2019: That was the year that was
December 26, 2019
As 2019 closes we take a look back at the leading stories from the year and one or two quirky news items you might have missed.
With most of Europe on a two or possibly three week Christmas break, the silence in the Xerox – HP saga is welcome, though it will re-emerge in the new year for sure. The deal is a David (Xerox), and Goliath (HP) story where Xerox having exited the long running Fuji-Xerox debacle made an audacious bid to buy HP. To put that into context, Xerox is worth $10 billion, and HP is worth $30 billion and follows on from a tie-up deal earlier in the year.
On paper, the deal looks good for several reasons. Firstly, in Europe and North America, the office printer market is mature, and as a society, we are printing less. There is growth in emerging markets like Africa and the Middle East and China, but not enough to counteract the maturing decline of the core European and North America markets. These changes do not just affect Xerox and HP, but all OEMs who are the drivers of the primary printer hardware and consumables market.
The second challenge is that the consumer is changing. It is an age thing, but older OEM brand loyalty customers are leaving the workplace, and a younger, environmentally conscious brand swappers are in the workplace. How does that shape the future market? For the last umpteen years consumers have either bought OEM or remanufactured on around a 75/25 split, and the consumer thinking is a combination of brand, price and environment. Older consumers think the best brand and best price and the environment is for tree huggers. Younger consumers think about price and environment, and that breaks the OEM is the best brand strategy.
Xerox sees that the market is changing, and they are adopting the “first strike” strategy of getting as strong as they can, as quickly as they can, and the acquisition of HP fits that strategy. HP, on the other hand, is playing the reluctant bride and feels that the Xerox dowry is not good enough. HP has recently appointed a new leader and, like Baldric from Black Adder, has a cunning plan to lay off between 7,000 and 9,000 employees and launch their new “Advance, Transform, Disrupt” to take on the third party suppliers of consumables. Can HP re-invent themselves, or is Xerox better placed to do that for them. We will see in 2020.
Then, of course, there are the daily IP battles, Amazon takedown notices, and so on that, the OEMs are using to defend their market share. But the tide is turning, and not everything is going the OEMs way. Epson got a metaphoric spanking in Argentina this year from long-established GTC and HP was on the receiving end from 123inkt.nl in the Netherlands. In the USA, the USITC affirmed their initial determination, granting Ninestar, Static, and some other respondents’ a summary determination the respondent’s products do not infringe Canon’s patents.
In Europe, the European Commission imposed a fine of €28 million ($31.86 million) on Canon Inc. for alleged “gun jumping” relating to the acquisition of Toshiba Medical Systems Corporation back in 2016. Canon is appealing this fine.
It is not all OEM
Clover hit the headlines as the parent Clover Technologies had their credit rating cut by Moody’s following the tie up with Xerox and HP who were supply the OEMs. Clover wasn’t helped with HP’s targeted focus on smaller independent resellers who were incentivised to go OEM only. Clover responded with their “Silver Bullet” strategy to switch OEM resellers to remanufactured.
The Clover Imaging business got sold to Norwest Equity Partners, owners of Marco, who are the largest office provider of technology-focused products and services.
Somewhere in all the to and fro with HP, Xerox and Clover, LMI Solutions hit the buffers when they got caught up in the Xerox HP tie-up, and their equity partner took fright and placed LMI into receivership. Clover purchased the LMI assets, but the Willert’s family that managed LMI were picked up by Static Control.
In Europe, Turbon continues its reinvention, and the Turbon Products focus is slowly taking shape while the tidying up within the Turbon AG group continues.
Slipping a little under the radar were two deals. The first was the acquisition of the massive Chinese ink remanufacturer, Speed Infotech by the rapidly growing Hubei Dinglong group. As we closed for Christmas, the other deal was US private equity firm Blackford Capital taking a license from Cartridge World for its North American business. On paper, this is the best news from Cartridge world since Bryan Stokes and partners sold it in August 2007 to the Australian private-equity firm, Wolseley Private Equity.
You might think that the market is tight, and it is, and it is likely to remain so for at least the next few years. But the aftermarket is moving forward. Younger consumers are thinking price and environment, and that breaks the OEM is best brand loyalty. But brands do matter, and the growth of licensed brands like IBM, Kodak, IBM and so forth and the re-emergence of a strong Cartridge World brand will carry weight and do make it easier to switch a customer away from the OEM.
Firmware, the new battleground
Almost a 1000 OEM firmware updates were issued in 2018, and it is similar this year. HP leads the firmware wars releasing around one a day! Firmware updates can have a significant impact on consumers of aftermarket cartridges. For the chip manufacturers, it is a battlefield of reengineering a firmware upgrade, only to be followed by the next one!
