1 • · 39 I 2015 Dealer Prole Series No. 4 of 4 Gordon Flesch Company, Inc. Megadealer Has Unique...

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WITH US, IT’S PERSONAL

• 3 •

THECANNATAREPORT (ISSN: 0889-5880) is published twelve times yearly by Marketing Research Consultants LLC, P.O. Box 180 Hamburg, New Jersey 07419. Phone: (973) 823-6314; Fax: (973) 823-6316; email: [email protected]. Editor and Publisher, Frank G. Cannata. All rights reserved. No part of this periodical may be reproduced in any manner in any language without the consent of THECANNATAREPORT. The information set forth herein and on its complementary website,TheCannataReport.com, has been obtained from sources believed to be reliable but is not guaranteed by THECANNATAREPORT and may be incomplete. THECANNATAREPORT’s expressed views and opinions are based on the foregoing and should be viewed in this context. Printed in the U.S.A. SUBSCRIPTION RATE for THECANNATAREPORT and TheCannataReport.com is $495 for one year. Subscribe at TheCannataReport.com/Register. POSTMASTER: Please email address changes to [email protected].

EDITORIAL AND PUBLISHING

Frank G. Cannata President, Editor-In-Chief and Publisher

Charles J. CannataSVP, Brand Strategy and Development

Carol C. CannataSVP, Client and Creative Services

Doreen Borghoff Design Director

Sharon Tosto Esker Story and Features Editor

Walter Geer III Executive Director, Digital Strategy

Bob Ingoglia Chief Marketing Correspondent

Bob Sostilio Chief Technology Correspondent

Tetsuo Kubo Japanese Correspondent

Karen Stewart Executive Producer, Digital Video

Charlene Piro Executive Producer, Print

Cathy O’BrienSenior Public Relations Consultant

Matt Stauble Events Photographer

EDITORIAL ADVISORY BOARD

Keith AllisonCEO, Systel Business Equipment

Paul HannaPresident, Blue Technologies

Steve Reding President, C.A. Reding

Andrew RitschelPresident, Electronic Office Systems

Barry Simon President, Datamax

Mark SteadmanCEO, Stan’s Office Technologies

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THECANNATAREPORT

TheCannataReport.com

Visit TheCannataReport.comOctober 2015

This Month In lieu of a quote from a celebrity or high profile executive this month, I would like to personally dedicate this issue to the city and people of Paris. My personal hope is that Americans finally learn something from the unspeakable horrors that transpired there because stated as a New Yorker and Manhattanite, we certainly did not after 9/11.If we do not stop judging how individuals live their lives instead of focusing on the big picture and standing together in solidarity, life as we know it will cease to exist.

– CJ Cannata

PART TWO

COVER STORY

21 I 2015 Dealer Survey Results and Analysis (Part II of II)

Introduction .......................................... 21Dealers Rate MFP Suppliers ............... 21Dealer Meetings .................................. 23Dealers Rate A4 Manufacturers .......... 24Leasing Companies: Perception and Penetration .......................................... 27Service and Solution Companies ........ 35

DEPARTMENTS

6 I Japanese HeadlinesSharp StreamlinesManufacturer Announces Restructuring Anchored by Agile New Business Solu-tions Company

47 I Conflict Avoidance Track Key Industry Meetings as Well as the Cannata Travel Schedule to Date

47 I Up Next The Cannatas Tour Texas, Announce Continued Operational Updates and Pre-pare to Launch Production Print Issue

FEATURES

16 I Samsung’s Story: “The future ain’t what it used to be.”Industry Underdog Makes a Strategic Bet on Mobile Printing and Delivers Effective Live Demos

20 I 2015 Dealer Survey: Executive Summary (Part II of II)Dealer Revenue Trend Inverts, Dealer Meeting Attendance Increases, Dealers Expected to Sell More for Less

36 I 2015 Dealer Survey: Editor’s Notes and ConclusionsSharp Effectively Assures Dealers; Ricoh Continues to Improve; Dealers Rate Toshiba Executives Most Favorably

39 I 2015 Dealer Profile Series No. 4 of 4 Gordon Flesch Company, Inc.Megadealer Has Unique Potential to Sat-isfy the Distribution for Entire Region

44 I Graph Expo Preview Industrial Print: The New Frontier2015 Graph Expo Event Outlines Oppor-tunities for Dealers and Manufacturers

8 I INK: “Best Software Developer” Winner Square 9 Draws over 100 Dealer Representatives to First Encompass Event; Award-winning Indigo 10000 Digital Press Prints Nobel Peace Prize Laureates Book for Third Consecutive Time; MWA Intelligence Welcomes DEX Imaging to the SAP Business One FORZA Family

MANUFACTURERS

“Best Woman Executive” Laura Blackmer

Canon Channel Partners Help Drive 30 Percent Growth

Northwest Equity Partners of Minneapolis Acquires Marco

VIDEO

THIS MONTH ON

Take 30

Born in the U.S.A., The 30th Anniversary Can-nata Dinner on Thursday, October 1, featured seven awards, raised a record $185,000, and packed a full house of 250 decision makers across the dealer, manufacturing, leasing, software and services segments—and we got it all on video.

TheCannataReport.com

Check out these features and more in “This Week,” “Live Wire,” and “Video” at: TheCannataReport.com

NEW

S MACHINE

The Real Cost of War: Burden on Few Protects the Many

DEALERS

Presented by

VETERANS

“Best Executive” Rick Taylor

PRODUCTION

Q&A Q&A

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Effective October 1, 2015, Sharp Corporation (Sharp) restruc-tured its business to comprise

five business units. This change is part of Sharp’s effort to transform itself into a more competitive organization that can quickly respond to customer needs and market changes. The Office Solutions Business Division, which is charged with digital MFPs, now fall under Sharp’s Business Solutions Company, which is focused on Sharp’s existing businesses, including Visual Solutions Business Division and Sys-tem Solutions Division, and has added new businesses such as robotics and medical healthcare. Each company is centered around an integrated sys-tem that spans development, produc-tion and sales for the business in its charge, and manages each business independently and intends to enhance each business’s respective profit base.

At a press conference on October 20, Kazushi Mukai, Business Solutions Company President, and Akihiko Kawahara, Office Solutions Division Manager, unveiled Sharp’s new series of digital full-color MFPs and stated the direction of the newly announced Business Solutions Company.

“Based upon the existing business such as Office Solutions Business, Vi-sual Solutions Business and System Solutions Business, we will tackle with new business such as robotics or medical healthcare to expand our business,” said Mukai. “Solutions pro-posals by combining each business will become our strength. We will take full advantage of this strength and will steadily propel our sales plan for 350

billion yen in FY2016 and 400 billion yen in FY2017. In the U.S. and Europe, we are working on expanding the di-rect sales channel and will enhance bundled sales (with other company products) and solution proposals.”

Kawahara stated that Sharp’s Business Solutions Company would integrate the manufacturer’s digital color MFP portfolio so operability and commu-nized toner consumables can be uni-fied for maximum efficiency. The com-pany’s plan is to sell 300,000 units over three years for the new series in total.

The Office Solutions Business Divi-sion’s revenue in FY2014 was 250 billion yen with a plan for 300 billion yen in FY2017, with the new series as the core. There are nine models in the new series, with print speeds from 26 PPM to 61 PPM (A4 size). Sharp also announced and released three low-er-end models, MX-2650FN (26 PPM), MX-3150FN (31 PPM), and MX-3650FN (36 PPM) on October 28. Higher-end models (41 PPM, 51 PPM and 61 PPM)—both standard and high func-tion—will be released in spring 2016.

Toner for the new series has incorpo-rated the newly developed “Mycros toner crystal,” which utilizes new resin that melts quickly and enables fixing at lower temperatures. This crystal-based toner is said to help reduce power consumption, while simultaneously producing superior color reproduction as well. This is just one of many new technologies that have been incorpo-rated in this new series.

Furthermore, Sharp intends to incor-

porate a human body sensor func-tionality that automatically “wakes up” MFPs from their sleep modes, sensing people as they approach the machines, into their high-end models slated for released in the spring of 2016.

Sharp StreamlinesManufacturer Announces Restructuring Anchored by Agile New Business Solutions Company

JAPANESE HEADLINES BY TETSUO KUBO

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Questions About This Story? Contact CJ CannataPhone: (917) 514-9501Email: [email protected]

Kazushi Mukai, President, Business Solutions Company, Sharp Corporation

Sharp MX-2650

CEO Stephen Young, CTO Brian Banet, and SVP Channel Development, Square 9 Softworks, developer of award-win-ning Business Process Automation solu-tions—and The Cannata Report’s inau-gural Frank award winner in the “Best Software Developer” category—hosted an international channel of dedicated re-sellers and their customers at the com-pany’s first 2015 Encompass Confer-ence. Hosted at The Sandpearl Resort in Clearwater Beach, Florida, from October 20–23, the three-day event focused on Square 9’s culture and ongoing vision for the future of Enterprise Content Manage-ment (ECM).

Over 50 dealerships were represented by over 100 dealer professionals, including

the following 12 at the Principal, C-Suite and GM level: ABM Office Automation; Advanced Office; Advanced Office Sys-tems (AOS); ATS, Inc.; Bison Office Systems; Citywide Office Solutions; DEX Imaging; ImageNet Consulting; Document Logistics; KDI, Inc.; Sarama-na Business Products; Standley Systems; and TGI Office Automation.

