Have Your Software and Eat It Too; by Brian Bissett

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

Screen Shot 2014-05-29 at 7.12.16 AMThe tenuous love-hate relationship between makers of office MFPs and independent developers of MFP-related software has always been more about mutual exploitation than a shared vision of the world. And there have been numerous ebbs and flows in their views as to which party needs the other more, which side contributes more to the relationship, and which partner obtains the greatest benefit. But it’s now clear. We’re entering a new high-stakes era in which competition is winning out over cooperation.

In the early days of the industry, MFP vendors welcomed the attention and concrete efforts of developers like eCopy, NSi, Equitrac, DocuWare and RightFax. Back then, the implicit validation and respect for what MFP vendors hoped to achieve was just as important as the practical contributions these developers made to the way MFPs were promoted, sold and used. Of course, in those days a particular MFP vendor used to align with a specific software developer, so there was more a feeling of “we’re in this together.”

The arrival of formalized software platforms and proper partner programs never did bring big application developers into the MFP world. Instead, these costly efforts just made it easier for the usual suspects to work with every other vendor. The resulting lack of third-party software differentiation — and a petulant I-can-do-that-as- well-as-you-can attitude on the part of hardware companies — led MFP vendors to invest more and more to create their very own applications.

What has continued to save software partners has been the generally sub-par quality of the software emanating from MFP vendors. And the few applications that weren’t too bad were usually handicapped by unrealistically high prices or poor marketing. But just as we saw with early MFP controllers, vendors eventually do get better at making software. In most instances, it’s been a case of simple evolution, and in some cases companies or talent have been acquired.

Still, disputes between MFP vendors and ISVs have remained behind closed doors. But perhaps no more. Ricoh is now the first vendor to cross the proverbial Rubicon, stating for the record this month that the new release of its Streamline NX MFP software suite is first and foremost intended to take business away from its top partners (i.e., Nuance and Notable Solutions), primarily through lower prices and more modular packaging.

Presumably, Ricoh is also prepared to leverage its other big asset. That’s the fact that the vast majority of MFP software is sold by branches, which operate under a command-and-control structure. Despite the oft-stated goal that MFP software is supposed to represent a new source of revenue and profit, everyone in this business knows that homegrown applications are the first things a branch discounts or gives away outright so as not to lose a big MFP hardware deal.

I really don’t mean to pick on Ricoh. Actually, I give Ricoh a lot of credit for saying openly what other MFP companies only whisper in private. It’s the admission that’s new, not the idea. And it won’t end with Ricoh. It’s clear neither Canon nor Lexmark has ever fully bought into the idea of working with top MFP software partners. Xerox, Konica Minolta and HP are only slightly if grudgingly better. And Sharp, Toshiba, and Kyocera have historically not had enough software momentum in the market to keep key ISVs interested.

In a world of flat hardcopy device sales and declining page volumes — where MPS is now old hat and high-end services are often beyond reach — software is what separates vendors, salespeople and machines that otherwise look and sound the same. At the same time, the nature of MFP software is getting more diverse. But scanning middleware and print tracking software are still the bread- and-butter applications. Not surprisingly, these are the revenue generators MFP vendors want for themselves. But there’s more to it. There’s a new need to offset the costs of other software.

MFP vendors are investing big in apps that appeal to customers and differentiate hardware but generate little money. Likewise, vendors are creating more sophisticated tools to support MPS and MDS initiatives. Such tools can win big deals, but they’re a cost of doing business, rather than an explicit source of revenue. So in some ways, MFP makers have no choice but to target their best partners. Like Willie Sutton said about robbing banks, “That’s where the money is.”

Call it the “new normal.” MFP hardware vendors and their software partners will continue to feign cooperation and talk publicly about their mutual interests. But increasingly, the two sides will slug it out and figure how to get the best of the other … all without destroying the underlying relationship on which both sets of companies depend.

We’ll also see more initiatives outside the MFP space. It’s no surprise that Nuance wants to reach out more to scanner vendors, capture resellers, and companies focused on vertical markets. And do pay attention to what Xerox is up to, integrating its own MPS tools with remote management software, and supporting channel partners who want to create apps and connectors. Hang on! It’s only going to get uglier. 

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