Is the Age of the Paperless Office on the Horizon?

Author: John Sollars
Published: August 08, 2012 at 3:21 pm
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In a research note released recently, Chris Whitmore of Deutsche Bank securities claims that the ‘dead tree format is dying’. Claiming that the use of ‘low cost connected devices’ like smartphones and tablets is enabling the sharing of information electronically rather than in a printed format. Supporting this claim, Whitmore asserts that looking at the results of the major printer manufacturers over the past 10 quarters shows a dramatic decline in both units shipped and revenues.

 

Equipment and Supplies revenue trend for major printer vendors.
(Credit: Deutsche Bank)

The Q2 12 results for printer suppliers were "particularly weak as Canon, Epson, Lexmark and Xerox all missed expectations," according to Whitmore. Canon, Epson, Hewlett-Packard, and Lexmark over the past 10 quarters show combined supplies and hardware revenues declining about 6 percent year-over-year in the second quarter of this year, he went on to say.

This is disturbing news and a bad sign for sales of consumables, as they tend to lag sales of hardware by nine to twelve months and are usually the profitable end of the business for printer manufacturers. Another key indicator is sales of printer paper (specifically A3 and A4) which also fell by 6% in the second quarter to levels that are 20 percent below their historical peak in 2006.

All of the companies in Whitmore’s survey have already reported their earnings this quarter, except for one - Hewlett Packard, and it reports its quarterly results on August 22nd. Since the arrival of CEO Meg Whitman, the printing business unit has been amalgamated with the personal computer unit, the thinking being to create an opportunity to save on costs which could otherwise be duplicated.

HP accounts for nearly half of all printers sold in the world, and when last reported, revenues from the printing group had decreased by nearly 9% (more than $1 billion) for the six months ending April 2012. And even worse news for the group was the decline in sales of supplies of over 6%. Printer supplies contribute around $17 billion a year which is nearly two thirds of the printer business revenue of $25.7 billion.

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Article Author: John Sollars

+John Sollars is the owner and MD of Stinkyink.com. He started the business in 2002 with absolutely no knowledge of how the internet worked - only a burning desire to be in on the cutting edge!. Stinkyink.com has been regularly among the top performing …

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