HP Shakes Up Copier Industry

HP has announced that it is moving its new generation of multi-purpose office copiers to an "open distribution" system, whereby any retail or B2B channel that wants to distribute the company's hot new copier line has access to the products. IKON and other traditional office products dealers are understandably concerned, as the move reinforces a broader industry shift in the channel system for office equipment and supplies.



More and more businesses - including medium sized companies - are moving to consolidate their procurement activities into one-stop integrated supply relationships, most notably with the large "contract supply" arms of major office products distributors such as Staples and Office Depot. IKON and other more specialized dealers will find it increasingly harder to sell the high margin (read: higher cost to buyers) bundles of equipment, service and supplies that their business model depends on.



And HP knows the non-Dealer terrain well, as office products superstores (OPSS), in particular, are a major pipeline for distributing the company's workhorse printer products. They have clout in the channel, and will certainly leverage it to grab shelf space and position. While I'm not a big fan of OPSS retail outlets (high staff turnover, poor product knowledge levels on the floor, sloppy store environments, excessive out-of-stocks, poor product demonstrations, etc.), those players' B2B initiatives via contract sales have been more successful.



In any event, traditional equipment-only dealers are increasingly an anachronism. Not surprisingly, IKON continues to struggle, and its stock price is still declining from early-2002.