Subscription Print Services, The Bubble is going to Burst!!!!

by ray stasieczko November 28, 2020

The worst thing about a fad is the surprise to its investors when it ends.

When un-measured hope is slapped by reality bubbles bust. I believe the software companies building out all these DCA tools to monitor, manage, and fulfill printer supply needs for the Small Office Home Office (SOHO, market) are heading for a disastrous outcome.

It's all about - Once needed verses Still needed, and Fads are disastrous to stakeholders when they end. Subscription-based printing within the SOHO market is, at best, a fad, a reaction to what may happen. Subscription-based billing is completely distorting the common sense of some of the print industry's actors.

Unfortunately, as workers went home, they left the needs and the reasons they print at the office. Soon the home worker or remote worker will realize what they anticipated they would print proved unwarranted. At this reckoning, subscriptions are canceled, causing the bursting of a bubble built on a fantasy.

I have a few questions for all the printer manufacturers and software developers who proclaim these needs to manage all these SOHO print devices on subscription platforms.

The first question is this, did you sign up all of your work from home or remote workers on a subscription program?

Do you see value in paying $25.00 dollars or more a month per employee so they can print without any worries of running out of ink or toner?

How many dealers or resellers implemented a subscription print management program for their remote workers?

Well, No was the answer to all the questions. The industry got so excited about Work From Home (WFH) they set out a path to do something that did not even work in an office building. Managed Print Services (MPS) for the SMB

What about HP?

Recently HP proclaimed they now have 8 million Ink subscriptions as the industry's actors listen to this noise. I suggest instead listen to facts around the noise. Maybe HP can share the value of these subscriptions. Both the revenue and its profits. After all HP does seem to settle for ridiculous operating profits.

As we see in their - Personal Systems Business which runs on ONLY, around five percent operating profit. Yes, their printing business unit is more profitable. The question is, what is the profitability of the ink subscription business? More importantly what is the life expectancy of this subscription business?

What are the subscribers really buying? Are these subscription buyers merely involved in a fad? A manufacturer delivering directly to end-users sub $250.00 devices in subscription models including Ink is not a deliverable for the value-added dealers and resellers.

All those looking at HP as an example, remember, HP proclaimed four years ago, it would disrupt the 55 Billion A3 marketplaces with their A3 equipment acquired through the Samsung Print acquisition. Well, It has been four years when will HP disrupt A3?

Recently on a "The End Of The Day With Ray! episode I discussed my thoughts on HP's 4th Quarter Results. Here's a link to that episode. Here's the link https://www.youtube.com/watch?v=OHmOjnX8o2w

As I watch the print equipment and its services industry fight for relevance. I notice how what would have been futuristic two decades ago is not needed today. Some of today's software capabilities are tremendous. However, these platforms came too late, as many of the equipment manufacturers have now included into the hardware remote and diagnostic capabilities through cloud platforms.

Many legacy software developers have a dilemma because most of their aspirations are based on how things used to be. In the past these legacy developers struggled under the restraints in budgets or software development complexities.

Over the last half-decade, the cost of software development and the infrastructure to develop it has changed drastically. These changes allow software developers to bring to life their decade's old dreams. Think about the power of no-code software development.

Unfortunately, the ability to bring software applications initially conceived a decade ago to the market today has caused many to believe what they once realized as valuable is still useful as a decade ago. In other words, the developers took too long in development and are ignoring the marketplace changes.

Sometimes good intentions fall victim to the struggles of implementation, and by the time implementation is made easier, the reasons for the good intentions have faded.

The industry had fantastic fantasies of every print device in the world being under an MPS contract. I often question why these print management software organizations are still attempting to deliver what isn't needed, especially when every business print user is printing less and is continuously seeking solutions to avoid printing.

The pandemic fueled the status quo to double down on what they understood over, waking them up to what they must learn.

The global pandemic created the greatest false hope for the status quo, hoping that millions of people would print millions of pages in their home offices. This illusion caused many in the industry to misinterpret even further print output realities. The facts are that print end-users will quickly align what they thought they would print remotely with what they actually print remotely.

"All industries in decline must challenge optimism when born of memories."

Unfortunately, the print equipment industry distracts itself by what they want to believe over what they can quickly discover if they look to the facts disproving what they believe is reality.

The disconnect is many who lead these organizations are using their memories to develop software to function as one's memories see it performing. In other words, instead of creating something new, they are creating something to save something old.

The advancements in software creations have caused a delusional path towards what I describe as the MPS software bubble. Very creative software teams attempt to align fantastic software with a decade's old reality.

If these platforms were available two decades ago when print end-users truly desired to control print cost, they would have been in a position to compete. However, today is replacing a Print, DCA tool with another Print, DCA tool is a waste of time?

