• 1 •

• 3 •

EDITORIAL AND PUBLISHING

Frank G. Cannata 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

Karen Stewart Executive Producer, Digital Video

Charlene Piro Executive Producer, Print

Matt Stauble Events Photographer

CONTRIBUTORS

Bob Ingoglia Chief Marketing Correspondent

Bob Sostilio Chief Technology Correspondent

Tetsuo Kubo Japanese Correspondent

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

Subscriptions I Advertising I Licensing Reprints | Questions | Feedback

cjcannata@cannatareport.com(917) 514-9501

THECANNATAREPORTTheCannataReport.com

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: fgcannata@cannatareport.com. 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 cjcannata@cannatareport.com.

Visit TheCannataReport.comMay 2015

COVER STORY

20 I 2015 Virtual Panel Series SPECIAL EDITION: A4Manufacturer Executives Address Current Dealer Concerns

FEATURES

12 I GE Capital’s Exit StrategyTop Leasing Company to Divest Majority of Assets over Next Two Years

13 I Born in the U.S.A. The Cannata Report Officially Announces Theme and Beneficiaries of 30th Anniversary Event

14 I KYOCERA’s Power 2 Perform 2015 Dealer Meeting Stresses Partnership Approach and Sets the Stage for Success

24 I Heretofore A4 Forevermore The Increasing Vehicles of Choice for American End-Users

26 I HP’s Reimagined Office Printers: Compact and Powerful In Spite of or Because of the Freedom Advanced Technology Has Brought Employees, Physical Space Is Shrinking 28 I Content Kings Ricoh’s Relevant Digitally Anchored Advertising Strategy Effectively Emphasizes Engagement and Efficiency

DEPARTMENTS

6 I Hard Copy | From the Editor’s DeskNo. 16: The Inevitable Ascension of A4Frank Launches First-Ever A4-Themed Issue in Response to Dealer Inquiries

11 I Japanese Headlines Production IncreaseKonica Minolta Expands Global Marketing Print Management Services

31 I Mergers & Acquisitions Applied ExpansionMidwestern Dealer Influencer Merges with Promising IT Business Partner

32 I Veteran’s Way Freeman’s PhenomenonMedia Misrepresents Military Service and U.S. Army Captain’s Achievements

34 I Conflict Avoidance The Cannata Report Lists Industry Events and Forthcoming Cannata Sightings

34 I Up NextThe Cannata Report Launches 30th Anniversary Dealer Survey

This Month Quote:“I still battle with issues of insecurity, ego [and] pride every day. Too often those issues get in the way of me seeing the ‘Big Picture.’ But what I have learned is some of these powerful insecurities can be harnessed into life’s greatest motivator... It’s called a little old-fashioned fear.”

Jimmy IovineAmerican Entrepreneur, Record Producer and Film Producer; Co-founder of Interscope Records and Chairman of Interscope Geffen A&M Records

8 I INK Industry Awards, Acknowledgments and Sightings DOCUmation Hosts New Headquarters Grand Opening; Tod Pike Appointed New President of Mohegan LDI Enterprise; 2015 FOG Tournament Draws Top Dealers; Jeff Gau Named 2015 EY Entrepreneur of the Year Finalist; Continuum Confirms High-Performing MSP Partners to Speak at Navigate 2015

A4

SPEC

IAL

ISSU

E 20

TRENDS

SERVICES

THIS MONTH ON

A4 RisingThe latest feature Frank Can-nata wrote for Japan’s OA Life, edited by Tetsuo Kubo, our Japanese Correspon-dent, provides a 10-foot view of the past, current and future impact of A4 in the United States and sets the tone for this month’s A4 theme.

Paul Dippell Leads MNS WorkshopGreatAmerica will host a two-part Service Leadership, Inc. MNS Sales Training Workshop on June 23–24 at its headquar-ters in Cedar Rapids, Iowa.

TheCannataReport.com

Check out these features and stories at: TheCannataReport.com/Live-Wire

NEW

S MACHINE

Sharp and Continuum Form Strategic AllianceOEM selects the industry’s only channel-exclusive provider of fully integrated managed IT ser-vices solutions for dealer profit-ability and technical resources.

DEALER GROUPSThe Business Technology Association Presents Sharp with Top 2015 Channel’s Choice Award and Recognizes OthersBTA honors Sharp with the 2015 Channel’s Choice Superior Performance Award and other industry leaders as follows: GreatAmerica (Third-Party Leasing), Konica Minolta (Inventory Performance and Corporate Support Performance), KYOCERA (Outstanding Performance as a Secondary Product Line Provider/Coporate Support Performance) and MSE (Remanufactured Cartridges).

DocuWare Group Ap-points COODocuWare announces the ap-pointment of Timothy Sutter to the newly created role of COO, which includes global responsi-bilities for sales and marketing.

Sharp Back Out onthe RoadThe Boston event kicks off 2015’s tour with a state of print presentation and a dealer pan-el, followed by tracks for princi-pals and sales reps on day two.

MANUFACTURERSSOFTWARE

• 5 •

• 6 •

No. 16: The Inevitable Ascension of A4

This month we highlight the relevance and disruptive potential of the A4 MFP segment in our first-ever-themed A4 issue. This focus is in direct response to questions several dealers have posed about the potentially disruptive nature of A4 MFPs leading up to and during KYOCERA’s April dealer meeting. Of the 24 new products KYOCERA introduced or previewed, seven were A4 MFPs.

KYOCERA’s new models include robust features and provide many “answers” for customers who previously opted for an A3 product. Primary concerns related to the lack of finishing and paper handling that have been the most deficient in previous A4 MFP offerings. From what we saw, KYO-CERA has addressed these issues quite well. HP, Lexmark and Samsung have also been steadily improving their A4 product portfolios, while adding software — with document management being the most important — that satisfies many demands of contemporary MFP customers.

In our lead story this month, we feature three A4 panelists who describe where A4 is today, as well as the fundamental differences between A3 and A4. The bottom line is that they are each more or less convinced that these two product lines are compatible, and dealers who sell both are better for it.

By virtue of selling more A4 and less A3, dealers may experience a deterioration in average unit pricing. Reps will have to sell more to stay even, and forget about growth. Therein lies the crux of the matter. The counters to these issues are managed print and IT services, with production print also equalizing the situation. For us, production print does not include print for pay. We are talking about 75- to 90-PPM color digital presses that can handle Variable Data Processing and a digital front-end with software that includes remote device monitoring and all the capabilities of the cloud.