But it isn’t all one-way traffic. Current guidance from the aftermarket is to disable firmware updates. Both HP and Epson face legal actions over their firmware updates and Netherlands based 123inkt.nl customers have recently won their firmware legal action against HP. But it is an issue for the whole industry, and 2020 will see innovations in firmware blocking and fast chip resetting technology. Look out for more on this topic at our Firmware Forum at Remanexpo on 25th January and regular coverage in The Recycler during next year.
Toner, Ink and all the bits you need
This year we saw the sale of the Coates toner plant, probably one of the worst days for the people involved following the decision to exit the market. India’s NAND IPL will suffer the same auction process in January. Both reflections on the changing market and the mammoth challenge of bringing new toner technology into an established market. Meanwhile, CET is now making pulverised toner for Canon and Ninestar has acquired a minority stake in Malaysian toner producer, Jadi Imaging.
In the ink sector the UK, based remanufacturer Environmental Business Products who acquired German ink manufacturer, OCP GmbH, in late 2018 has followed that take over buying another German ink producer Compedo in the last few weeks.
A different market perspective
Traditional thinking in the consumables market is an OEM and aftermarket split. A two-way split between OEM and remanufactured for reuse (Reuse) cartridges. The interloper was the introduction of new-build cartridges (NBC). Typically, a very low cost and invariably an OEM copy, clone cartridge. (Clone NBC) and a more recently evolved IP safe NBC.
As we enter 2020 is the consumables market more nuanced than that?
If you look at the motor industry, there are two distinctive markets: New car and secondhand car markets. Should the office imaging sector adopt a similar unique market categorisation? New single-use consumables and reused consumables would better reflect the market today. After all the reuse consumables market is one that is reliant on the availability of empty new cartridges, in the same way, the secondhand car market needs new cars.
Talk of NBC’s is fractious whomever you talk to. OEMs don’t like them because they are cheap and disrupt the long established razor and blades model. The reuse community don’t like NBC’s because they are cheap and usually not remanufactureable. The NBC community are disrupting the market and are being challenged on many sides.
Issues around safety, WEEE, RoHS, IP all doggedly NBC products and finding decaBDE in some NBC cartridges was a sea change moment in the NBC market as our “2020: A new perspective?” report sets out. NBC sales are active in the market, and many resellers and remanufacturers are selling NBC cartridges as a third option.
It is all about people.
2019 saw many people changes across all sectors of the industry. To put that in context, almost 30% of the contacts in our database changed this year. Some have left the industry, and some have changed their roles, while others have moved on to new opportunities.
Those leaving the industry, were typically in the 45+ age category, those taking on new roles were in the 35 – 45 age category and the fasted growing sector were in the 21 – 35 age category.
After twenty-seven years with the Turbon Group, Managing Director, Rob Aukema bowed out as Managing Director, handing over the reins to Ovidiu Stoichici.
Aukema joined Turbon in September 1992 when the reuse of printer consumables was in its infancy, and Turbon was one of the pioneers developing replacement hoppers and developing reverse logistics and remanufacturing technology and techniques.
From his base in The Netherlands Aukema has travelled extensively over the last twenty-seven years looking after product development, production and distribution at the Turbon facilities in Romania and Thailand. More recently Aukema has incorporated the manufacturing requirements of the Turbon electrical division that produces speciality cable assemblies at the Romanian factory.
Also leaving Turbon was Michael Pages, the Executive Director and MD at the Turbon Group following the recent reorganisation. Simon McCouaig, who joined Turbon in December 2016 after seventeen years with NCR, takes over Pages role.
Luke Goldberg took to LinkedIn to announce his departure from Clover in November. Goldberg joined the industry way back in 1997 with Nukote International where he spent four years as Director of Sales.
For fourteen years Goldberg was the frontman at MSE, building the companies MSE brand and reputation and was a prominent and respected speaker at industry events around the world. His honest, no-nonsense approach to the market won him respect throughout the channel.
Meanwhile, sales, marketing and social media guru, Zoltan Matyas joined German toner manufacturer, Integral GmbH, as the head of marketing.
Thank you for supporting The Recycler in 2019, and I hope you enjoyed this snapshot of the 2000+ stories we published this year. Next year is another chance, a new beginning and the things will change for us all. Have a good one and see you in 2020.
Categories : Around the Industry
Tags : 2020 Industry New Hires People Remanufacturing Year in Review
