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Mergers and acquisitions are on everybody's mind. This is always the case during difficult times. Early in 2008, InfoTrends conducted a survey that revealed that 96% of all UK printers expected the printing industry to consolidate further, which is not surprising. But a staggering 85% of respondents indicated they were considering an acquisition in 2008, in addition to 8% who already had concrete plans for the year.

However, mergers and acquisitions are not limited to print service providers, as suppliers also feel the need to cover more markets and to move into growth areas.

10 years ago, Ricoh was the market leader for copiers in Japan, but was less successful in Europe. Today, it is a major player in the world market for office equipment and print technology products and is expanding its influence in the production printing environment.

As a first step in its global expansion strategy, Ricoh upped its presence in office markets with the acquisition of Gestetner in 1995 and Lanier in 2000. As a result, it and its subsidiaries rivalled the market shares of Canon and Xerox.

Ricoh has a strategy of aggressive expansion into digital production printing. Now, with several strong products for production print in the pipeline, it has started to focus on market access and know-how in professional print.

Acquisition strategy
In 2006, Ricoh acquired the European operations of Danka, now named Infotec. The following year, it announced the formation of a joint venture with IBM based on the latter’s printing systems division. Ricoh initially acquired 51% of the joint venture, which was named InfoPrint Solutions. It consisted of small desktop printers and very high-end monochrome production printers. Conveniently, most of the cut-sheet production devices of IBM printing systems were based on Ricoh engines, while all continuous feed printers were based on Hitachi engines – also a company recently acquired by Ricoh. In August this year, Ricoh announced its intention to acquire Ikon Office Solutions, a company based in the US, but with subsidiaries in several European countries.

Hence, with InfoPrint Solutions, Ricoh now has a solid foothold from which to launch further products in the high-volume document market. Infotec, under Ricoh stewardship, promises to be a good area for light-production activities, while professional services under the Ikon brand add another area of expertise to the Ricoh portfolio.

While Ricoh has been on the most high-profile acquisition trail, other vendors have not kept their hands in their pockets. Xerox has added Global Imaging Systems, a major independent distributor of office equipment in the US, and Veenman, a Dutch office communication equipment supplier, to its ranks; Konica Minolta acquired the Danka dealer network in the US in 2008; Océ acquired Imagistics in 2005; and HP hunted slightly off the traditional graphic arts space in the software and services businesses and bought EDS and Exstream.

There are plenty of implications for printers. On the downside, it means less choice for the printer and the loss of a local, focused business to an elusive global organisation.

On the other hand, digital products are getting faster and service and support are becoming more and more important. The more productive a printing device is, the more it hurts when it is down.

Additionally, software is getting increasingly important and complex and requires more support from the vendor
and its representatives. The same could be said about business development tools, which should help the print
service provider to make better use of investments. Only a strong player will be able to provide tools and services to a broad market.

We have not seen the end of the string of acquisitions and mergers among the manufacturers. Suppliers will either need to concentrate on a niche, where they can dominate the market, or cover a wide portfolio of solutions. The current financial crisis is merely putting a hold on some of the acquisitions to come.

Ralf Schlözer is a director of the on-demand printing and publishing consulting service for Europe at analyst Infotrends. Email ralf_schlozer@infotrends.com

30-SECOND BRIEFING ON... SUPPLIER EXPANSION INTO NEW MARKETS

• Suppliers are increasingly looking to cover more markets and to move into growth areas. A method of doing this is through mergers and acquisitions

• Ricoh is a good example. 10 years ago they were trailing Canon and Xerox in European markets, despite dominating in Japan. Today it is a major player in the world market for office equipment and print technology products and is looking to expand into production printing

• This change was brought about by its acquisition strategy. Since 1995, it has added Gestetner, Lanier, Ikon Office Solutions and the European operations of Danka, and has embarked on a joint operation with IBM

• Xerox, Konica Minolta, Océ and HP have also bought to expand

• There are inevitable implications for printers as a result of suppliers merging. On the negative side, a local, focused supplier is often replaced by an elusive global organisation

• However, these larger organisations are often more geared to offer fast service and support for clients

• The credit crunch is only putting off acquisitions, not ending them for good