For dealers looking to sell A4 MFPs in any significant numbers, we think their best bet is to sell them under a fleet-type contract that cumulatively gives them an accepted level of margin and profit, enabling dealers to compensate employees and derive nec-essary profit levels. A conscious, and even delicate, balance of A4 placements with A3 installs would enable steady growth by virtue of addressing a much wider range of the market. The concept is simple, but the execution is not.

Instead of simply writing A4s off as disruptive, we challenge interested dealers to find a way to incorporate A4 products in their portfolios by fulfilling a market niche where A4s can be installed in conjunction with the more desirable A3 models. This isn’t a new approach to A4s. In fact, dealers are doing this every day.

This A4-dedicated issue marks the beginning of another strategy to continue providing our audience with a wider breadth of content and views from additional writers. We are pleased to announce we will be running content authored by Buyers Lab (BLI). BLI is a well-respected organization that conducts hands-on testing and evaluations of hardware and software for the document imaging industry. BLI’s reporting provides our readers with tested information, adding a new dimension to our publi-cation. This month, we are pleased to include an overview of some of HP’s new offerings by Marlene Orr, one of BLI’s Senior Analysts.

Lastly, this month marks the launch of our 30th Anniversary Dealer Survey. Please visit www.TheCannataReport.com/Sur-vey30 this month to take it. We thank all dealers in advance for their participation.

Sincerely,

Frank G. CannataEditor-In-Chief and Publisher

HARDCOPY From the Editor’s Desk

• 8 •

On Friday, May 1, DOCUmation held a Grand Opening celebration and ribbon cutting for its new 46,000 sq. ft. facility. Over 200 guests attended, representing more than 130 companies from the Great-er San Antonio, Texas, area and beyond. Guests included business owners and de-cision makers from many of DOCUma-tion’s customers and partners across education, government, non-profit and faculty in San Antonio, Texas.

Representatives from DOCUmation’s manufacturer partners, including Ricoh and KYOCERA, and finance partners also attended.

The opening ceremonies of the event fea-tured presentations by keynote speaker Gordon Hartman, Founder of Morgan’s Wonderland and owner of the San Anto-nio Scorpions NASL Soccer Team; Ron Nirenberg, San Antonio City Council-

man; Lynn Hickey, Director of Athletics for UTSA; and a formal ribbon cutting by DOCUmations’s Founder and Chairman, Lou Scantland.

Following the ribbon cutting, DOCUma-tion hosted a celebration, featuring live music from local band, Scratch, tours of the new facility, multiple door prizes for attendees and a spread of BBQ brisket, chicken and sausage, which were slow-smoked by award-winning DOCU-Grill-ers who won a city-wide, Kosher cook-off last year. The Texas dealer also offered guests the opportunity to test drive four 2015 Tesla sedans.

DOCUmation also raised $20,000 to ben-efit Morgan’s Wonderland (www.mor-ganswonderland.com) by raffling off the use of a new Tesla vehicle for one year. Leasing partner GreatAmerica Financial Services raised an additional $5,000 for the cause.

INduSTry AWArdS, ACkNOWlEdgMENTS & SIgHTINgS

DOCUmation Hosts Grand Opening for New 46,000 Square Foot Headquarters

I N KBY CJ CANNATA

CR

CR

DOCUMATION’S NEW HEADQUARTERS

DOCUMATION SERVICE VEHICLE

LOU SCANTLAND

Leslie Digital Imaging (LDI) and Mo-hegan Tribe of Connecticut announced Tod Pike’s appointment to the position of President of KÔTA, a Mohegan LDI En-terprise, and Chief Sales Officer of LDI Color ToolBox. On April 28, Pike joined KÔTA and LDI after recently serving as SVP of Samsung Electronics America, as well as various senior management roles at Canon Business Solutions and Canon USA over the past 19 years. “KÔTA represents the long envisioned op-portunity for LDI and the Mohegan Tribe to deliver its unique value proposition in digital office technology directly to the Southern New England marketplace, and there is no one more suited to this position than Tod Pike,” said Jerry Blaine, Founder, CEO and President of LDI. “I’ve known

Tod for over 20 years and have admired his ability to build teams, grow businesses and take great care of customers. I’m very much looking forward to working with him in his new roles.”

kÔTA recognized as Bona Fide Minority Business Enterprise

The Greater New England Minority Sup-plier Development Council recognized KÔTA, a Mohegan LDI Enterprise, recent-ly formed by Connecticut’s Mohegan Tribe of Indians and LDI Color ToolBox, as a bona fide Minority Business Enterprise.

KÔTA serves the Southern New England region with a product portfolio of emerging digital technologies for copy, scan, send, managed print, production print, document

workflow and visual communications. KÔTA is a Mohegan term meaning “close association,” a best practice representing both parent companies’ commitments to people, customer service and a cornerstone of the new business. “KÔTA will be able to execute on oppor-tunities in government and commercial markets that are currently underserved,” said Blaine. “The partnership brings to-gether two entities that have enjoyed sus-tained business success by delivering the finest client experience.”

• 9 •

I NK

CR

Tod Pike Appointed New President of Mohegan LDI Enterprise KÔTA

MWA Intelligence (MWAi) sponsored the annual Friends of Golf (FOG) tournament at the Bel-Air Country Club, April 20, 2015 for the eighth year in a row. Konica Minolta Business Solutions, Inc. (Konica Minolta) also sponsored the event. Partic-ipant Jim D’Emidio, President of Muratec America, Inc. (Muratec), hosted dinner for guests at the Luxe Hotel on Sunset Boule-vard the evening prior to the tournament.

FOG supports junior golf programs throughout the United States by providing them with generous equipment and edu-cational donations made by corporate and individual sponsors.

“MWAi was honored to participate in this one-of-a-kind event,” said Michael T.

Stramaglio, President and CEO of MWAi. “For years, FOG has been one of the lead-ing charities in the world helping young children participate in programs they could not otherwise participate. Addition-ally, MWAi has been a long-time sponsor and has enjoyed building some great rela-tionships with executives from around the world. The event has transformed itself to a wonderful dealer experience that we are proud to host and be a part of.”