Most of the other outstanding dealer-ships with a presence at the event were represented at the by department heads or senior staff in business development; IT, solutions and/or services; marketing and/or sales. These included: Capitol Office Solutions; C.A. Reding; Caltronics; Cen-tric Business Systems; Coordinated Busi-ness Systems; Commonwealth Digital

Office Solutions; EO Johnson; Gobins, Inc.; MT Business Technologies; Wood-hull LLC; RJ Young; and Zeno Office Solutions; among others.

Featured speakers and sponsors included top industry brass such as Larry White, SVP, Sales, Americas, Toshiba Ameri-cas Business Solutions, Inc.; John Baker, VP, Strategic Accounts, Everbank Com-mercial Finance, Keith Snyder, National Sales Manager, PSIGEN Software; and Paul Carman, President and CEO, Xam-cor Inc. Speakers shared their many in-sights about solving complex business problems through proven, high-perform-ing and effective sales tactics.

Interactive discussions addressed indus-try trends, challenges and future oppor-tunities for business efficiency solutions.

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INDUSTRY AWARDS, ACKNOWLEDGMENTS & SIGHTINGS

“Best Software Developer” Winner Square 9 Draws over 100 Dealer Representatives to First Encompass Event

I N KBY CJ CANNATA

STEPHEN YOUNG’S OPENING KEYNOTE

REGISTRATION AND EVENT HALL

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Presentations focused on how equipment, solutions and other technologies enable organizations to leverage information as actionable data, streamlining the manage-ment of critical data with cost efficiency.

Attendees had the opportunity to meet with Square 9 professionals in intimate breakout sessions throughout the confer-ence. These one-on-one interactive ex-periences included the anticipated intro-duction of Square 9’s updated solutions portfolio, as well as an exclusive first look

at the company’s digital business process automation workflow engine, GlobalAc-tion, scheduled for launch on November 15 as part of Square 9’s upcoming Smart-Search version 4.3 release.

Encompass attendees also experienced a number of networking opportunities, roundtable discussions and interactive breakout sessions on attaining optimal business efficiency. Square 9 developers were on hand live to answer questions and present programming and non-pro-

gramming methodologies for each cus-tom application.

Square 9 also hosted an awards ceremony to recognize its Elite Resellers. Awards and winners included Lifetime Achievement Award winner EO Johnson Technologies, Dealer of the Year AOS, Rookie of the Year ATS, North central Regional Perfor-mance Leader A&B Business Equipment, Western Regional Performance Leader Standley Systems, South-central Region-al Performance Leader Dahill, North-east Regional Performance Leader AOS, Midwest Regional Performance Leader Michigan Office Solutions, 2015 South-east Regional Performance Leader Saxon, 2015 Mid-Atlantic Regional Performance Leader ATS and Canada Regional Perfor-mance Leader Konica Minolta Canada.

Other industry notables in attendance in-cluded PSIGEN CEO Bruce Hensley and President Glenn Johnson and Kim Loud-en, Director National Accounts, GreatA-merica Financial Services.

OCEANSIDE WELCOME RECEPTION

TONY BISHOP, BRIAN BANET AND STEPHEN YOUNG HOST DINNER CRUISE

KIM LOUDEN AND CJ CANNATA

HP Inc. recently announced that for the third consecutive time HP Indigo has been selected to print Being Nobel, a book about the inspirational lives of No-bel Peace Laureates, which will be pre-sented to each honoree and youth delegate during the 15th World Summit of Nobel Peace Laureates event in Barcelona, Cat-

alonia, Spain during the November 12–15 event. In addition to the Laureates, the event will bring together heads of state, the mayor of Barcelona and Hollywood stars, among others. Being Nobel was written by author Livia Malcangio, an Italian journalist, interpret-

er and translator or five languages, human rights activist, and since 2001 has worked for the Permanent Secretariat of the World Summit of Nobel Peace Laureates.

With more than 170 images, illustrations and maps, Being Nobel details the cou-rageous stories of recent Nobel Peace Prize winners—from Mikhail Gorbachev and Desmond Tutu to the Dalai Lama and 18-year-old Malala Yousafzai, the youngest Nobel Peace Laureate in histo-ry, among others.

Being Nobel is meticulously arranged continent by continent, with vivid pho-tographs and illustrations. Each chapter carefully integrates stories of those who by accident or design, shaped the last 60 years of world history.

Printed in Germany by The Elanders Group, with operations in over 15 coun-tries on four continents is renown for it’s global solutions across areas that include

• 12 •

I NK

THE DALAI LAMA AND LIVIA MALCANGIO

Award-winning Indigo 10000 Digital Press Prints Nobel Peace Prize Laureates Book for Third Consecutive Time

HP INDIGO 10000

I NK

As of November 17, 2015, MWA Intelli-gence Inc. (MWAi)—a master value-added reseller (MVAR) and original equipment manufacturer (OEM) for SAP Business One and leader in enterprise resource plan-ning software (ERP)—will continue to ex-pand their FORZA and SAP Business One client base by officially adding DEX Imag-ing to the family.

Industry leader DEX Imaging, has estab-lished a long and successful track record

in the conventional print imaging industry and, in recent years, has enjoyed successes in the managed services (MS) and managed print services (MPS) fields as their next generation of growth.

Since DEX Imaging’s inception in 2002, Chairman, Dan Doyle Sr. and CEO, Dan Doyle Jr., have implemented innovative strategies that continue to revolutionize how the industry does business today while forging transformational strategies capable

of propelling DEX Imaging into the most elite group of dealers for years to come.

With nearly 40 years of industry experi-ence, DEX Imaging continues to lead the marketplace in innovation and evolution. However, the company was at a critical growth juncture and began to quickly real-ize that their current business system could not effectively grow with their present and future needs. “FORZA, built on SAP Busi-ness One, proves to be the only ERP in this industry that can grow with our business,” said Dan Doyle, Jr., President and CEO of DEX Imaging.

MWAi FORZA with SAP Business One is positioned as a comprehensive, integrat-ed ERP system that provides transparency and instant visibility into operations. The FORZA solution was designed to help deal-erships to better unify, manage, and control their entire business across financials, sales, customers, and operations.

MWA Intelligence Welcomes DEX Imaging to the SAP Business One FORZA Family

FATHER AND SON: DAN DOYLE, SR. AND DAN DOYLE, JR.

JENNA STRAMAGLIO, CJ CANNATA AND MIKE STRAMAGLIO

• 14 •

CR

supply chain solutions, print and packag-ing solutions and e-commerce solutions. Markets most important to this compa-ny include China, Germany, Singapore, Sweden, the U.K. and the U.S.A. The Elanders Group’s largest customers rep-resent the automotive, consumer electron-ics and white goods categories.

The HP Indigo 10000 Digital Press, which won the InterTech Technology Award for Innovation in 2013, was cho-sen to produce the book because it enables high-quality production of any size appli-cation on a wide range of substrates: from

pocket folders and six-page brochures to posters and large lay-flat books, such as Being Nobel. The 29-inch HP Indigo 10000 utilizes up to seven ink stations for an extended color gamut, including HP Indigo ElectroInk white, spot colors and special colors. Because the Laureates are chosen so close to the day of the actual ceremony, quick turnaround is critical. The HP Indigo 10000 prints up to 4,600 color B2-for-mat sheets per hour and integrates with a range of in-line and near-line finishing devices for seamless production.

LIVIA MALCANGIO

Top Dealers. Best Business Practices.The Cannata Report and TheCannataReport.com

present our 2015 Dealer Profiles as a cohesive

series for the second consecutive year in a row.

Written predominantly in a Q&A format, each

installment shares valuable insights directly from

different industry-leading dealer principles about

transitioning to a services orientation.

See page 39 or visit TheCannataReport.com for this month’s story.

No. 4 of 4: Gordon Flesch Company, Inc.

THE CANNATA REPORT 2015 Dealer Profile Series

Access. Commitment.

INSIDE INFORMATION

Mark Flesch, VP, Sales–Eastern Region; Tom Flesch, CEO; Patrick Flesch, VP, Sales–Western Region

• 16 •

“You can see a lot by watching.”

I hadn’t been to the city of Miami in over 30 years, so I was anxious to see what it looked like. Spanish is now

the language spoken all over the place. While I was there, it was hot, humid and very rainy. Looking out my hotel win-

dow at the beach and surf, I couldn’t be-lieve my eyes as a tiny sail boat crashed ashore, and nine people and a dog jumped out right in front of us. The people on the beach cheered their arrival. “Welcome to America, land of opportunity,” they shouted. Even the Police and EMTs were smiling. The boat, I soon learned on the news, had escaped from Cuba. It rained so hard later that night that the little boat would surely have capsized had it not safely landed already. Lucky people...in more ways than one.

