Is Financial Pressure Reducing Industry R&D spend?

There are many reasons why shareholders have wanted to invest in the imaging industry. A few reasons have been revenue growth, profit growth, the business model (supplies annuity), impressive technology, new stylish products, or even dividends.

As shareholder expectations have increased for the industry (and the fact that management bonuses are tied to growth), most firms have extended product life cycles to reduce new product development expense to eke out some type of growth.

In the not too distant past, imaging participants released products every 18 months to two years in order to include new technology and be first to market. New technology such as instant-on fuser, duplex, two-line operator panels, LCD displays, chemically produced toner (CPT), MFPs or MFDs, larger paper trays, mobile print support, improved security and more.

Today it is common to see imaging companies announce new or follow-on products using a four to six-year product release cycle. Maybe it is the fact that customers can’t digest the new technology as fast; or get the product into the departmental workflow. Some blame the millennial generation where most work is completed using screen-based technology like smartphones or tablets. And, of course, there are those that hold the environmental card and believe that paper should be eliminated. Whatever the real or imagined reason, R&D spending is down (see Figure 1).

 

Figure 1 - R&D Expenses - 2007 and 2015
Figure 1 – R&D Expenses – 2007 and 2015

 

Longer refresh cycles, consolidation among industry players, fewer R&D researchers and engineers have all contributed to this trend. Reduced R&D spend ultimately leads to less competitive positions and market share losses. Is it time to take a long-term view of the imaging industry to come up with a strategy that will take advantage of your strengths, especially if your future depends on it?

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