Lauded dealer influencer attendees and players included Steve Bandy, Co-Owner and SVP, Modern Office Methods; Rick Bastinelli, President, Centric Business Systems, Inc.; Jerry Blaine, President, LDI ColorToolbox; John Kuchta, Presi-dent, SolutionOne; Chip Miceli, President

and CEO, Des Plaines Office Automation (DPOE); Mike McGuirk, President, Pro-Copy; Terry Newsom, President, Pacific Office Automation; Ben Russert, Execu-tive Chairman, ProSource; Barry Simon, President, Datamax; and Dean Swenson, President, The Swenson Group.

Other industry insider attendees and play-ers included attorney Bob Goldberg; Dave Hansen, EVP and GM, Dell; Rick Taylor,

2015 FOG Tournament Sponsored inPart by MWAi Draws Top Dealers

TOD PIKE

JERRY BLAINE

CHIP MICELI, BOB GOLDBERG, MIKE STRAMAGLIO AND JIM D’EMIDIO

I NK

CR

Marco, Inc.’s (Marco) CEO, Jeff Gau, has been named a finalist for the EY En-trepreneur of the Year 2015 in the Upper Midwest region. The EY awards program recognizes entrepreneurs who demon-strate excellence and extraordinary suc-cess in areas like innovation, financial performance and personal commitment

to their businesses and communities. A panel of independent judges selected the finalists and winners. Winners will be announced at a gala on June 10, 2015, at the Hyatt Regency Hotel in Minneapolis. Since Gau became Marco’s President in 2003, Marco has grown from a $34 million

company to $200 million with 900 em-ployees today at 43 locations nationwide. Marco do-nates up to five percent of its profits to the communi-

ties it serves and pays employees to lead key volunteer efforts in the community.

Marco CEO Jeff Gau Named 2015 EY Entrepreneur of the Year Finalist

President and COO, Konica Minolta; and Gavin Williams, CSO of MWAi.

Honoree Phil Mickelson, who turned pro at 22 and is now one of the most success-ful players in PGA history, attended this year’s event. Mickelson boasts 49 career wins, with five Majors (three Masters) and 42 PGA Tour titles. He has also participat-ed in 10 Ryder Cups, 10 Presidents Cups and two Walker Cups.

On April 22, Continuum, the industry’s only channel-exclusive provider of fully integrated managed IT services solutions, confirmed representatives from five of its top partners will share success stories and best practices during Navigate 2015 (Continuum’s second annual user confer-ence) from September 27–29 at the Cos-mopolitan in Las Vegas.

Navigate 2015 is a three-day education-al and training event for the industry’s top MSP partners and IT resellers led by highly regarded business and channel leaders. In addition to offering product training on Continuum’s managed IT ser-vices solutions for SMB clients, Navigate

2015 will include sessions on business strategies and economic models, sales and marketing, and service delivery op-timization. Navigate 2014 attracted more than 400 people to the three-day sold out conference with a Net Promoter Score (NPS) of 71.

This year’s confirmed speakers and sub-sequent topics include Scott Spiro, CEO of Computer Solutions Group (CSG) (managing technology for better business performance and success); Charles Love, Director of Service and Cloud Operations at Big Sur Technologies (the advantages of utilizing Continuum’s Network Opera-tions Center and Help Desk); Dan McCoy,

President at Micro En-terprises and the founder of TechSub-luxation.com ( m o d e r a t o r of a partner panel cen-tered on the powerful ad-

vantages of niching IT services); Chris Johnson, Technology Strategist at Untan-gled Solutions (best sales and marketing practices for creating customized service packages); and Jay Ryerse, VP of Busi-ness Development at Digitel Corporation (successes with Continuum’s marketing programs and strategies).

Learn more about Navigate 2015 and register at: www.Continuum.net/Navi-gate2015.

Continuum Confirms High-Performing MSP Partners to Speak at Navigate 2015

CR

CR

DEAN SWENSON, TERRY NEWSOM AND RICK TAYLOR

JERRY BLAINE, JIM D’EMIDIO AND MIKE STRAMAGLIO

JEFFGAU

TONYSCOTT

• 10 •

In an effort to for-tify its compet-itiveness in the

production print business with major markets in commer-cial print and central re-production department (CRD), Konica Minolta and the compa-ny’s President Shoei Yamana have built up a global presence as a marketing print management (MPM) services provid-er. By expanding its service capabilities beyond Europe and APAC, where it has provided production of promotional print materials, the company has also launched its operations in the U.S. and Japan.

Konica Minolta’s MMS services are targeting the marketing departments of leading global firms. The manufacturer’s staff members are stationed at the clients’ offices to engage in the immense produc-tion of promotional print materials while centrally managing its content, process,

quality and delivery to contribute to in-creased sales and brand enhancement by optimizing their ROI.

Konica Minolta acquired Charterhouse PM Limited, a leading MPM services provider headquartered in Hertfordshire, U.K., in November 2011 and Ergo Asia Pty Limited, a leading MPM services pro-vider headquartered in Sydney, Australia, in June 2014. Konica Minolta has since provided its own MPM services in the re-spective regions.

With the recent establishment and oper-ational launch of its subsidiary firms in the U.S. and Japan, Konica Minolta has assembled the structure to provide MPM services on a global scale, covering Eu-rope, the U.S., Japan and APAC. Now, Konica Minolta has the ability to deliv-er its MPM services with the same stan-dards and quality in markets and regions that comprise a large portion of sales for leading global firms.

While maintaining MPM services at its fundamental core, Konica Minolta plans to tap into the know-how of the man-agement marketing service (MMS) that is being provided in Europe and expand it into other regions of the world to es-tablish itself as a marketing partner for global firms going forward Furthermore, Konica Minolta will convey the high con-venience and efficiency of digital print systems for marketing-related, high-mix, small-lot print production to suppliers in each region and also propose total solu-tions, such as the streamlining of overall print production, including output pro-cess management and distribution and communication support services that strengthen relationships between the cli-ents and their customers.

Konica Minolta aims to offer its produc-tion print services with a presence more closely tied together with the user to con-tinually add value.

Production Increasekonica Minolta Expands global Marketing Print Management Services

JAPANESE HEADLINES BY TETSUO KUBO

Konica Minolta’s Marketing Management Services

MMS is a cohesive service execut-ing the planning, production and ap-plication stages of communication strategies, combining print material and digital media, with foundation-al analysis of customer preferences and purchasing patterns. Along with maximizing ROI, it helps strengthen brands and customer loyalty.