Samsung’s Story: “The future ain’t what it used to be.”Industry Underdog Makes a Strategic Bet on Mobile Printingand Delivers Effective Live DemosBy Robert Ingoglia Lawrence Peter Berra, aka “Yogi,”

passed away at age 90 on Sep-tember 22, 2015, exactly 70 years to the day that he played his first baseball game for the New York Yankees. A man with only an eighth-grade education, his “Yo-gi-isms” are sprinkled throughout this article, because they are now considered world famous “pearls of wisdom.” As I packed my bags to attend the Samsung meeting, I smiled remembering his 10 World Series Rings (a record), three MVP Awards and a most astute obser-vation: “Why buy good luggage? You only use it when you travel.” Rest in peace, Mr. Berra.

• 17 •

The good folks at Samsung America Inc. (Samsung) were very prepared for our analyst briefing (always a good idea to start off a meeting where you want the press to pay close attention). Samsung’s Director of Printing Eddie Castillo and his staff took us around the expo, print-ers all neatly displayed and at the ready. I’m not a product guy, but I was very im-pressed after getting a preview. All the products were controlled by integrated Android-compatible tablet devices. They were strong devices with dual access and powerful scanning capabilities. Who wouldn’t like them?

The theme of the meeting was “The Next Big Thing in Printing Solutions.” I al-ready knew what they were hinting at. Mobile printing was to be the focus, and Samsung was betting the ranch on this new trend. The company claimed our $72 billion market comprised 12.9% print-er business and 13.9% mobile business. (I took them at their word…I’m also not a numbers guy.) Samsung’s goal was to greatly increase its business over the next five years. I’d heard this before, in fact for 35 years, as every sales company had a PLAN. The key was to reach the plan, and most often they actually did.

I learned that 330 people were attending:

150 dealers, 30 ISL solution partners, more than 100 dealer salespeople, inter-nal staff and press. Not all dealers were invited, which seemed strange to me, but it was understandable when you consid-er economics and payback. Buying two printers a year doesn’t cut it. Or, as Yogi would say: “A nickel ain’t worth a dime anymore.” Approximately 75% invited were existing dealers and Samsung hoped to attract 25% additional ones. They need additional dealers.

The main message to this group was that dealers needed to “engage with their customers” and increase their “share” of wallet. And the way to do this was through customized solutions, the use of third-party developers and by offering highly “reliable” Samsung products.

I began to think back about 25 years. Ev-erything was nicely presented, but this meeting reminded me of the early days of my career. Excited sales and product types were all looking to please their au-dience. The had a featured product line on that looked great, but may have had a few holes here and there. Executives who seemed very capable, dedicated and enthusiastic. Overseas visitors who were there to observe, support, listen, promise and deliver the future products that these

dealers were sure to ask for. Nothing fan-cy at all, just a plain, simple, “back-to-ba-sics” approach.

But, I was very excited because Samsung promised to offer a lot of meat and pota-toes. Allow me to explain. Most meetings are razzle-dazzle, hype, slick videos, con-tests and A/V productions, all topped off with a very recognizable keynote speaker. This Samsung meeting was none of that.

Instead, the company actually demonstrat-ed its products and applications (especial-ly mobile applications) through excellent live, on-stage demos, using video cameras that projected all its technology on video screens that ALL could easily see. Risky? You bet. Effective? Absolutely!

Samsung’s Vice President of Sales Matt Smith, a very effective speaker, used no video prompters, so his presentation was very conversational. His message was that Samsung’s mobile technology was the dealer’s key to success. The compa-ny’s Smart UX 2.0 Platform tied into the cloud, mobility, remote support, and app development programs, SDKs, and a long list of MFP partners. Samsung introduced its newest flagship product, the MX-7 line for Enterprise environments and the MX-4 line for workgroup environments, on stage

Product Fair Featuring MX-7 Series

• 18 •

and live. The featured Samsung products were most impressive and performed flaw-lessly on stage.

Not only that, but each follow-up speak-er, including Samsung’s software partners and vendors, did an equally effective job of demonstrating capabilities rather than merely talking about them.

Samsung’s video group/smart signage products were also showcased, a very in-teresting tie-in. Your overall impression was that Samsung really does have a lot of technology. Besides, Matt Smith told us several times, so it was really begin-ning to sink in.

Day two featured the breakout sessions and again, Samsung impressed me with the company’s actual customers, who re-canted how great Samsung was for their businesses. The Miami Dolphins (a well-known Samsung customer) were there, several dealers presented and some of Samsung’s MPS partners had excellent presentations as well.

Again, Yogi popped into my head: “If you ask me anything I don’t know, I’m not gonna answer.” Classic, I thought.

Then I began to think about the five Sam-

sung plasma TVs in my home and my brand-new, four-door, very expensive, Samsung refrigerator just recently deliv-ered. Hey, these guys and gals may actu-ally be serious.

The Samsung worldwide brand is in the top-five ranking. The assembled dealers were promised increased adver-tising support, new marketing support programs (perhaps Samsung’s Achilles heel?), and a promise to THINK MO-BILE and THINK AGGRESSIVELY. Their goal is to be No. 5 in three years and No. 3 in five years in the printer are-na. Let’s both save this article and talk again in five years. Okay?

Enter the Keynote Speaker—A Guy Named Erik Qualman.

I’ve hired a lot of public speakers in my career and 98% of them disappoint, ex-cept for Lou Holtz, who is my favorite, all-time, public speaker. If you ever have the need, you should hire him. He’s ab-solutely excellent and very funny. Or, as Yogi once said:

“Public speaking is one of the best things

I hate.”

Here are some of Qualman’s more salient points about so-cial media:

1. Technology will allow you to stay connected, and everything will soon have an online rating and an online review.

2. Digital leaders are made, not born.

3. Focus on output, not throughput (when thinking about your atti-tude or actions).

4. Network with your customers when you are in a position of strength, not when you’re look-ing for something from them (or you’re looking for a new job).

5. Use social media tools (Face-book, LinkedIn, Instagram, Flickr, Tumblr, etc.), and invest in your people if you don’t know what I just suggested.

6. Most important of all … BE DIS-RUPTIVE if you want to suc-ceed! Qualman gave an example of the very successful “Dollar Shave Club,” which ran only one 90 second TV commercial and now has 6% share of the razor blade market and is giving com-panies like Gillette a fit.


“Public speaking is one of the best things I hate.”

Erik Qualman is another exception. He was on topic and had great video “stings.” He also spoke about millennials, their im-portance now and in the future, and their reliance on Google technologies. He cov-ered the new buzzword “Mobile Ecosys-tem” as well.

Qualman’s book, Socialnomics, is worth the read. It explains how social media is transforming the way we live…and the way we all must do business. He claims that you can increase your business by 17% if you use social media correctly.

“Even Napoleon had his Watergate.”

Yes, Yogi said that, too. (Millennials may not remember Nixon, but I do.)

Overall Meeting Observations

Back in the General Session room, a question-and-answer period was under-way and the dealers asked a few relevant and not particularly unusual questions:

Q: What does the future hold for us?

Does Samsung plan on developing

a high speed printer perhaps?

A: We’ll see.

Q: When are the Samsung support

programs coming?

A: Very soon.

Q: Will we see a High Speed A4 Color

Product from Samsung?

A: It’s a future investment area.

I completely understand Samsung’s strategy to go after the mobile market. It makes sense for them. The company sells Android mobile phones and tablets, and therefore, Samsung has a strong back-ground in this area. Samsung has huge R&D resources and supposedly 44,000 software engineers. The company usually dominates any market it chooses to enter. That’s in its DNA.

But, Samsung is also late to arrive in a very competitive market and did not men-tion one very important thing.

It’s called DISTRIBUTION. Samsung has quite a few distribution outlets for its products, and some larger dealers across the country may not yet see Samsung as a serious provider.

Dealers want a few important things: a profitable margin, ongoing sales and ser-vice support, and a trusted partnership. Samsung delivers on some of these, and the company hopes to expand its national support levels. But it’s not yet “best-of-breed,” and Samsung’s competitors have been at it for a much longer time. So in or-der to be successful in the dealer channel, it is critical to avoid “Too many wrong mistakes,” as Yogi would term it. So, be while Samsung may what Yogi termed as “the overwhelming underdogs,” I wouldn’t sell the company short. As I al-ready said at the beginning, “The future ain’t what it used to be.”

“If the world were perfect, it wouldn’t be.” Yogi Berra got it right even when he got it wrong.

Samsung’s not yet perfect, but it has a long time to “get it right.” I’m sure it will, as it continues to improve each year. In five years, Samsung just may be right where it wants to be. I think if you bet against Samsung, you’ll probably lose!