The DCA tools are management software that translates mechanical sensors to communicate a needed action to either other software or a human collector. I discussed this in a recent "The End Of The Day With Ray! episode. Here's the link.

https://www.youtube.com/watch?v=KkvJdRpSAyU&t=40s

The question for all these new DCA tool software manufacturers is this. What other machines have sensors which could inform a needed action? Just because two decades ago, the intentions were to compete in the fantasy of MPS. It doesn't mean that these tools should die as MPS died.

"The death of all good intentions is caused by what I describe as pigeonholed leadership—leaders who believe that past success will continue without modification."

The arguments of the significant momentum for subscription print in SOHO environments will prove to be as out of alignment as the twenty-plus year quest to put all SMB print devices on MPS agreements. The industry hind behind this miscalculation because it was never calculating what it lost in transactional business from this miscalculation.

However, as the industry consolidates and the industry's vertical resellers converge, those who calculate all delivery avenues will win. Those chasing fads will bog themselves down during a time they need to be agile and fluid.

"Complacency allows memories to drown out imagination."

Print equipment its supplies and services have been delivered to end-users through different means. The actors of these means each believe they provide the most significant value. Each delivery system's question is this, what system wins as the print deliverable continues declining in end-user value?

It's essential to clarify the different means in which end-users can engage to obtain print equipment, supplies, and services.

Online transactional providers selling print equipment, supplies, and services all online without a human to human interaction.
Dealers or resellers who engage directly with end-users on behalf of manufacturers and deliver equipment, supplies, and services through this engagement. (BTA dealers providing A3 as its core as example)
Manufacturers who sell directly to end-users offering both equipment supplies and services.

The dealers and resellers have built great businesses based on the complexities of the deliverables upper end. The business customer repeatedly upgraded and obligated themselves to contractual leases and services agreements. As these core A3 customers continue to decline in their print needs, how will the dealers and resellers respond?

Dealers and resellers of print equipment its supplies and services must understand and implement changes in their processess and systems to move their core business A3 office customers from A3MFP equipment to A4MFP equipment.

Dealers must implement programs enabling their prospects and clients to buy equipment, supplies, and services transactionally, dealers and resellers must implement e-commerce platforms, dealers and resellers must stop using memories to continue dragging the past to the future.

The question the legacy dealers and resellers must ask is this. As the end-users decline in A3 needs and shift to A4, will the legacy dealer/reseller model be in a position to sell the A4 shift profitably? Or will the online systems, alternative new innovators or manufacturers themselves bypass the legacy dealers/resellers?

The remote worker regarding print will be a commodity-driven process. Will dealers and resellers who call on businesses to provide print equipment, supplies, and services in a system of processes built and sustained around A3, Be able to transition and function as others already are?

Dealers and resellers must deliver based on the buyer's purchasing and needs realities. Those believing that SOHO environments using sub $250.00 print equipment will contract and engage in billing models once designed for much more expensive A3 equipment with greater service needs. Are completely distracted by what they hope over what's reality.

Over the past decade, A3 Dealers have lost hundreds of millions of dollars, ignoring A4 transactional business, and transactional business will continue growing as the end-users decide more and more they don't need to print as they once did, and they indeed won't care to manage what they know will continue declining.

If dealers and resellers focus solely on bringing A3 equipment strategies regarding leasing and contractual services to the A4 shift, they will fall victim to those who deliver based on realities. Customers will not engage in outdated programs when made aware of alternative options that align closer to their desires.

As the print equipment end-users diminish in how they value the product the industry is selling. The sellers must align their delivery systems to end-user value. Anytime there is an out of alignment in value between the buyer and the seller. The seller's cost in selling is too high and threatens the financial stability of the selling organization.

Buyers of print equipment, supplies, and services have options over the next couple of years; the actors who deliver these things will either remain an option or fade as a past option. Those trying to hold on to something will lose to those who create the means more acceptable to the buyer's desired outcome.

Those remaining obsessed with implementing subscriptions in declining markets. I ask you to think of this. If tomorrow I could put a lotion on my face, which kept hair from growing for a year, would I really need a razor subscription?

Now I ask all my friends obsessed with MPS and home print subscriptions this. Is technology eliminating enough print output that users will not renew and cancel subscriptions?

I conclude absolutely yes they will!

It's time for the dealers and resellers to start having conversations with end-users about why they print instead of hiding behind perceptions of why what they think they print is essential.

Of course, print is essential to those who sell it. However, those who buy print equipment will determine the best means to reach their desired outcome. We all must admit the insanity of subscriptions on equipment in the SOHO market is pure fantasy, currently a fad that will, in fact, fade.

"Status quo is the killer of all that will be invented."

If not already Let's connect here on Linkedin

Ray Stasieczko

CEO/Founder TEASRA,The Innovation Channel and Host of The End of The Day With Ray! https://www.endofthedaywithray.com/

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