Konica Minolta shifting towards Software Solutions in 2017

In a chat with VARINDIA, Kuldeep Malhotra, Vice-President, Sales Division, Konica Minolta, speaks about the printer market, latest technologies, effects of demonetization, channel strategy and achievements of the company

Konica Minolta is gradually shifting its focus from hardware to software solutions. The solutions will help customers to increase productivity and lower printing cost. The company is registering higher growth in the production segment than Office Automation. Moreover, the company is trying to educate customers on A3 printers as the Total Cost of Ownership of these printers is low and also the lifespan is longer than A4 devices. 

Konica Minolta views demonetization as a slowdown in the decision-making process of a customer to invest in printing devices. It also feels that, with the gradual improvement in cash flow, the market condition will get better.    

How would you recap 2016 in terms of technology and business?
Our financial year is from April to March. We have not yet closed our financial year, even though the calendar year is finished. We have completed three quarters where we have shown a double-digit percentage increase. During the first half (April–September), our growth was 25% which may have come down in the third quarter. Business came down during the October- December quarter, but we were able to maintain our double-digit growth in terms of performance. 
In terms of technology, we have launched 18 new products in the beginning of our financial year. So we are getting good response and even in the last quarter we have launched two new products which are in the 25ppm and 30ppm category. 

What are the latest technologies that will be coming up in 2017?
We are looking more into the software solutions. Till date, what we have done is more of hardware. Now we are trying to offer software solutions also which will enable customers to increase their productivity and minimize their expenses in printing. DMS e-biz Vault is one of the examples. It is more of scanning, retrieval software and then in future we may come out with more solutions for our office segment. Similarly, for production also we are coming out with print management, colour management, Web to print solutions. So both in the office as well as printing, we are working on the solutions workflows. 

How do you see the printing industry moving, especially the office automation one?
We will divide it into two. One is the office segment and another is production device. We are expecting good growth in the device production segment because the people are looking at the short length runs. Now, a lot of commercial printers are adopting digital technology, besides working on the offset. The office segment is also growing, but the overall market is not growing. The growth is just 8% to 10%.  

How are you strategizing to overcome this sluggish market?  
Everyone needs to work together – both customers and OEMs. What technology can do for you it’s not just copy and print it can do beyond that like scanning, faxing or can print directly from your USB pen drive. More education is required in this. But when you look at the overall market, people still feel that they can afford A4 but not A3. They still feel A3 is a bigger machine and A4 is the smaller one. So that mindset will take some more time to change and understand that you need to look at the overall TCO (Total Cost of Ownership). You may have to invest more initially, but if the running cost is lower in that equipment, In the long run, it will benefit you. 

Secondly, the life of A3 equipment is more than A4 as people use it for two to three years, while people can easily use A3 for five to seven years. So the life is double, the running cost is lower. Only the hardware cost is more. So people can adopt A3 rather than A4 devices. The price of A4 is more than Rs.16 lakh. So some of that market should shift towards A3 which as an OEM and vendor we are educating customers. Both corporate and the government are cutting the cost. People are reducing the printing cost, so people are not buying new devices. 

Another biggest challenge is colourization. 10-12,000 units is nothing when you compare it with inkjet colour. The perception is that colour prints are very costly. 

Do you think that the government is apprehensive of adopting this new technology?
To some extent, yes. They have no control who is printing. So they need to adopt that technology which restricts people who can print and who cannot. How many can one print? If he prints more, he has to pay VAT so charge VAT to that department and allocate the budget, quota allocation so that people will be more careful. 

Need to educate what is the benefit and how they can restrict the employees to have a limited set of prints for colour so that they can minimize the expense also.  

How Konica Minolta is facing the demonetization challenge?
It is a slowdown process which has happened in customer’s decision-making to invest money in these equipments. That is why it has the impact on the overall business in the third quarter. I think in the fourth quarter government wants to spend because their budget will be exhausted and anyway they have preponed their budget to February 1. So the new budget will come and I am hopeful that people would like to spend money.

Slowdown is there, but when will it improve it is difficult to say because cash flow is now slowly improving and it is getting back on track.

What is your channel strategy for 2017? 
We have over 150 direct partners who are promoting our office products range which is A3 and A4. Our strength lies in copy shops, SMBs and government, but our major gap is mid-size large-size corporates and we want to further improve our SMBs and government segment. So we will  be focussing on how to penetrate more in these segments to grow our overall market share both in black and white as well as colour.

In Tier-II and Tier-III cities, business is growing and more expansion is happening in those markets. We already have a good coverage network which we have created in these cities and have started paying us back. We would be focussing more on reaching out to those customers who are participating in road shows, product demonstrations, local exhibitions to showcase our products.

What are the achievements of Konica Minolta in 2016?
We would be closing our year at around Rs.500 crore which will give us a double-digit growth. We will improve or try to improve our market share. The current market share in mono is 18%+ and colour 24%–25%.