• 19 •


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Questions About This Story?Contact CJ CannataPhone: (917) 514-9501Email: [email protected]

• 20 •

u Manufacturers with the largest dealers have historical-ly fared very well in terms of dealer revenue according to our rating system. This year, results were inverse. In terms of average revenue:

• Canon and Ricoh dealers fell to the bottom. • Toshiba, Sharp and KYOCERA dealers rose to the top. • Konica Minolta dealers came in at the bottom.

u These results suggest that the higher their revenue, the more likely dealers are to be increasingly demanding and critical of their primary suppliers.

u Dealer meetings continue to be a challenge for manu-facturers for the most part. Approximately 17% percent of dealers do not attend their primary vendors meetings. These dealers tend to be smaller, and they are also the ones that deliver the highest percentage of profits for their manufacturer partners.

u The dealer meeting attendance trend does appear to be shifting. Results indicated that attendance is up from last year, when 27% percent of dealers reported that they do not attended their primary manufacturer dealer meetings.

u Dealers’ most prevalent complaint about manufacturers re-garding production print is they price A3 (11” x 17”) prints as a single click. From the manufacturers’ standpoint, they are bidding the business where they believe the market is and the notion that dealers are conceding too much to the manufacturers is unrealistic. (However, the channel part-ners have a diametrically different objective than the man-ufacturers do. Independent dealers want to make a profit on everything they sell. The manufacturers, given their Japanese origin and the Japanese economic system, wants to keep their factories in full operation.

u Like all other companies, independent dealers operate their businesses to make a profit. Many American com-panies have lower revenues but sustain higher profits. Dealers want to emulate that model, not necessarily with lower revenues but with lower costs to offset declines in product margins.

u Manufacturers place higher quotas on their channel part-ners every year, while they continue to sustain a decline in product pricing. Thus, dealers not only have to sell more to meet their quotas, but also have to make up for the price deterioration.

2015 DEALER SURVEY Executive Summary (Part II of II)By Frank G. Cannata and CJ Cannata

In this question, we simply asked dealers to rate their primary A3 MFP supplier by using a scale of 1 to 5, with 5 being the

highest. With those results, we calculat-ed a combined rating, allocating 5 points for Excellent, 4 points for Very Good, 3

points for Good, 2 points for Weak, and 1 point for Poor. We then divided the total by the number of dealers that participated.

2015 Annual Dealer Survey Results and Analysis (Part II of II)

RATING POINTS

Excellent 5 Very Good 4 Good 3 Fair 2 Poor 1

54%

4%

20%

21%

PoorFairGoodVery GoodExcellent

2%

Exhibit 2.1: Dealers Rate Their Primary A3 Manufacturer–Canon

55%

11%

82%


2%

Exhibit 2.2: Dealers Rate Their Primary A3 Manufacturer–Konica Minolta

• 21 •

Rating: 3.78 Rating: 4.20

As stated in our last issue’s “Part I,” the total survey sample size is 280. In asking dealers to rate their MFP suppliers in “Part II” of our survey, results indicated sever-al historical consistencies. Dealers have continually rewarded certain suppliers and leasing companies with high marks. For those suppliers and leasing companies that

were not ranked as well, we believe these results should serve as a starting place for discussion at minimum.

To determine how dealers rated their sup-pliers, we used the adjacent 5-point sys-tem. Overall ratings were positive. At the same time, we believe all of the results

should be closely considered by the com-panies ranked, regardless of whether their scores were positive or negative.

Dealers Rate MFP Suppliers

Introduction

• 22 •

55%

22%

20%


2%1%

Exhibit 2.3: Dealers Rate Their Primary A3 Manufacturer–KYOCERA

56%

13%

28%


2%1%

Exhibit 2.4: Dealers Rate Their Primary A3 Manufacturer–Ricoh Family Group (RFG)

62%

10%

28%


Exhibit 2.5: Dealers Rate Their Primary A3 Manufacturer–Sharp

68%

11%

19%


2%

Exhibit 2.6: Dealers Rate Their Primary A3 Manufacturer–Toshiba


Rating: 4.36Rating: 4.39

On the whole, dealers rate their manu-facturers on the high side. Looking back to 2012 through today, we can see that dealers have had an increasing level of approval for their primary A3 suppliers. Although, we caution you to bear in mind that these types of questions tend to re-flect what a dealer was feeling at that par-ticular moment when he or she was com-pleting the survey.

The following chart shows the differences over the previous surveys. The years of the survey reflects the actual year of the data. It is easy to see how dealers trend-ed upward overall in their attitude toward their major A3 suppliers.

Dealers have consistently ranked Toshiba and Sharp as No. 1 and No. 2, respectively, over a five-year period. In our minds, there is no doubt that Toshiba and Sharp dealers value the relationship they have with these two companies. On the other side of the spectrum, Ricoh and Canon consistently rank the lowest of these six manufacturers.

Dealer MeetingsWe conducted this survey from May through July 2015. By the end of our survey, several of the manufacturers had already held dealer meetings in 2015. We

asked the dealers to evaluate the most re-cent dealer meeting they had attended for

their primary A3 manufacturer partner in our Survey.

• 23 •

3

4

5

Percentage Up

2015201420132012

0.8

1.0

1.2

Exhibit 2.7: Dealers Rate Primary A3 Manufacturers–Universe (Historical)

3

4

5

20152014201320122011

Dea

ler A

ppro

val R

atin

g

Toshiba

Canon

Sharp

KYOCERA

RFG

Konica Minolta

Exhibit 2.8: Dealers Rate Primary A3 Manufacturers–Individual

Exhibit 2.9: Dealer Non-Attendance at Primary Manufacturer Events

2012 2013 2014 2015

Canon 23% 22% 25% 15%Konica Minolta 25% 15% 14% 18%KYOCERA 1% 23% 20% 19% RFG 4% 11% 10% 12%Sharp 26% 19% 16% 22%Toshiba 33% 22% 23% 18%

Totals 27% 17% 17% 17%

• 24 •

As it pertains to this year 17 percent did not elect to attend their primary A3 man-ufacturer’s meeting, which is consistent with what we have seen over the past three years.

As we said last year, manufacturers must understand that too many of their dealers are being kept from becoming better in-formed about their products, programs, as well as each manufacturer’s current and future directions.

In addressing the reasoning behind deal-ers choosing not to attend, many have said they were not invited, had to pay, were too small, or did not meet the manufacturer’s quota. Others stated they couldn’t justify the expense or the time to attend, and these were not all small dealers.

While some manufacturers certainly do a better job pulling in dealers than oth-

ers for a meeting, for those that don’t, we think it is to their disadvantage. These meetings serve as excellent forums to display new products, convey corporate direction and obtain dealer feedback on all of the above.

Given the high percentage of dealers at-tending these meetings, it is clear dealers believe these meetings can offer a valu-able opportunity to hear firsthand from their manufacturers, as well as meet and discuss business with their fellow dealers. These meetings provide dealers with the time to share best practices, as well as learn how other dealers are coping with similar business issues.

We also recognize that dealers cannot realistically attend every manufacturer meeting, especially when they are carry-ing multiple lines. Not every dealer car-rying an MFP line makes an equal effort

with each of the manufacturers a dealer-ship represents.

For manufacturers being relegated to a second position for a dealer, a company meeting is an ideal opportunity to demon-strate to those dealers their importance to the manufacturer, in addition to showcas-ing products and services.

While we understand that the cost of these meetings is considerable for the manufac-turer, however, we believe they can justify the cost by winning “mind share,” which can only lead to increased sales.

In today’s product environment where much is considered “me too,” manufactur-ers must continue to explore new avenues to convince dealers to push their product lines over their competitors’ lines. As with most issues facing our industry, there are no easy roads to that end.

Similar to what we asked dealers about their primary A3 manufacturer partners

and providers in our survey, we asked dealers to rate their primary A4 manufac-

turers. Again, we focused primarily on the Big Six.

Dealers Rate A4 Manufacturers

75%

4%2%

19%


Exhibit 2.10: Dealers Rate Their Primary A4 Manufacturer–Canon

67%

13%

3%

17%


Exhibit 2.11: Dealers Rate Their Primary A4 Manufacturer–Konica Minolta


45%

4%

17%

33%


1%

Exhibit 2.12: Dealers Rate Thier Primary A4 Manufacturers–KYOCERA

70%

5%2%

22%


1%

Exhibit 2.13: Dealers Rate Their Primary A4 Manufacturer–RFG


69%

9%

22%


Exhibit 2.14: Dealers Rate Their Primary A4 Manufacturer–Sharp

52%

10%

36%


2%

Exhibit 2.15: Dealers Rate Their Primary A4 Manufacturer–Toshiba

• 25 •



7%4%

43%

46*%

Exhibit 2.19: Dealers Rate Leading A4 Manufacturers–Lexmark

• 26 •

4

5

20152014

Exhibit 2.16: Average Dealer Ratings of A4 Manufacturers

Leading A4 Manufacturers Rated by Dealers

For this query in our 2015 survey, we restricted dealer evalua-tions to the following five companies: KYOCERA, Lexmark, Samsung and HP.

While we are aware that Canon, Konica Minolta, Ricoh and Sharp have an A4 presence, we believe the best way to deter-mine what dealers think of about these specific five manufac-turers is to narrow the scope.


25% 25%

25% 25%

Exhibit 2.17: Dealers Rate Leading A4 Manufacturers–HP Inc.


7%5%

18%

70*%

Exhibit 2.18: Dealers Rate Leading A4 Manufacturers–KYOCERA

* Of the dealers that noted that KYOCERA provided excellent product, 71% of them were KYOCERA dealers. If we were to include Canon, Konica Mi-nolta and Sharp selections of the dealers who carried both their A3 and A4 products, we would see similar spikes. However, with the results of these specific KYOCERA dealers, the manufacturer was able to garner a 4.45 rating. If you remove the rankings of that 71%, KYOCERA’s rating would have fallen to 3.59.


100%

Exhibit 2.20: Dealers Rate Leading A4 Manufacturers–Muratec


30%

10%

20%

40%

Exhibit 2.21:Dealers Rate Leading A4 Manufacturers–Samsung

After tallying the ratings, these five manufacturers garnered an average rating of 4.36. This high rating supports the relative strength of these companies in the A4 arena.