There are four companies that com-prise the global MPM services struc-ture as follows:

1. Charterhouse PM Limited • Headquarters: Hertfordshire, U.K.

• Representative: Gary Mahoney, CEO

• Operating Region: Europe (22 countries, including the U.K., Germany and France

• Established in 2007

2. Ergo Asia Pty Limited • Headquarters: Sydney, Australia • Representative: Eugene Cora,

CEO • Operating Regions: APAC and

others (10 countries) • Established in 2004

3. Charterhouse U.S.A, Inc. • Headquarters: New Jersey, U.S.A.

• Representative: Patrick Fogarty, President and COO

• Operating Region: N. America • Established in October 2014

4. ERGO MPM K.K. • Headquarters: Chiyoda, Tokyo,

Japan • Representative: Toshitaka Ue-

mura, President and Represen-tative Director

• Operating Region: Japan • Established in January 2015

CR

SHOEI YAMANA

• 11 •

This month, we learned GE Capital is exiting the leasing game, among other areas of business. For our

audience, this news may signal trouble. We contacted Glenn Clark, Vice Presi-dent and General Manager of GE Capital, Office Imaging, to gain some insight into the decision and its potential effects.

“As you can read in the press release, GE has decided to sell most of the assets of GE Capital in order to focus on their industrial businesses,” wrote Clark by email. “Our OI business is one of the businesses being sold. We are committed to continuing to service our customers as this process un-folds. We are a market-leading franchise with talented professionals and valuable customer relationships. We anticipate be-ing sold to a buyer who is invested in the financial services industry and can offer a good environment for growth. It’s current-ly business as usual here, as we work to service existing customers and originate new leases.”

The Wall Street Journal also printed an article commenting on GE’s move. Ac-cording to the Journal, the industrial con-glomerate strategically decided to shed the bulk of GE Capital to focus on its in-dustrial efforts. GE Capital long account-ed for around half the company’s profits, but the weight of regulatory burdens and investor discontent dragged on its stock. The majority of GE Capital – worth ap-proximately $500 billion – is set to be sold or spun off over the next two years.

Given the company’s renewed energy toward its industrial operations, GE will maintain its aircraft-leasing operations, and financing for the energy and health-

care industries—smaller lending lines that support its core industrial operations.

From GE’s perspective, its exit from the banking business makes sense. But what about the dealers who employ its leasing services? Depending on which company acquires GE Capital, it could be a potential problem. The age-old dilemma of trading up or trading out comes into play here.

In our 29th Annual Dealer Survey last year, 31 percent of all respondents indi-cated that they utilized GE Capital as one of their leasing sources or partners. Of that group, 26.7 percent had GE in first place. So with GE’s exit, we will be look-ing for a shift in leasing partners for those dealers, assuming the financial institution acquiring the GE Office Imaging business is not already doing business with dealers.

Only 8 percent of those same dealers using GE Capital as a primary leasing partner indicated they were dedicated, meaning that GE was their only source for leasing. For the remaining dealers, 61 percent said DLL, GreatAmerica (GA), Everbank and U.S. Bank were their lead-ing secondary sources. It would stand to reason that these particular dealers would further develop leasing relationships with their existing partners.

Looking back on last year’s survey, DLL and GreatAmerica ranked highest among dealers listing GE in second, third or fourth place for their leasing partnerships. U.S. Bank followed closely behind these two, with Leaf coming in fourth.

For those readers who are currently using GE Capital for leasing services, we urge

you to closely consider your options as you move forward. While there is certain-ly no need for immediate action, planning is most definitely in order. The good news is that so few of our dealer readers uti-lize only one line for leasing. This is why multiple lines are so important.

If I were a dealer who had a large portfo-lio with GE, I would talk to my primary A3 manufacturer and inform them of my concerns. If it affects you, then it affects the OEMs. The manufacturers may have considerably more leverage with GE, which can only help the dealer.

I would also reach out to my other leas-ing providers to see what they can do to help in what we know will be a bit of a challenge. When dealers have acquired a competitive MIF (different from the leas-ing provider used by the acquiring deal-er), there has been an issue.

Our intention is not to be alarmists, but caution is always a good thing when sit-uations you have no control over develop. Bare in mind, it may take some time for a company to step up and buy this piece of business from GE. It is not chump change.For all we know, this transition may well turn out for the better, as the new owner could be very conscious of what dealers’ concerns are. In that case, the acquiring company may want to make the effort to allay dealers’ fears.

• 12 •

GE Capital’s Exit Strategy Top leasing Company to divest Majority of Assets over Next Two years By Frank G. Cannata

Recommended Reading:

The Wall Street Journal, “GE Seeks Exit from Banking Business,” published April 10, 2015

CR

GLEN CLARK

On Thursday October 1, 2015, The Cannata Report will be cel-ebrating our 30th Anniversary

Awards & Charities Dinner. In honor of this milestone, we have themed this year’s event “Born in the U.S.A.” We primarily settled on this theme because the deal-er channel we serve comprises industri-ous entrepreneurs, and entrepreneurship is one of the core values upon which our nation’s culture is based. This theme also dovetails well with our audience’s overall enthusiasm and support of the military and charitable causes, two other key pillars of American culture. Last, but certainly not least, 2015 is the 30th anniversary of the year in which New Jersey native Bruce Springsteen’s game-changing record “Born in the U.S.A.” achieved No. 1 status on the Billboard’s Hot 200 Album’s chart for three consecutive weeks in a row.

As we have alluded to in previous months this year, we will establish a cancer re-search endowment in the name of Robert “Bob” Shields, former President of Cop-ytronics, Inc. This will be the 11th such endowment we have created to combat cancer. To establish an endowment in Shields’ name, we will work again — for the ninth time — with the V Foundation for Cancer Research, which will be the beneficiary of this grant.

Our endowment will benefit research for esophageal cancer, which took our dear friend Bob Shields’ life last year. We fully anticipate members of the Shields family, including Bob’s wife Dena, to join us that

evening. If circumstances permit, a rep-resentative from the V Foundation will attend as well.

As has been the case with every single other charitable event we have hosted under The Cannata Report moniker, this is a non-proceeds event with 100 per-cent of proceeds raised through the price of admission directly benefiting our en-dowment. This has been our policy since the inception of the awards component at the Cannata Dinner. Since we are not generating proceeds for this event, the V Foundation will not extract any portion of monies raised to cover any expenses per-taining to the establishment of the grant.

