A4 models in other geographies — makes sense. But it’s not at all clear that the ongoing collaboration does enough to offset the fundamental challenges both vendors face.

Second, there’s the opposite of this: OEM’ing to leverage complementary strengths. The best new example is provided by Lexmark and Konica Minolta. Lexmark now gets access to strong A3 bizhub platforms, and Konica Minolta gets to leverage Lexmark’s A4 strengths. Moreover, both vendors are adding very tangible amounts of their own technology. It’s this

kind of synergistic sourcing that might conceivably presage something more (à la Konica and Minolta a decade ago).

Third, there’s rapid growth in OEM’ing of low-end MFPs and printers, specifically to
satisfy the divergent needs of businesses
in China and other emerging markets.
There’s long been an element of this in
the low-speed, A3 monochrome MFP
business, where a company like Teco in
Taiwan has found a niche. But that’s now extending over to A4 monochrome devices. And similar color devices (both A4
and A3) are sure to be next. Look no further than what’s going on this month between Fuji Xerox and Brother, and between Lenovo and Ricoh.

Fourth, there’s the rise of companies whose hardcopy product development efforts are predicated largely or even wholly on the idea of supplying devices to others on an OEM basis. Think of Memjet in the “wholly” category. And Avision is a great example in the “mostly” category, an old vendor who’s renewing its MFP OEM efforts. Sagemcom can be seen as the latest casualty in this domain, having all but abandoned its own monochrome A4 platform after failing to attract sufficient OEM sales. Conversely, companies like Sindoh and Pantum, when operating outside of Korea or China, ought to reconsider shifting all of their efforts to an OEM sales model.

I would argue that the confluence of these four trends gravitates in the direction of more OEM’ing, more significant OEM’ing, and more complex OEM’ing. This is especially true when overlaid on a hardcopy business in which sales are anemic but demand is increasing for even greater product and business diversification.

Instead of a massive wave of vendor consolidation, we’re likely to see companies become much more selective about the products, platforms and technologies they develop. To varying degrees, MFP vendors retain brand recognition, channel strengths, and satisfied customers. In theory then, as “hardcopy” shifts toward greater reliance on IT, services and software, it will become less and less important that every vendor own all the DNA in every box it sells. And that could be a good thing for all concerned.