When the economy went sour from 2008 and into 2009, dealers were having a great deal of difficulty in obtaining approvals for many of their requests. There were “toxic” codes such as real estate, con-

struction and mortgage companies. To overcome these hurdles, dealers resorted to two solutions.

The first was to use multiple financial

partners, which put a strain on an already fragile situation. We, as would many oth-ers, term the exercise “dialing for dol-lars.” Placing the same lease with mul-tiple vendors, at the same time, placed a

Leasing Companies: Perception and Penetration

• 27 •


11%

7%

22%59%

1%

Exhibit 2.22: Dealers Rate A4 Manufacturers–Total Universe*

* Includes Japanese Big Six, HP, KYOCERA, Lexmark, Muratec and Samsung

growing burden on the organizations that rely on dealers to understand the costs they are adding to the leasing companies at the worst possible time. There is an opportunity cost to examine and either approve or reject a lease. Leasing com-panies knew what was going on. Fortu-nately, the practice of dialing for dollars seems to be abated.

In an effort to track this type of activity, we have continued to monitor the number of leasing companies utilize and compare those results with prior years.

We have tabulated that 10% of dealers use internal leasing from our 2015 survey re-sults, compared with the 8% we tabulated from our 2014 survey results. However,

on average dealers are overall using more than two leasing partners.

In comparison with 2014’s results, deal-ers have slightly increased the number of leasing companies they are utilizing. That said, there was 25% of dealers use of four leasing companies to service their fleets. We have to ask the question why.

• 28 •

0

5

10

15

20

25

201520142013

Leas

ing

Part

ners

per

Dea

ler

Toshiba

Canon

Sharp

KYOCERA

RFG

Konica Minolta

Exhibit 2.24: Percentage of Dealers Performing Own Leasing

2.0

2.5

3.0

201520142013

Leas

ing

Part

ners

per

Dea

ler

Toshiba

Canon

Sharp

KYOCERA

RFG

Konica Minolta

Exhibit 2.23: Average Number of Leasing Partners per Dealer by Primary Manufacturer)

• 29 •

Exhibit 2.25: Dealers Rate Leasing Partners by Primary Manufacturer–Canon

Leasing Vendor Excellent Provides us with Good in Fair and could Poor and not the in every way very good print every area be better with type of partner management & necessary lower rates we want competitive rates

CFS 8 1 – – –CIT 1 2 – – –DLL 1 3 2 – –GreatAmerica – 3 – – –U.S. Bank – 2 – – –

Totals: 10 11 2

2015 Canon Average Dealer Rating of All Their Leasing Partners: 4.00 2014 Canon Average Dealer Rating of All Their Leasing Partners: 3.63

Exhibit 2.26: Dealers Rate Leasing Partners by Primary Manufacturer–Konica Minolta


CIT 4 1 1 – –DLL 9 4 1 – –Everbank 4 1 – – –GreatAmerica 9 3 – – –GE 2 1 1 – –Marlin 2 1 1 1 –U.S. Bank 7 1 – – –

Totals: 37 12 4 1 –

2015 Konica Minolta Average Dealer Rating of All Their Leasing Partners: 4.122014 Konica Minolta Average Dealer Rating of All Their Leasing Partners: 3.79

The low interest rate environment con-tinues to make leasing across multiple partners very attractive. Companies such as Everbank have been doing an excellent job of enticing dealers to take on an added partner in leasing.

RatingsRatings by Manufacturer Partner

Here, we asked dealers to rank leasing

partners using the following criteria: helps the dealer increase revenue; pro-vides back room support; introduces products and services that help dealers make the transition into print manage-ment; and provides competitive rates.

We first measure how the individual deal-ers, by vendor, feel about their primary leasing partner. In this analayis as well, we use a 5.0 system to give a numerical value to the individual manufacturer’s

group of dealers and their respective leas-ing partners.

We had difficulties in this area last year for several reasons. That aside if you want to take these numbers apart please be our guest. Here we divide the value by the to-tal number of dealers from the six major manufacturers and assign no value to the eight others. While there were 23 dealers who indicated that they had an internal leasing organization they still listed rela-

• 30 •

Exhibit 2.27: Dealers Rate Leasing Partners by Primary Manufacturer–KYOCERA


CIT 1 – – – –DLL 3 1 – – –Everbank 6 – 1 – –GreatAmerica 2 – 2 – –GE 2 – 2 – –Leaf 1 – 1 – –Marlin – – – 1 –U.S. Bank 4 – – – –Wells Fargo 2 1 – – –Other 1 – – – –

Totals: 22 2 6 1 –

2015 KYOCERA Average Dealer Rating of All Their Leasing Partners: 4.31 2014 KYOCERA Average Dealer Rating of All Their Leasing Partners: 3.77

Exhibit 2.28: Dealers Rate Leasing Partners by Primary Manufacturer–RFG


CIT DLL 4 4 3 – – Everbank – 1 1 – –GreatAmerica 13 – – – –GE – – – – –Leaf 2 – – 1 –Marlin – – – – 1U.S. Bank 13 2 3 1 –Wells Fargo – 1 – – –

Totals: 32 8 7 2 1

2015 Ricoh Family Group Average Dealer Rating of All Their Leasing Partners: 3.882014 Ricoh Family Group Average Dealer Rating of All Their Leasing Partners: 3.98

tionships with at least one or two of the recognized leasing companies.

The year before we were almost identical with the previous year’s number and a little

bit higher than the numbers we calculated from our 2011 survey. All in all we believe this indicates an improved leasing environ-ment and dealers are feeling far less san-guine then they were four years ago.

Ratings by Dealer

In the past, we included only those leas-ing companies with 25 dealers or more in-dicating that they were a primary leasing

• 31 •

Exhibit 2.29: Dealers Rate Leasing Partners by Primary Manufacturer–Sharp


CIT 3 – 1 1 – DLL 5 2 – – –Everbank 1 2 – – –GreatAmerica 5 2 – – –GE 5 – 1 1 –Leaf 1 1 1 – –Marlin 2 2 – 1 –U.S. Bank – – – – –Wells Fargo 3 1 – – –Other – – – 1 –

Totals: 25 10 3 4 –

2015 Sharp Average Dealer Rating of All Their Leasing Partners: 3.962014 Sharp Average Dealer Rating of All Their Leasing Partners: 3.58

Exhibit 2.30: Dealers Rate Leasing Partners by Primary Manufacturer–Toshiba


CIT DLL 2 1 – – – Everbank 2 2 1 – – GreatAmerica 10 1 – – –GE 3 2 1 – –Leaf – 1 1 – 1Marlin – 1 2 – –U.S. Bank 7 4 – - – Wells Fargo – 1 1 2 –Other 1 3 – – –

Totals: 25 16 6 2 1

2015 Toshiba Average Dealer Rating of All Their Leasing Partners: 4.28 2014 Toshiba Average Dealer Rating of All Their Leasing Partners: 4.01

partner. This year, only three firms qual-ified using that criteria: GreatAmerica, U.S. Bank and De Lage Landen. Coming in a close fourth was Everbank, which

had 21 dealers responding that the com-pany was their primary leasing partner. This year, it is the first time Everbank is included in the top four leasing partners

for dealers. From our perspective, ratings for all the leasing companies were ex-tremely high, indicating a strong level of dealer satisfaction with leasing partners.

The top four leasing companies noted in the 2014 survey [GreatAmerica Financial Services (GreatAmerica), U.S. Bank, De Lage Landen and GE Capital] represent-ed 62% of the leasing universe. Across the board, we believe that is a valid num-ber for the independent dealer communi-ty. Additionally, in total, the lowest rating was a 3.7 for a single leasing partner in this group of four, and the four leasing partners average a rating of 4.1 on a 5.0 point scale.

In 2015, the top four leasing partners (GreatAmerica, U.S. Bank, De Lage Landen and Everbank) represented 55% of all respondents. This lower percentage compared to 2014’s 62% reflects the in-creasing competition currently found in the universe of equipment leasing.

When leasing company representatives walk through a dealer’s door, they know they are in for a struggle. The good ones realize they have to earn a dealer‘s busi-ness. Dealer expectations are high and their demands equal those expectations. Conversely, when the time comes to hand out plaudits, they do it with grace and often a lot of appreciation. I believe that was the case here.

At the same time, dealers are not averse to calling someone out. No vendor ever calling upon dealers comes away with a 100% approval rating, which is why we give dealers a broad range of options from which to select.

That said, we believe these results rep-resent a very accurate appraisal of how dealers currently feel toward the four leading leasing organizations, that are clearly doing a good job of supporting their dealerships.

Leasing Partner Summary

This year, the responding dealers ranked leasing companies significantly higher than any other previous survey. With a 5.0 rating system, each of the top four leasing companies rated higher than a 4.4. That is amazing performance. The survey re-sults indicated that 36.4% of all the deal-ers participating rated their leasing source as one of the top four and collectively ranked them at a 4.6. In simplest terms, that is what I call smoking.