In addition to the endowment, we will also incorporate a second charitable effort for “Adopt a Soldier Platoon,” into this year’s event. To raise money for this addi-tional cause, we will sponsor our first-ev-er silent auction. The auction items will consist of sports memorabilia donated by Robert Ingoglia and Frank G. Can-nata. All monies raised will benefit this particularly worthy charity, which passes on 95 percent of all proceeds directly to veterans in need. We recently learned 22 veterans who have served multiple tours in Iraq and Afghanistan commit suicide every day. Adopt a Soldier Platoon is making a major effort to help combat this horrendous statistic. You will read more about Adopt a Soldier Platoon in June’s installment of the recently launched “Vet-eran’s Way” quarterly department, pre-sented by U.S. Bank.

• 13 •

All Dinner Sponsors Confirmed

We have filled all sponsorships for our 30th Anniversay Cannata Dinner and thank Lead Sponsor, Square 9 Softworks — whose participation was announced in February — as well as Clover Im-aging Group and Digitek who just offi-cially confirmed their sponsorships this month.

BORN IN THE USA

30th ANNIVERSARY

THECANNATAREPORT

&CHARITIESDINNER

AWARDS

The Ride for Bobby Shields

MWAi CEO Mike Stramaglio is honoring Bob Shields via Rolling Thunder’s 2015 “Ride for Freedom.” Stramaglio depart-ed Scottsdale, Arizona on May 15 for Washington, D.C., where the ride will culminate on Memorial Day, May 25, 2015. All pledges will benefit the Esoph-ageal Cancer Research Endowment established in honor of Shields with the V Foundation for Cancer Research, the beneficiary of our 30th Anniversary Awards & Charities Dinner.

Donate to Mike’s Ride for Bobby at: RideforBobby.MWAIntel.com.

Learn about Rolling Thunder at: RollingThunder1.com.

BornIN THE

The Cannata report Officially Announces Theme and Charitable Beneficiaries of 30th Anniversary EventBy CJ Cannata

U.S.A.2014 Dealer Survey Launches

Take our 30th Anniversary Survey at: TheCannataReport.com/Survey30.

• 14 •

POWERPERFORM

kyOCErA’s

YOCERA’s FY16 Business and Technology Conference at the

Pallazzo in Las Vegas, themed “Power 2 Perform,” was further valida-tion that this company takes a unique ap-proach to our industry and continues to enjoy a remarkable degree of success.

The meeting kicked off with a look back at the company’s founding in 1959 by Kazuo Inamori, KYOCERA’s current Chairman Emeritus, featuring a large graphic touting the 55-year anniversary for KYOCERA.

Ed Bialecki, KYOCERA’s Senior Vice President of Sales, acted as Master of Ceremonies during the Opening Ses-sion and he extended a warm welcome to the attendees who came from across the Americas. He also took a moment to inform us that KYOCERA has 750 U.S. authorized dealers, including Copystar.

To give an economic snapshot of the fi-nancial condition of KYOCERA, Bial-ecki introduced Takahasi Kuki, President of KYOCERA Document Solutions, Inc., also known as KDC Group, which is the document imaging division (printers, MFPs, apps, etc.) — in other words, the copier/printer division. Kuki reported the total income for KYO-CERA Document Solutions was 332 bil-lion yen at the conclusion of fiscal year 2015, which was up by over 8 percent from the previous year.

KYOCERA’s fiscal year 2015 pre-tax profit is over 34 billion yen, and the man-ufacturer’s profit ratio is over 10 percent. Moving into fiscal year 2016, which started in April, the company is targeting double-digit growth.

One thing you can count on from KYO-CERA is very aggressive predictions of what it is striving to achieve in the future. Kuki stated that the company has a target of 2 trillion yen in sales revenue for 2017

for Kyocera Document Solutions. Will it make that goal? Not likely, but we predict the company will surely keep growing at high single digits.

To show us how serious KYOCERA is, Kuki continued by advising dealers that KDS has been actively investing in R&D and in production facilities, even during the economic stagnation that commenced in 2008.

It is Kuki’s belief that KYOCERA’s ag-gressive investment is why the compa-ny has exceeded the industry’s average growth for many years. He also added KYOCERA will be investing about 10 billion yen to build a new production fa-cility for a new kind of toner.

Kuki also elaborated on a newly devel-oped application that enables dealers to provide remote maintenance and fleet management so KYOCERA dealers can be proactive in call avoidance. Since this software can be run in a cloud environ-ment, dealers can implement it without having to make an initial investment, such as the expense of building a server.To finish his presentation, Kuki stated his appreciation of all the support dealers have given KYOCERA. “America is our most important market,” he closed.

View from the Top

Following Kuki, President and CEO of KYOCERA Document Solutions Amer-ica (KDA), Nori Ina, took the stage to explain the significance of this year’s the-matic message.

It was clear Ina wanted KYOCERA dealers to understand his commitment to them. “Two-way communication is critical for our mutual success,” he said. “As you know, KDA has an active Deal-er Advisory Council. At these Council meetings, we have in-depth discussions about your needs and what you want to see from KDA.”

• 15 •

PERFORM2015 dealer Meeting Stresses Partnership Approach and Sets the Stage for SuccessBy Frank G. Cannata

For more information about our 1999 trip to Japan, access our archives at The CannataReport.com to read our October 1999 issue.

K

• 16 •

Historical Perscpective

To understand KYOCERA’s growth, let’s look back at recent history. KYOCERA acquired Mita in Janu-ary 2000. KYOCERA was then a $5 billion company entering the copier business against Canon, Konica Mi-nolta, Ricoh, Sharp, Toshiba and Xe-rox. Each of KYOCERA’s competitors could call upon significantly larger re-sources to maintain their visability.

On October 5, 1999 (prior to KYO-CERA’s acquisition announcement), I was invited to visit Mita and KYO-CERA headquarters in Osaka and Kyoto, Japan, along with Lynn Rit-ter of Dataquest, Jonathan Bees of Better Buys for Business and Bruce Thatcher of CAP Ventures. I learned that Bob Magrino, VP and GM, Mita Copystar, suggested we be invited to Japan for an opportunity to hear what the company’s plans were for entering the copier business. At that point, KYOCERA had successfully launched its printers, employing long life (ceramic) drums, and were hailed as a green, particularly in Europe. (At the time, Greenpeace was begin-

ning to gain a significant audience in Western Europe.)

