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Office Document Solutions Market Forecast In years past, InfoTrends has written documents regarding the adoption rate of solutions within the office equipment market. At that time, solutions were really in the early stages of adoption, and OEM vendors and ISVs were in their initial posturing stages, as they were trying to determine how best to take advantage of solutions and how they would eventually fit into their overall marketing and sales strategies. While solutions are still in the early stages of technology adoption today, we have seen significant growth in this category over the years, and we believe that solutions have yet to reach their full potential for penetration within this market. In fact, new InfoTrends forecast data estimates that the overall office document solutions market will show a compound annual growth rate (CAGR) of 27% by 2011, with total revenues reaching $2.1 billion. This growth incorporates all revenue categories including software licenses, professional/support services, software maintenance, and installation services. Figure 1: Total U.S. Office Document Solutions Market Software maintenance will experience the most growth with an expected CAGR of 45% by 2011. Growth in this area is to be expected, as customers are maintaining these solutions for years after purchasing their initial software license. Professional services is experiencing more notable growth than it has in previous years with a CAGR of 35%, as more companies are charging for services such as consulting, installation, and post maintenance throughout the life of the solution. Channel Shifts Looking at the revenues and growth rates from a channel perspective, interesting shifts are occurring as a result of the change in dynamics of sales strategies that was not anticipated in previous years. There has been a lot of activity coming from the OEM vendor side of acquisitions in the market. This will show a stronger shift in the growth of direct sales organizations, which will become the strongest channel throughout the forecast period. The VAR or dealer communities are not lagging dramatically as they secure strong positioning as the #2 and #3 channels for solutions. Figure 2: Total U.S. Solutions Forecast by Channel
Although many dealers understand that solutions should be an integral part of their strategy, most are still in the process of figuring out how to incorporate them into their range of offerings. In addition, their propensity to fall back on the hardware products that they are used to selling is hindering them from migrating to the next level and fully embracing the true solutions sale. Nevertheless, within the office equipment market, hardware is becoming more difficult to differentiate; it is becoming a more replaceable commodity, and vendors are dropping their margins at a consistent rate to remain competitive. Other disruptive technologies and printer-based products are driving traditional laser-based MFP prices down, making it more and more difficult for equipment vendors and dealers to achieve a profit. Therefore, solutions and professional services have become the Holy Grail of the office equipment market, as they can be a huge differentiator in a hardware sale. A solution can be customized to fit within a customer’s workflow or environment to solve a problem or facilitate a task. It can improve a business process and increase the user’s productivity, and it can also create new business opportunities that can improve a company’s bottom line. Lastly, a solution can help a company achieve compliance and maintain undisrupted business operations. These attributes make solutions much more difficult to replace than a nondescript piece of hardware, and this is something that customers are willing to pay for. The preceding is an excerpt from InfoTrends’ forecast entitled “U.S. Network Document Solutions Forecast: 2006-2011”. To learn more about the reports or to make a purchase, visit our online store or contact Nicole Shown at +1 ext. 207 or . Copyright © 2007 InfoTrends. All rights reserved. Reproduction or reuse of InfoTrends materials is strictly prohibited without prior written consent. If you are interested in referencing InfoTrends’ content, please submit your request to . |