• 32 •

3

4

5

20152014201220122011To

tal R

atin

gs

Exhibit 2.31: Total Universe Leasing Partner Ratings

66%

8%

25%

2015

Poor

Fair

Good

Very Good

Excellent

42%

3%

39%

16%

2014

* Universe includes GreatAmerica, U.S. Bank, De Lage Landen and GE Capital.

Exhibit 2.33: Dealers Rate Leasing Partners–Universe* (2014 vs. 2015)

*Universe includes GreatAmerica, U.S. Bank, De Lage Landen and Everbank.


79%

5%

16%

2014 2015

Poor

Fair

Good

Very Good

Excellent

69%

29%

2%

Exhibit 2.34: Dealers Rate GreatAmerica (2014 vs. 2015)

69%

7%

24%

2014 2015

Poor

Fair

Good

Very Good

Excellent

36%

3%

51%

10%

Exhibit 2.35: Dealers Rate U.S. Bank (2014 vs. 2015)

53%

13%

34%

2014 2015

Poor

Fair

Good

Very Good

Excellent15%

4%

38%

43%

Exhibit 2.37: Dealers Rate De Lage Landen (2014 vs. 2015)




• 33 •

• 34 •

0% 20% 40% 60% 80% 100%

Universe

Everbank

De Lage Landen

U.S. Bank

Great America

Poor

Fair

Good

Very Good

Excellent

79% 16% 5%

69% 24% 7%

53% 34% 13%

62% 29% 9%

66% 25% 8%

Exhibit 2.41: Leasing Partner Ratings Trends–Top Four vs. Universe

Exhibit 2.39: Dealers Rate GE Capital (2014)

40%

12%

35%

2014

Poor

Fair

Good

Very Good

Excellent

13%

Rating: 3.8

62%

9%

29%

2015

Poor

Fair

Good

Very Good

Excellent

Exhibit 2.40: Dealers Rate Everbank (2015)

Rating: 4.5

In our 2011 survey, we openly discussed the difficulties resulting from the poor economy, such as friction between leas-ing companies and dealers. At that point, dealers rated their leasing partners with a 3.44. Today, dealers ranked their leasing

partners at a 4.6. While the improving economy and the continuing availability of low interest rates has brought added competition into the financial markets, leasing partners continue to improve their games and satisfy their customers.

Last year, we stated that we believes the leasing climate would continue to im-prove as dealers made greater inroads into the production print arena. We also said we thought the upward trend would continue. With dealers maintaining rela-

Given the increasing importance of the Services and Solutions segments, we posed the following question in our 29th Annual Dealer Survey last year:

List the companies, other than MPF and printer manufacturers, that provide products and services to your dealership whom you would rate best? The criteria are: Provides your tools and correspond-ing software Enables you to add consid-erable value to the customer Allows you to more deeply penetrate the market.

This year, we felt the need to incorporate a little more clarity and context. Here’s how the question read this year:

Which company, not including hardware manufacturers of any kind (copy/print/scan) or leasing company provides you with outstanding products and support and enables you to compete very effec-tively in the market place?

See how the results broke down in Exhib-it 2.43 below.

Note that we received many votes for leasing companies this year, which we had hoped would not be the case and we disqualified those responses. However, we experienced this to a lesser degree than last year. Next year, we will attempt to reword the question again as explic-itly as possible to try an ensure answers across the board omit leasing companies (as well as hardware manufacturers).

For those of you who participated in the survey, these questions (both the 2014 and 2015 versions) were designed to acknowl-edge the road that software solutions are playing a substantial role in the evolution of our industry today. We encourage all 2016 survey participants to strongly con-sider this when taking next year’s survey.

Service and Solutions Partners

• 35 •

0

1

2

3

4

5

2015

2014

GE CapitalEverbankDe Lage Landen

U.S.BankGreatAmerica

Leas

ing C

ompa

ny R

ating

s 4.6 4.7

4.0

4.6

3.7

4.4 4.5

0

3.8

0

Exhibit 2.42: Dealers Rate Leasing Partners (2014–2015)

0%

5%

10%

15%

20%

25%

30%

Other*ContinuumDocu-Ware

Supplies Network

PaperCutLMI Solutions

Square 9

Perc

enta

ge o

f Dea

lers

28%

24%

5%

15%

9%6%

3%

Exhibit 2.43: Dealers Rate Solutions and Services Partners

* Includes Clover (West Point), Digital Gateway and Laserfiche, all of which individually yielded the same results at less than 2%.

2014 Services and Solution Partner Ratings

1. PaperCut2. Square 93. LMI Solutions4. FM AUDIT5. Mail Room, Print Fleet, NSI Au-

toStore and Nuance (tie)6. EFI7. Continuum and KATUN (tie)8. CEO Juice

tionships with at least two or more leasing vendors, we can surmise that they have a preferential leasing source, and when they are turned down, they go to a secondary source. Leveraging vendors is part of the game. We are still great believers in loy-alty between vendors and merchants, but only when it is earned.

2015 DEALER SURVEY Editor’s Notes and Conclusions

Looking at the survey results as a whole, we wanted to make a few editorial comments, which we

rarely do in presenting our survey results.

u First, we paid close attention to the Sharp dealers that responded to the survey. As a group, they appear to be doing well, especially given the troublesome financial news Sharp has been bombarded with. President Doug Albregts and his staff have done a very good job of ensuring that the dealers were aware of all the facts and that there is a tomor-row for Sharp dealers.

u Sharp has effectively assured dealers that the manufacturer has a strong future in the business technology segment of their offerings.

u Ricoh continues to show improve-ment overall, and we have to give Vice President of Dealer Sales Jim Coriddi credit as well. Dealers gave him a very warm welcome at the company’s June 2012 meeting, and it was clear dealers were looking for

Coriddi to resolve the communica-tion difficulties they were encoun-tering. Based on the Ricoh dealers’ performance in this survey, Coriddi and his team have more than done their jobs. We tip our hats to the dealer group out of West Caldwell for a job well done.

u Ricoh and Jim Coriddi continue to show overall improvement from dealers’ perspective.

u Dealers aggregately rated Toshi-ba executives more favorably than those of any other manufacturer. Toshiba continues to support its dealers in a manner that must be

commended. I would like to note that survey participants rated sev-eral senior Toshiba executives very highly. In the categories of “Best Executive” and “Best Woman Exec-utive,” Scott Maccabe, Larry White, Sue Wilson and Sally Anderson all received substantial votes. No other company had more than two votes across both of these categories.

u No other company received more

than two votes across the catego-ries of “Best Executive” and “Best Woman Executive” than Toshiba, and both Scott Maccabe and Sue Wilson made the top four.

As we move forward, we will continue to hone our approach to the survey, as we strive to validate the data we collect. Our approach to next year’s survey will be decidedly different. You will be hearing more about it beginning in January 2016 issue, as we turn the calendar to our 37th year as a business. We will continue to forge ahead with our best efforts to serve the best distribution organization in this country in the manner they deserve.

• 36 •

By Frank G. Cannata

No other company re-ceived more than two

votes across the categories of “Best Executive” and

“Best Woman Executive” than Toshiba, and both

Scott Maccabe and Sue Wilson made the top four.

• 37 •

Rearview MirrorAfter working intensively for close to four months, we want to step back and revisit this survey with some additional more in depth comments. As we noted earlier, there were a lot of positives in the results and unfortunately, some neg-atives. One of the most satisfying results is the increase of dealers crossing over the $5 million in revenue mark, which we recognize is partly attributed to the continuing consolidation of the inde-pendent dealer channel.

We do not live in a vacuum, and the consolidation of industry is occurring across the board. Virtually every eco-nomic sector (except healthcare, edu-cation and government) is searching for ways to achieve a greater and more efficient economy of mass. It is readily apparent that everyone understands that we are in a global economy.

The most successful business people are investing in avenues for growth and profit. The decisions of where and how to invest are being made on the basis of possessing the best possible informa-tion. We are providing one small piece of that database, and hopefully, all of our readers will avail themselves of the whole litany of periodicals that address our industry and its interaction in the general economy.

Providing a valuable resource is one driving reason why we conducted a spe-cial presentation on industrial printing at September’s Graph Expo 2015 in Chi-cago. Our concern was that not enough dealers would elect to delve into this area of the print world. It offers stagger-ing growth and fits right in the dealers’ wheelhouse. To ignore or not even con-sider the need to find areas of business

“outside of the office space” is an invi-tation to failure.

We certainly have not lost our confi-dence in the independent dealer, de-spite the consolidation. This year’s survey underscores dealers understand the necessity of participating in the ser-vices business and are adapting to the new technology. They are currently providing their customers a far greater level of service than they have in the past. As they morph into becoming true services providers, they will create a new, more vibrant channel of distribu-tion. However, it cannot remain a via-ble channel if dealers elect not to seek other areas of opportunity, such as in-dustrial printing.

As we read the scientific literature, try-ing to understand how it will impact all of us is no small feat. Perhaps, for the first time, we are concerned about the future. We cannot allow this great coun-try to lose its competitive edge. That is my personal growing fear. In my opin-ion, we are not investing in education, and many of the young people have ei-ther not been able to receive a quality education or come out of universities and colleges with an enormous debt.

Jobs go begging because not enough people are sufficiently trained to take advantage of the opportunities. We have to do a better job of educating our young and ensure that they have an education that is second to none. At the same time, students should not be leaving colleges all over this country with a debt far greater than their parents’ mortgage.