Of KYOCERA’s total printer produc-tion, 70 percent was sold in Europe, making them the second largest printer supplier in Germany, the U.K. and Italy. These countries represent-ed 60% of the European economy. For all of Europe, KYOCERA ranked third in printer sales, following HP and Lexmark. In 1999, KYOCERA’s print-er production was between 40,000 to 50,000 printers per month.

After touring Mita, representatives then took us from Osaka to Kyoto for a visit with Yasuo Nishiguchi, Presi-dent of KYOCERA. After a tour, we met with Nishiguchi, who gave us a brief presentation after which he in-vited us to ask our questions. In the presentation, Nishiguchi indicated

KYOCERA would focus on three key business areas:

• Advanced information technology and telecommunications;

• Environmental preservation; and• Lifestyles and culture.

“We believe each of these areas will see sweeping changes,” Nishiguchi said. “The development of multimedia technologies will transform communi-cations. Environmental compatibility will become an inherent requirement of new products and people will seek a greater emotional fulfillment.”

He went on to state that during the first decade of the new millennium, 50 percent of the sales channel growth would come from office and commu-nications products. His most telling comment was, “In the years 2010 to 2020, KYOCERA will take active steps to enjoy greater participation in IT and telecommunications growth. That was why we chose to add Mita.”

In hindsight, I would have to say that Mr. Nishiguchi knew exactly what he was talking about. And according to KYOCERA’s published fiscal year 2014 results, the company has grown to $14 billion, representing a cumula-tive growth of 64.3 percent over 14 years. Impressive.

Those numbers alone have made me a believer.

KYOCERA’s Product and Solutions Fair

“

“

In the years 2010–2020,

KYOCERA will take active steps

to enjoy greater participation

in IT and telecommunications growth,” Nishiguchi

said. “That is why we chose to

add Mita

Ina emphasized this particular point by saying that much of what dealers would see and hear at the KYOCERA conference is a direct result of their in-put. He added one more thank you to the dealers for being such good part-ners and for continuing their partner-ship with KYOCERA.

This is a truly dealer-centric manufac-turing organization.

“‘Power 2 Perform’ means the power of our continued strength and evo-lution,” Ina said. “The ‘2’ stands for partnership and represents growth and communication, between you [the dealer] and KYOCERA.”

Dealers can take Ina’s words of com-mitment and believe that he means every bit of it. At every Dealer Coun-cil meeting and with dealers he meets individually, Ina stated that he listens closely to their needs and strives to take action immediately. He also added that if he cannot take action, he will explain why at the very least. Turning to new products, there was a decided emphasis on A4 MFPs. A total

of 24 new machines were previewed or announced. Within that group were:

• 7 A4 MFPs;• 3 printers; and• 14 A3s.

KYOCERA’s 14 new A3 products in-clude 25–75 PPM color, which will be available in the second half of fis-cal year 2016, most likely in the last months of 2015. The remainder will come in the first half of the fiscal year, most likely this summer.

To explain the substantial significance of KYOCERA’s new A4s, Danielle Wolowitz, Senior Director of KYO-CERA’s Corporate Marketing Group, brought in the audience.

“When I say ‘A4 MFPs,’ what words come to mind? Small? Desktop? Compact? Individual use? Printer up-grade?” Wolowitz asked the audience. “But let me ask you this: What if, this year, you had a new series of products that could contribute an even greater share to that bottom line, and help you expand your [existing] customer base into new segments?”

“

• 17 •

Power 2 Perform means the power of our continued strength and evolution,” Ina said, “The ‘2’ stands for partnership and represents growth and communication, between you and all of us at KYOCERA.

“

A4 Apprehension

Despite bullish views on A4 MFPs, deal-ers are still expressing concerns about KYOCERA’s new offerings. It doesn’t seem to have anything to do with the ef-ficacy of the new models. Even though pricing was not discussed, it is apparent KYOCERA will not bring any new price points up or down. This means that dealers will be adding KYOCERA’s new products to their inventories that can address a much broader audience than its predecessors.

Mainly, we’re hearing two major stum-bling blocks. The first is compensation for their reps and the second is the products’ average unit selling prices. Roughly 11 percent of revenue is as-sumed to be a desirable level of com-pensation for a dealer’s outbound sales organization. How will their sales reps react when they find they have new models that could be as low as a third of the price of an A3 device that they had previously sold to a customer? Let’s say, for discussion’s sake, the previ-ous model was a Segment 3 MFP color acquired for $9,500 to $10,000. When that lease runs out, a rep would likely present a replacement that is roughly in the same area price-wise but features some added software, which brings the price up a little. A competitor could of-fer an A4 MFP for $3,000 or less that operates at the same speed as that A3 being offered, and provides excellent software for document management.

The dilemma is clear.

KYOCERA President and CEO Nori Ina makes his presidential address

• 18 •

“

“

When I say ‘A4 MFPs,’ what

words come to mind? Small?

Desktop? Compact? Individual use?

Printer upgrade?” Wolowitz asked. “But

let me ask you this: What if, this year,

you had a new series of products that

could contribute an even greater share to that bottom line,

and help you expand your customer base into new segments?

Wolowitz went on to say that this new se-ries would shift dealers’ views of an A4 MFP. These new products are designed to emulate A3 capabilities such as “floor standing, robust, 3,000 sheet finisher, dual scan and 1200 dpi.”

She then made it a point to emphasize that these new MFPs are only available from KYOCERA. They are the first A3-like A4 MFPs on the market.

KYOCERA’s new TASKalfa 406ci series consists of three floor-standing A4 mod-els. Each boast high speeds of up to 47 PPM in color. The series has paper capac-ities of up to 3,100 sheets, optional fin-ishers, the ability to print banners up to 47 inches in length and a three-tier color billing option.

Wolowitz’s presentation at the meeting was intriguing; it certainly prompts se-rious consideration about the impact on dealers’ businesses when they begin to offer these A3-like A4 products to their customers. The question I still have re-

maining is whether or not A4 is a disrup-tive technology.

Will the pricing of these particular A4 MFPs — with speeds of up to 47 PPM in color, with lots of optional features to go with a paper capacity of over 3,000 sheets — help a dealer sell more units? And if it does, at what price? And how will it impact the dealers’ A3 MFP pricing structure? Lower-cost units lead to lower commission rates and dealer salespeople will have to sell more units to reach the compensation levels they currently enjoy with A3 MFPs.

