All change for equipment firms as IT enters workplace

The increasing use of the Internet as a business tool is changing the face of the office equipment industry. But a shift toward digital growth has created problems for dealers who lack the know-how to sell and service the new technologies.

"The computer has ceased to be a writing implement and has become an Internet tool, which requires less media than before," said Tomasz Świgost, chairman of U.S.-based office equipment manufacturer Fellowes. Świgost said this shift in the use of computers has led Fellowes to focus on ergonomic computer accessories such as keyboards and mouse pads, rather than storage solutions for CD Roms and floppy disks. "Storage used to represent 50% of our business," he said. "Now ergonomic accessories have become the dominant computer accessories." Świgort said this is because Polish office workers have not yet surrounded themselves with gadgets at work.

Internet and computer network integration has transformed traditional office products such as photocopiers, fax machines and printers. Rather than feed pages into a fax, employees can now e-mail their messages to a fax machine, which sends them automatically using a conventional phone line. Printers can use a company's e-mail system to report problems directly to the network administrator. The fastest growing market in electronic office products is for multifunctional devices, capable of scanning, printing and faxing.

But while helping to simplify office work, this new breed of device is proving a challenge for distributors of office equipment. Their service engineers must not only be trained in the workings of the equipment, but also in the ways it interacts with a client's computer network.

"This leap from analog to digital technology took many dealers by surprise," said Michał Sowiński, product development manager at Japanese fax and copier firm OKI Systems Polska. "The old products required a lot of mechanical maintenance, while the new office equipment ... requires maintenance linked to software." Sowiński said.

Zbigniew Truskolaski, chairman of office equipment distributor Merkator, said salesmen have had to be retrained to be able to cope with the new digital office technology. "It has meant that they have to interact with IT managers and network administrators rather than office managers, which puts greater demands on their technical knowledge," Truskolaski said. "Office equipment companies all over the world are finding that their sales networks are not sufficiently skilled."

The result has been lost business for office equipment dealers as manufacturers abandon their traditional sales networks in favor of dealers that specialize in computers.

"For computer dealers these devices are relatively easy to incorporate into their product range and to sell them well - to explain their workings to clients and install them," Sowiński said. "Dealers who sold analog copiers and were too slow in moving into digital devices are now a dying breed."

One company already selectively pruning its dealer network is Japanese electronics firm Canon, which represents 60% of Merkator's sales. In January this year, Canon created a separate distribution network for its range of digital equipment, termed "value" products, which are handled by a select group of dealers. "Of the 12 Canon dealers in Poland only two or three have been asked to join the value group," Truskolaski said. "If we didn't learn how to work with IT we could survive a short time by servicing old products, but sooner or later we would be crushed by the wheel of progress."

According to Polish computer market research firm Teleinfo, the domestic printer market is dominated by U.S. computer giant Hewlett Packard, which has a 52.3% sector share. Sales of multifunctional devices, which combine the functions of a scanner, fax-modem, printer and copier, grew from 6,000 units in 1998 to 38,000 in 2000, but remained a small proportion of the overall printer market of 845,411 units. The Polish multifunctional device market is divided between Hewlett Packard and Japanese electronic group Panasonic, with sales of 21,500 units and 7,000 units respectively.

But Sowiński said the growth of the multi-functional device sector will not offset this year's decline in sales, caused by the slowing growth of the economy. "This year is comparable to 2000 - there is no growth," Sowiński said. "The economic slump makes this a difficult period to catch up with the computerization of developed countries."

Greg Goodale