We live in a global economy, and that means these young people are compet-ing for jobs around the world. When I was growing up, my parents bought their shoes that were manufactured in

Boston, their clothes were designed and manufactured in the great northeastern cities such as Boston, New York and Philadelphia, their cars came from De-troit, and their gasoline was pumped from the ground in Texas, Oklahoma, Louisiana and California. Parents of my generation sent us to colleges and uni-versities that were better than anywhere else around the globe in record num-bers. We were consistently the leaders in the world of education and in devel-opment of technology. We were also considered No. 1 in sending our youth to college.

Today, we are ranked sixth among the advanced nations of the world in send-ing our children to higher education.

Two years ago, we wrote about the ne-cessity to graduate more engineers to fill jobs here in the U.S. At that time, it was believed our nation was short about 75,000 engineers each year. With an unemployment rate that has per-sisted over 5%, it is not a far jump to understand how we can pull that rate further down. As I said then, students who are gradu-ating from higher education must con-sider the opportunities before choosing their paths. Educations that emphasize math and science have a far great-er breadth of opportunity in our na-tion. Just look at Silicon Valley, where business continues to boom. And look closely at our own industry, where our jobs have become increasingly techni-cal with the continued evolution and spread of technology.

Not only do we need to educate our young, but we also have to make sure that education is in areas that offer the greatest opportunity.

CR

• 38 •

To set the stage for this dealer pro-file, I’d like to revisit the history of the copier dealer. In the early 1950s, companies such as Kodak and 3M established copier dealers. APECO was a copier manufacturer that orig-inally launched in 1939 and incorpo-rated in 1954 as American Photo-copy Equipment Company. APECO sold its products exclusively through direct branches, and in 1955, it opened up M&M Sales as its “first” copier dealer in Des Moines, Iowa. Sixty years later, this dealership is still owned and operated by one of the company’s original family mem-bers, Tom Minor.

In 1951, copier manufacturers did not employ a dealer channel. Kodak only started selling specialty cam-eras to professional photographers and printers through dealers after World War II ended in 1945. In 195,1 3M introduced the Thermo Fax copi-er, which was an early version of the copier machine, and sold them to dealers who were primarily situated in secondary markets.

It could be said that typewriter deal-ers who also sold 3M “copiers” were the earliest adopters to the new tech-nology that has continued to evolve

right up until today. For more informa-tion on the transformation of this par-ticular business from typewriters to copiers, I encourage you to reach out to Brent Hoskins, Executive Director of Business Technology Association, which is the descendant of the Na-tional Office Machine Dealers that were primarily typewriter dealers. In 1959, Xerox 914 was introduced as the first true plain paper copier and emulated the earlier copier man-ufacturers in that Xerox only sold di-rect. As a result, dealerships were opened primarily in secondary mar-kets. Think of Utica, New York; Erie, Pennsylvania; Lima, Ohio; Tupelo, Mississippi; and Lubbock, Texas. These were the places where copier dealerships established themselves in the late 1950s through the early 1970s. At our industry’s peak (1975–1985), there were over 6,000 copier dealerships in the United States. To-day, there are less than 2,000.

Gordon Flesch back in 1973 was one of those dealerships that start-ed in a secondary market and has grown to be one of the top three dealerships (from a revenue stand-point) in the U.S. today. I had the privilege of meeting Gordon Flesch

in back in 1973 while I was working with Saxon Industries, and it was my very first experience calling on a dealer with my then Regional Manag-er Paul Fox. This is a story I have told many times before, and after visiting with this dealership, I gained a great respect for the entrepreneurial spirit exhibited by these small businesses that one day would become very sig-nificant distribution partners for off-shore manufacturers.

Dealers could not have become what they are today without the Jap-anese copier manufacturers, and those same manufacturers could not have quickly gained a foothold in our country without these dealers.

• 39 •

2015 DEALER PROFILE SERIES By Frank G. Cannata

No. 4 of 4: Gordon Flesch Company, Inc. Presented by LMI Solutions

Tom Flesch CEO, Gordon Flesch Company, Inc.

• 40 •

In 1956, Gordon Flesch was a leader in bringing modern business technology to the office environment in the greater Madison, Wisconsin area. He was one of the pioneers in the building of the copier dealer business model. Flesch and his company recognized early on the way to a sustainable business model was by servicing their customers and staying as close as possible to them. Machines were not very reliable, but if you were there to repair or replace them, the cus-tomers came to appreciate the rapid and courteous response to these often-trou-blesome copiers.

Using service as its foundation to build a relationship of mutual trust and respect, Gordon Flesch found that dealers could help its customers improve their over-all business processes and the company was quick to deliver and support the lat-est models, which only further strength-en the relationship. More than just an equipment reseller, the Gordon Flesch Company came to be known as an or-ganization that provided service that was second to none. As the technology evolved, Gordon Flesch Company be-came recognized for not only its break-and-fix capabilities but also its business solutions expertise.

Today, Flesch’s sons, Bill, John and Tom, honor the commitment to service made by their father, and it remains a cornerstone of the company’s corporate culture. This family-owned business has transitioned from an equipment reseller to an integrated business technology solutions provider. The markets Flesch serves today have grown to include the entire Great Lakes Region. The com-pany has evolved to meet the changing needs of business, providing customers with the latest technology that meets the requirements of businesses today.

Gordon Flesch’s corporate headquar-ters is located in Madison, Wisconsin. The company has 14 branches in all, which pretty much covers the states of Wisconsin, Illinois, Indiana and Ohio. These branches are situated in Appleton, Janesville and Milwaukee, Wisconsin, and Indianapolis and Bloomington, In-

diana. You will also find Gordon Flesch locations in Geneva, Chicago, Rockford and Vernon Hills, Illinois. There are five offices in Ohio, with branches in Columbus, Mansfield, Chillicothe, Lan-caster and Newark.

Vendors that provide this company with products recognize that they have a powerful partner in Gordon Flesch Company. On its own, Gordon Flesch actually has the potential to satisfy the distribution for an entire region. That is not something one normally associates with an independent dealer.

“The Gordon Flesch Company is one of our oldest and our largest independent dealers,” said Mason Olds, Senior Vice President of Canon USA. “Under Tom [Flesch]’s leadership, they provide in-dustry-leading satisfaction to their cus-tomers, are great partners, very stable and a real class act. It is certainly Can-on’s pleasure to be associated with the Gordon Flesch Company all these years and into the future.”

“The Flesch family and team has set the bar high for offering best in class service and support to their customer base,” said Doug Albregts, President of Sharp Imaging and Information Com-pany of America. “I’m not sure I’ve come across a company that has gar-nered so much respect from its peers, competition and customers alike. They are simply great people.”

A Sit Down With Tom

We had an opportunity to sit down with Tom Flesch, the current CEO of Gor-don Flesch Company. Over a period of about an hour, we learned quite a bit about why the Gordon Flesch business has grown to the position that it holds today as the third largest privately held dealership in the United States.

CR Let’s start off with your busi-ness performance. What was

your revenue for your most recent fiscal year? And as a follow up, was it up or down? What were the con-tributory factors that enabled you to achieve those results?

TF: We finished 2015 with $154 mil-lion, and it was up in single digits. It is difficult to single out individual areas that attributed to a successful result. That said, I would have to say that an important factor was our ability to land very large new customers. If there were a single reason, that would be it. Fol-lowing major account wins, we had a great deal of positive results with school systems and in banking. You have got to get net new customers to grow, espe-cially with all the pressure on volumes and clicks. Another important reason for our growth was the expansion into new markets such as Appleton, Wiscon-sin. That is part of an area we refer to as “The Fox Valley.” If you include Ap-pleton, Green Bay and Sheboygan and

Mark Flesch, VP, Sales–Eastern Region; Tom Flesch, CEO; Patrick Flesch, VP, Sales–Western Region

everything between, you have an area that encompasses 1 million people and a substantial collection of businesses in virtually every vertical.

CR What are your primary lines of business? Please include

both hardware and software. As a follow up, of the vendors you have partnered with, which have provid-ed your company with the closest possible support and highest level of communication?

TF: Our three primary lines are Canon, Sharp and Lexmark. I would add KYO-CERA to that. We have Perceptive from Lexmark, and their solutions portfo-lio is very strong, including ECM. We have been very lucky because all of our manufacturers and their dedicated account reps have provided excellent support to us, to our sales team and to our techs, however, communications between dealers and manufacturers could always improve.

CR With the growing importance of IT network services and

managed network services, how has your company transitioned itself to take advantage of this growing trend in our industry? As a follow up, what do you view as the ideal breakout of your revenue in terms of hardware and services, including both MPS and MNS?

TF: We launched our efforts in IT net-work services with a partner for three years. Our partner helped us get into the business. We developed our own desktop management and added other software to run out a comprehensive offering of solutions. At this point, we are expanding into the recurring ser-vices revenue and are providing cloud services, servers, and are moving very well into that area. We break out our revenue a little differently, which makes it seem as if we are not answering the question. Our current revenue break-out is 38 percent hardware, 45 percent services and 17 percent other revenue, which includes our leasing revenue, onsite services, ECM and IT services,

all of which have a recurring compo-nent. While we all know hardware sales drives everything, it is critical we be-lieve that dealers must have additional diverse revenue streams. As to what is the ideal breakout, I believe that will vary from dealership to dealership and market area to market area.