Powerful Peformance

KYOCERA typically runs the general assembly at these meetings extremely well, and this year’s was no exception. The company fits a substanial amount of information into the less-than-allotted 90 minutes for the session. There were no extraneous or keynote speakers, which served to the meeting’s advantage. Ex-ecutives said what they had to say, and

KYOCERA’s Peter Hendricks, Vice Pres-ident of Marketing, and Terry Knopsny-der, Vice President of Engineering, add-ed important elements for dealers to be aware of.

The product expo at this year’s KYOC-ERA meeting was well-organized and the press was given a professional and thor-ough run-through of what KYOCERA was showing. The manufacturer also hosted the usual press conference at the end of the event, which is how KYOC-ERA prefers to do it, and it worked for us to. Both Ina and Kuki fielded ques-tions and nothing was left unsaid or un-addressed. All in all, the company did a solid job and put on a good show.

When it comes to the company’s new products, we think KYOCERA is doing its best to satisfy the needs of a distribu-tion that is much smaller in terms of av-erage revenue per dealer than dealers who carry Canon, Konica Minolta, Ricoh and to a lesser degree, Sharp, as their primary A3 providers.

An engaging skit during the Opening Session emphasizes the consultative sale approach

In our 29th Annual Dealer Survey last year, the average revenue of our dealer respondents was $10 million. The aver-age revenue for the KYOCERA dealers who responded to our 2014 survey was $4 million. For those particular dealers, their primary supplier is providing prod-ucts in the segments they will most likely sell into.

For the last two years, KYOCERA has made a determined and focused effort to get its dealers involved in document solutions. The company’s Total Docu-ment Solutions (TDS) program has been a successful one and KYOCERA dealers are using the latest releases for software that support document management. For dealers’ distribution (meaning those who lead with KYOCERA products), these are the type of products that suit their busi-ness well.

As for the others, KDA has done a very good job of becoming the premier sec-ond line of choice, meaning dealers are using KYOCERA A4 MFPs and printers

in compelling numbers. KYOCERA’s product line complements those of Can-on, Ricoh and Konica Minolta. For those dealers, their strategy is different in that they are very slowly moving upstream and for them, bringing on these new A4 MFP products is very likey to create some kind of disruption.

Later on in 2016, KYOCERA will offer these dealers a 75-PPM color MFP. It will be interesting to see at that point how many of those 75-PPM machines these dealers who have KYOCERA positioned as a secondary supplier will sell.

Canon, Konica Minolta, Ricoh and Sharp have very strong competitive product lines in that segment. At the same time, they are doing considerably well with them. Thus at that point, KYOCERA will no longer be a compatible product offer-ing but rather a competitive one. That is going to be a challenge for this distribu-tion channel, and we will have to wait to see how those dealers respond.

• 19 •

CR

Recommended Reading:

For our most recent coverage of KYO-CERA’s TDS program, read “KYOC-ERA’s Successful Consultative Sales Strategies” at TheCannataReport.com.

Also, read our recent blog post, “KYO-CERA Continues to Impress,” at www.TheCannataReport.com/Live-Wire for our initial perspective on KYOCERA’s FY16 Business and Technology Con-ference coverage, posted shortly after the meeting.

When it comes to the company’s new products, we think KYOCERA is doing its best to satisfy the needs of a distribution that is much smaller in terms of average rev-enue per dealer than dealers who carry Canon, Kon-ica Minolta, Ricoh and to a lesser degree, Sharp, as their primary A3 providers.

KYOCERA President and CEO Nori Ina makes his presidential address

• 20 •

Matt SmithVice President of Sales and Marketing, Printing Solutions at Samsung

Electronics America, Inc.

Jim D’EmidioPresident of Muratec

America, Inc

Mike JohnsonVice President, North

America Business Channels and SMB at Lexmark

International, Inc.

2015 Virtual Panel Series Manufacturer Executives Address Current Dealer ConcernsBy Frank G. Cannata

SPECIAL EDITION A4

• 21 •

Welcome to what has turned out to be the surprise fifth and additional installment of our 2015 Virtual Panel

Series. Thus far, we have published four segments from January through April, featuring interviews with independent dealers, leasing company executives, software providers and hardware manufacturer executives. With the growth of A4 MFPs, we thought it was time to add a new segment to our Series, covering this particu-lar area of the market to see how the manufacturers are doing and determine the relative importance of the independent dealer here. In this panel discussion, our goal was to specifically address the A4 man-ufacturing segment in response to

dealer questions and comments we have heard out in the field this year,

most recently at KYOCERA’s FY16 Business and Technology Conference in Las Vegas in early April.

Three distinguished executives agreed to participate: Jim D’Emidio, President, Muratec America, Inc. (Muratec); Mike Johnson, Vice President, North America Business Channels and SMB, Lexmark International, Inc. (Lexmark); and Matt Smith, Vice President of Sales and Market-ing, Printing Solutions, Samsung Electron-ics America, Inc. (Samsung). We thank them for taking the time to respond to our questions, allowing us to better understand the contribution A4 products are making to our industry.

CR Let’s start off with what has to be the burning question of the

day, at least for our audience of inde-pendent dealers. A4 technology has been described as a disruptive tech-nology, in that the price your A4 MFPs are offered at are generally well below the comparable and similarly featured A3 models dealers have built their businesses on. Do you consider A4 a

disruptive technology? And how do you respond to those dealers who hold that opinion?

Jim D’Emidio (JM): We do not consider A4 MFP a disruptive technology at all. What we have always said is that A3 will always be a part of the industry landscape. If A4 MFP is disruptive to anything, it is to standalone printers. We advocate that when dealers are replacing fleets of sin-gle-function printers to recommend plac-ing A4 MFPs in critical areas for their scanning function and to serve as an on-ramp for the network to the cloud and for adding software/applications. In our opinion, A4 has taken some placements but for the most part cannot replace A3, but they do complement it.

Mike Johnson (MJ): We definitely view it as disruptive. However, it is also comple-mentary and increases the potential to add more units, at a lesser cost to the client. There is one area where A4 MFP can be disruptive, and that is on price. We also believe when you are able to combine an A4 MFP with A3 solutions technology, it is definitely disruptive. Most of our deal-ers use the A4 MFP to complement their A3 placements.

