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Workgroup Color: The Next Frontier

The Importance of Color in the Office

By the end of the decade, CAP Ventures is forecasting annual paper growth of only one-half of one percent a year. To grow revenue and profits, office equipment vendors must find a way to obtain more value from the pages being produced. Future profit growth for those in the office copying/printing equipment business is reliant upon the adoption of color in the office. The migration of even a small number of pages from black & white to color will generate substantially more revenue. Given market dynamics, this is one of the only ways that revenue will increase. As an example, if only 12% of the monochrome pages in the workgroup migrate to color, this represents a $1.06 billion increase in service and supply revenue, which represents an increase of slightly over 100%.

Table: Conversion from Black & White to Color at Various Price Points

Color Growth in the Office: A Disappointment

Until recently, all color technology was developed to meet the needs of the professional market. The workgroup was by and large not a target because of several factors:

• Too expensive (capital cost & operating cost)      
• Too complex to operate      
• Lack of any color copier/printer workflow in the office      
• Lack of functionality such as stapling and sorting, thus making it difficult to print multiple sets of documents

Although vendors realized the importance of the office, they had little success because they were trying to market products that did not fit. The old adage of “one size fits all” did not apply in this case. As a consequence, most placements to date have occurred in manned production environments. Color has been used by professionals and for “higher value” external business communication (documents that users were willing to pay a premium for). All of this has created a perception in the office regarding color that must be overcome before users will embrace the use of color in most of their documents. In the past, a similar thing happened in the personal environment with inkjet technology. Unfortunately, the legacy of color has left many users with the perception that color is expensive, complex, and sometimes unreliable. As a consequence, the use of color has been restricted in the office environment. To experience success in the color market, vendors must deploy a strategy that focuses on overcoming these perceptions. The good news is that CAP Ventures’ studies indicate that application owners believe that 30% to 50% of all applications printed in black & white would benefit from the use of full color. The main inhibitors are price, complexity, and access to color-capable devices.

The Good News: Technology Is Driving Positive Change

The market is moving toward the universal copier/printer, a device that can print color as well as monochrome at competitive prices with full functionality. Over the past year, we have seen the emergence of new technologies that are improving speed, cost, and functionality, thus enabling these products to be positioned as workgroup devices. These changes include:

• Tandem drum technology, which has resulted in higher speeds and lower equipment cost.      
• Chemical toner, which has lowered the cost per copy, created more consistent quality, and provided better substrate handling.      
• Monochrome copier-like features and functions that include high capacity feeding trays, better and faster scanning, and multiple finishing options that include online stitchers and booklet makers
• A dramatic example is illustrated in the following table, which shows how these new technologies have changed the product metrics in a short period of time.

Table: Old Technology vs. New Technology

This document has been abstracted from the CAP Ventures’ research report entitled “Workgroup Color: The Next Frontier,” which examines the behavior of workgroup members related to the use of color and color-capable devices. For more information about this and other CAP Ventures white papers, contact Alison Hipp at ext. 126.