Can a Print Technology Enable the Contractural Business Model?

Many OEMs looking to improve their competitiveness by offering an improved value proposition to their customers are considering shifting from a transactional business model to a contractual business model.  The transactional model is the historical method of selling a printer and then selling supplies and replacement components.  The contractual business model shifts the burden on tasks like supplies and component replacement to the OEM or dealer, freeing up the customer to focus on their core business.  The contractual business model also offers advantages to OEMs and dealers such as improved loyalty.

A very interesting supplies yield and component life dynamic takes place in the shift from the transactional model to the contractual model.  In the historical transactional model, an OEM often sees it as an advantage to offer a moderate supplies yield since the supplies stream is very profitable and the time to first supplies sale for a new printer installation is important to the OEM’s bottom line.  This desire for the OEM to quickly begin the supplier’s annuity is balanced by higher yields providing the customer with fewer interventions.  The industry has found an equilibrium that optimizes supplies yield considering the OEM and customer wants.  Similarly, the life of a technology component has been optimized for the transactional business model.  For instance, the design life of a drum or printhead has to be considered in context of its cost.  Usually, a higher life can be achieved by adding cost, but this impacts the initial device cost.

Consider now the comparison of Inkjet technology versus Laser technology in the context of the shift from the transactional business model the contractual business model.   In the contractual model, it is very desirable to have long life supplies and long-life technology components for both the OEM and the user.  The OEM benefits because cost is lowered due to having fewer “transactions” to administer.  The user benefits due to few interventions.  The opposing factors that limit the supplies life and component life for the transaction model are removed or greatly reduced in the contractual model.  Therefore, the contractual model will drive higher supplies yields and longer component life.  The question then becomes:  which technology is better suited for high yield supplies and long-life components?  The emerging evidence is that Inkjet is better suited than is Laser.  Long life supplies are being offered by several Inkjet OEMs at much higher yields than comparable Laser devices.  In addition to Inkjet having fewer technology components to replace, very long life can be achieved with the print head as evidenced by Epson’s recent announcement of a 1,000,000-page print head!

Therefore, Inkjet seems to have the advantage in both long-life supplies and technology components, and is therefore well positioned to take advantage of the shift to the contractual business model.

Recently, Photizo announced an Ink in the Office Advisory service which focuses on business ink printers that are competing against laser printers in the office.  For more information on this new Advisory Service, please contact Tim Strunk at tstrunk@photizogroup.com

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