CR Color production print is an-other important area of the

business today. What percentage of your revenue is derived from this area? As a point of clarification, we do not consider print-for-pay as pro-duction print.

TF: We don’t look at production print on a monthly basis. We divide it into two areas, light and heavy production. For us, the light production space was up 32 percent, and heavy production was up 88 percent. That is directly attributable to Océ and its line of products that in-cludes varioPRINT in black and white. That has been very successful for us. In light production, the Canon 700/800 color series, as well as the 7200, have all been very strong. The Océ 6000 and 6200 series have done very well in the light production space, as long as we place them in the right locations. Our heavy production (color and mono) is up about 17 percent this year, while our light production (color) revenue is up about 10 percent. I can see our light pro-duction numbers increasing as we place more Canon 700/800 units.

CR In looking ahead, what do you believe this industry will look

like in five years? As a follow up, what do you believe you need to do to prepare Gordon Flesch Company for that future?

TF: I think for most dealers like us, the equipment business will still be with us. Most of the hardware has to be man-aged by software such as uniFLOW and PaperCut. You have to optimize the hardware and give the customer the tools that make the devices more effi-cient and productive. Going forward, we will see more and more of a blend of product such as a combination of Lex-

mark and Canon to give the customer the right product, software and IT ser-vices. You have to have the ability to manage all of that under one contract—one supplier and one invoice. That is the trend, one phone call for to obtain everything needed, including back-up servers. That is where we are now, but it will become commonplace in five years. The smaller dealers who cannot provide that will of necessity move out, unless they find something totally dif-ferent to offer their customers.

CR We always like to give those we interview an opportunity to

say whatever is on their mind to their suppliers, fellow dealers or the in-dustry, in general.

TF: We discussed a lot of what we are doing and where we are going. We rec-ognize that we have to be diversified. That is not going to change, and you have to evolve by adding more and more services for that client. Our manufactur-ers are all working on products they will offer to us over the next five years. I am positive they will offer new and differ-ent technologies. Dealers have to take a hard look at what they are providing because the current pricing models are not sustainable. Every dealer is afraid of direct branches, and manufacturers have to take a serious look at their branches and where they belong and where they do not belong. Dealers need to invest and provide their customers with all the appropriate services. Once you get to that point, it would be very difficult to lose a customer and price will not be an issue. I think all of the manufactur-ers are looking at the rules of engage-ment and working with their dealers. I am very optimistic about the future and feel it will be very good for the dealers if they make the changes necessary, if they do it right. If they have the finan-cial wherewithal to get it done, there is a very good future.

CR

Questions About This Story?Contact Frank G. Cannata Phone: (860) 614-9501Email: [email protected]

• 42 •

• 43 •

Independent dealers must enter the in-dustrial print arena—the print indus-try’s only real growth area—in order

to survive increasing pressures on MFP margins and cost per page to grow their business for the future. That was the key message The Cannata Report delivered at “The New Print,” The Cannata Report’s editorial event on September 15 during Graph Expo 2015.

“Independent dealers bring a unique method of distribution for industrial printers,” said Frank G. Cannata, Analyst, President, and Editor-in-Chief/Publisher, “The manner in which they service their customers and pay close attention to their needs is virtually unparalleled.”

The Cannata Report gathered a number of industry notables at its first ever event at Graph Expo who shared their insight and expertise and provided a 360-degree view of the industrial print arena for dealers. According to Frank G. Cannata, and CJ Cannata, analyst, partner and SVP brand strategy and development, there were a number of key takeaways from “The New Print: Vital Growth Opportunities for Dealers in the Industrial Space.”

Frank Romano, Professor Emeritus, Roch-

ester Institute of Technology, delivered the seminar’s keynote presentation, “The New Print,” after which we took the name for our inaugural industrial print event.

Romano stated, “Of course [dealers] can [play a major role in the distribution of in-dustrial printers]. The inks are not propri-etary and the ability to print on plastics and any kind of materials opens up to a whole range of output for commercial printers supported by the independent dealers you are talking about,” Romano said. “These new materials and suppliers are perfect for the dealers.”

On the financing front, Fred Carollo, VP, Everbank Commercial Finance spoke to two different funding options for dealers.

The first option includes “minimum com-mitted service and supplies revenue inter-est free, annual up front funding of mini-mum service and supplies in contract with a discount in the funding or passing ser-vice and supply revenue to a dealer when received,” Carollo said.

The second option includes “adding the first years’ service and supplies into the initial funding as a part of the equipment financing, which can be presented as year

one service with supplies included for a specific number of prints and can add re-maining years’ of services and supplies as pass through.”

Dealer attendees at the event represented nearly $900 million in aggregate annual revenue. In addition, a number of indus-try notables from the manufacturing, soft-ware, and services segments of the indus-try attended. These guests included EFI’s SVP, Worldwide Sales and Marketing Frank Mallozzi; Canon U.S.A.’s SVP and General Manager, Marketing and Profes-sional Services Dennis Amorosano; Kon-ica Minolta Business Solutions U.S.A., Inc.’s President and COO Rick Taylor; Ricoh Americas Corp.’s VP, Production Printing business group John Fulena; Clover Imaging Group’s SVP, Worldwide Sales and Marketing Luke Goldberg; ESP/SurgeX’s VP, Global Accounts Mike Naples; PSIGEN Software Inc.’s busi-ness development manager Chris Brown; and Square 9 Softworks Inc.’s VP, North American sales Jeff McWilliams.

CR

Questions About This Story?Contact CJ CannataPhone: (917) 514-9501Email: [email protected]

Industrial Print: The New Frontier2015 Graph Expo Event Outlines Opportunities for Dealers and ManufacturersBy CJ Cannata

• 44 •

Graph Expo 2015 Preview

• 46 •

While travel slowed this past sum-mer, we certainly made up for it following Labor Day. Having been away virtually every week since then, we’ve had a break this week and look forward to the Thanksgiv-ing holiday to follow.

After Thanksgiving, we have but one trip left. During the first week of December Frank and I will be in Dallas to visit with Ken Copeland, President, ASI; and Jim D’Emidio, President, Muratec America, Inc. From there, we head to Dallas for Sharp’s 2015 National Dealer Meet-ing. The team at Sharp always does a nice job balancing facts with fun, and we always enjoy the hospitality of the executive team run by Pres-ident Doug Albregts; SVP, Market-

ing, Supply Chain and Service Mike Marusic; and The Cannata Report’s 2015 Frank award recipient in the category of “Best Women Execu-tive” Laura Blackmer, SVP, Sales.

In terms of our business, we are prioritizing two issues. The first pertains to additional site updates. While we have substantially up-dated TheCannataReport.com, we have been encountering growing pains pertaining to site and load timing. While we have taking steps to speed up the site, we have a few more to go and anticipate optimi-zation will be complete by the first week of December. The second pertains to our publishing schedule. While we continue to upgrade the design and finishings, as well as ex-pand the breath, scope and amount of content in The Cannata Report magazine, we have fallen behind in terms of issue launch timing. Over the next several months, we con-

tinue working to correct this. By February or March, issues will be-gin to launch roughly between the 7th and 10th of every month (with the exception of June/July and De-cember/January, which will become special double issues).

In the meantime, look out for our next issue. Themed Production Print, it will primarily focus on Graph Expo 2015 and SGIA 2015, the lat-er of which we attended for the first time this year.

We thank everyone in the industry who values us for bearing with us as we navigate the challenges of growing almost too quickly, and we appreciate your steadfast support. This is one of many reasons I know I made the right decision to join The Cannata Report. We service and work with the most successful, yet humble and loyal leaders out there.

UP NEXTBy CJ Cannata

Sharp 2015 National Dealer Meeting**JW MarriottSan Antonio, TexasDecember 3–5

EFI Connect 2016*The WynnLas Vegas, Nev.January 19–22

SDG**Wild Horse PassChandler, Ariz.February 16–18

MWAi Executive Connection Summit**Hotel Valley HoScottsdale, Ariz.February 17–19

IBPI Regional and Annual MeetingInterContinental HotelNew Orleans, Louis.March 16–18

BTA Southeast “Spring Break”InterContinental HotelNew Orleans, Louis.March 18–19

CDA**The Ritz CarltonSan Juan, Puerto RicoMarch 18–20

BPCA Spring Best Practices**Atlanta Marriott BuckheadAtlanta, GAMay 9–12

Lexmark 2015 Dealer Meeting*Marriott Harbor BeachFt. Lauderdale, Fla.May 9–11

KYOCERA*TBAOrlando, Fla.May 16–18

Toshiba LEAD**Bellagio Hotel and CasinoLas Vegas, Nev.May 16–18

DRUPA 2016*Düsseldorf Exhibition CentreDüsseldorf, GermanyMay 31–June 10

Conflict Avoidance

CR

Editor’s Note: To date, Frank Cannata and CJ Cannata are scheduled to attend events marked with an “*”. Carol Cannata is scheduled to join us at events marked with an “**”. If you have questions about these or other industry events, please contact us at [email protected] or [email protected].

• 47 •

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