How much does your company spend printing documents out of computers? If you said not much, or you don’t know, you’re in for a nasty shock because you probably spend more than you imagine.
Printing documents is one of the few areas where companies don’t attempt to control costs because they think printing is cheap, says Paul J. Curlander, president and CEO of Lexmark International. But in fact, he says, many companies are spending between 1 and 2 percent of their revenue on hard copies. “If you can get on top of that, and architect it correctly, you can save anywhere from 30 to 50 percent. For every $100 you spend on PCs, you’ll spend another $60 on printing and supplies during the year.”
And if you’re wondering how Curlander knows this, it’s because his company, Lexmark, supplies printers to 20 percent of the Fortune 1000 accounts and is the world’s second largest provider of workgroup lasers and the fourth largest provider of color inkjet printers. And all of the company’s $2 billion in revenue comes from printers, print supplies, print software, or printing-related services.
But convincing large companies that they spend an outrageous sum on printing is difficult because many don’t even know how many printers they own. Even those that do, generally have no idea of what they cost to run.
“Only 5 percent of what you spend on a printer is hardware,” says Curlander. “Close to 45 percent is going to be the running costs, paper, toner, service costs, and 50 percent is hidden costs-management, support, installation, updates.” In fact, up to 50 percent of all calls handled by IT help desks relate to printers.
Lexmark says its approach to ‘owning’ its technology reduces costs and improves productivity. That is, all of Lexmark’s laser models look the same and use common features and supplies. “This makes them easier to support. And we have a graphical display that shows exactly what’s happening. When a call comes into the help desk they can bring up a screen and see how the printer is configured,” he says. “They can remotely access each printer from anywhere on the network and see the problem.”
One challenge facing Lexmark is a lack of brand recognition, which has forced it to develop a business model that falls halfway between the direct sales and the reseller method. Lexmark approaches Fortune 1000 accounts directly and, when it makes a sale, uses resellers to assist with the installation, similar to the way
On the retail side it seeks partnerships. Last year, Lexmark signed a deal with Compaq and Samsung; both companies now sell Lexmark printers with their logo on them. “If you walk into Office Depot you won’t find a Lexmark color inkjet, but we’re there as Compaq,” says Curlander. “In the
In 1998, Lexmark expected to sell more than 5 million printers. For the past three years the company has been growing at an annual compound rate of just over 50 percent, five times the industry average. Revenues, however, have not grown at this rate, because like computers, printer prices have fallen.
Like most high-tech areas, competition is tough and just a few dollars can sway a customer to a product made by another company. This means keeping an eye on the competition-and making sure no new players “steal” business. It’s a true challenge, given a constantly changing competitive IT landscape. “If you asked me today who my biggest competitor is, I’d say it’s H-P,” says Curlander. “If you ask me who it will be in five years it may be H-P, but it could also be Xerox.” Thinking ahead, he has already compared Xerox’s strategy with his own company’s.
“Xerox’s approach is to take copiers and transform them into digital copier/printers and connect them onto the network.” The problem with that strategy, he says, is that it actually inhibits productivity, because printers are typically shared by six people. “When you put the print stuff on top of a copier you get a very expensive device-$20,000, $30,000.
“We say the primary application is printing. Let’s focus on your printing as well as your copying. Let’s talk about all your hard copy and where you want to be on price/performance. “
Curlander’s greatest challenge now is dealing with change while keeping the company focused. “Today we’re selling mono laser printers and color inkjet print= ers,” says Curlander. “Ten years from now we’re going to be selling color business products, services, and printing instead of printers. We’ll be in the information appliance business. As we go forward we’re going to have to take some risks.”
PAUL J. CURLANDER
President and CEO
“Ten years from now, we’re going to be in the information appliance business…we’re going to have to take some risks.”
Family: Wife, Gretchen
Education: B.S. Electrical Engineering,
First job: Junior engineer at
Car: Green Jeep Cherokee.
Strongest influence: Father. “He was an engineer. I always knew I wanted to be an engineer.”
Leisure activities: “I like movies. I see everything with my wife.”
Favorite movies: Films from the ’40s. “
Last book read: Tom Clancy’s Patriot Games.
Best career move: Transferring to
Decision he would most like to retract: Lexmark’s decision to produce notebook computers.