Matt Smith (MS): We can understand why some would term A4 MFP as dis-ruptive. We have brought both A4 and A3 to the market. Quite a few [dealers] sell both, and there is no problem. That said, there are some that have problems with facing off a $2,000 box versus a $10,000 box. In that case, they [A4s] have the abil-ity to be disruptive. If you are looking a single-unit placement and it is clear that a customer does not really need 11” x 17” and the finishing you are providing with an A4 MFP is more than adequate for the customer’s needs, that is where the prob-lem comes in for the dealer. A4 leads to a lower average unit price for him and less money for his sales rep. However, dealers have demonstrated a very strong

adoption of managed [print] services, and that is where A4 is really what is need-ed, particularly when you are replacing multiple units or even fleets of printers. My take is [overall] A4 is disruptive. My example would be taking the customer in a decentralized environment that needs a combination of 10 MFPs and printers. It makes sense to sell the lower-cost A4s in a possible scenario with just one or two A3s. When dealers bring that kind of ca-pability to market, they can sell both. In my opinion, A4 does not fit the previous A3 model. It is up to the dealers who have seen the advantage of selling them both and fit it into their business model. The ones that can are doing a very good job with it.

CR Turning to your respective com-pany’s performance, how well

did you perform in 2014 and on a year-over-year basis? How are doing in 2015? Specifically, we would like you to address the revenue you are generating from the sale of A4 MFPs and printers to independent dealers.

JD: Last year our hardware sales were flat. We had strong growth in managed document and managed print services. The reason we were flat was due to the fact we were changing products and expe-rienced delays. We have the new products and for that reason, we anticipate our cur-rent fiscal year (2016) to be a banner year. We will be refreshing our A4 offering and providing new printers as well.

MJ: In general, we were flat from a rev-enue standpoint with a lot of transition in our product line. We exited the inkjet business but added a lot of growth reve-nue generated by MPS. That is what led us to experiencing a flat result. For this year [FY 2015], we are feeling very good about enjoying a very positive year, espe-cially in the United States. The accelera-tion of our software efforts makes us very optimistic about our channel growth and

• 22 •

that we are going in the right direction. We are off to a good start in 2015.

MS: A4 print is doing very well with sig-nificant growth. In terms of revenue on a percentage basis, we are doing very well in both A3 and A4 segments. A3 is new-er for us, and as a result, we are starting the new year from a smaller base. The A4 business is one-and-a-half times that of A3, as that [A4] is where we started. We have new A3s coming out in the sec-ond half of the year, but right now, the A4 is doing very well. Not every deal-er is carrying both. We have put a lot of requirements on the dealer who wishes to carry A3 and fortunately, many have met that criteria and are now beginning to sell both.

CR Independent dealers require a level of support that is generally

associated with what they receive from their A3 suppliers. Do you be-lieve your company is providing the same support structure and respon-siveness that dealers are experienc-ing from their A3 partners?

JD: I believe your annual dealer surveys show that we have supported dealers very well over the years. We only sell through dealers. From the very begin-ning, we have made a concerted effort to work very closely with them. Muratec supports the dealers, as well as any A3 manufacturer out there. It all stems from how we go to market. We have always told dealers that we market exclusively through them, and we fully realize we need them more than they need us. We have a very strong A4 background and are moving into the A3 area. That is op-posite of what the major manufacturers are really just starting to do.

MJ: I do feel like we are we get a lot of positives [from dealers] in terms of our support. I feel strongly that Lexmark has made a very strong commitment in terms of sales, marketing and technical sup-port. In the last couple of years, we have doubled our support staff and the level of talent we have added is very high. Virtually every partner has said they ap-

preciate the level of support we provide and that we are very competitive with the vendors they are currently working with. From day one [in 2007], we have always strived to provide a lot of pro-gram support that was at least as good as what they were getting or better. We are currently pulling support from oth-er areas into the copier channel. We are making every effort to help our partners against their competition. Every year, we huddle up and attempt to determine where we can add more depth to make sure we provide the necessary support for the dealers.

MS: In general, if you look at the $10,000 A3 box versus the A4 $2,000 box, there is a different requirement. The service requirement is vastly different. Techni-cally speaking, the requirement is much less on A4 products. Samsung respon-siveness is good, but the requirements are different. All of my business is done through dealerships. For the most part, we give them all the collaterals and don’t see the difference. I believe we provide the same kind of programs that place us on par with what the rest of our compet-itors are providing.

CR In your view, how deeply can A4 MFPs penetrate into the tra-

ditional segmentation of the copier market?

JD: We have never really looked at the market in that manner. We were primarily an A4 provider that slowly added some A3 products. The way A4 MFPs and printers are used today has a great deal to do with managed services and document manage-ment. On a revenue basis, we have deal-ers who drive 40 percent of their revenue from A4. From a price standpoint alone, A4 MFP is addressing the lower seg-ments, and that could be anywhere from Segments 1 to 3. But again, it depends on what the dealer is primarily using his A4 products for. You replace a fleet of print-ers with three to four A4 MFPs, and the rest are single function printers.

MJ: Today, I think we have firmly es-tablished that the A4 engine can satisfy

a customer’s requirements in every cat-egory up to Segment 3 and even touch on Segment 4. We have A4 products that have speeds up to 70 PPM. We are aware of the difference in the A3 and A4 plat-forms, and speed is only one criterion for the traditional segmentation of the copier/printer. We listen to our Dealer Council, and they want speed, hole punching and booklet making. They also tell us our high-end MFP that operates at speeds up to 70 PPM offer a very real value within a properly placed area. What we try our best to do is to focus on dealer feedback and push the envelope at the specifica-tions for a Segment 4 device.

MS: The dealer’s preference is to sup-port an A3 [business] model. In terms of speed, we go up to 50 PPM and faster on the A3 side. I would say A4 fits well into Segments 1, 2 and 3. Anything above, that is really is best satisfied in an A3 box with the service support that goes along with it. I will also say that our A4 compet-itors will push into that upper space, even where they don’t have the speed required. They offer multiple A4 machines with speeds of less than 60 PPM. For example, they will offer two 45-PPM A4 MFPs in-stead of one 60- to 70-PPM product. We see that all the time from A4-only ven-dors, and it really depends on the applica-tion and what the customer requires other than price.

CR In your view, what would be the ideal balance of an indepen-

dent dealer’s unit placements be-tween A3 and A4? In doing as you suggest, how could the dealers profit?

JD: It is hard for me to give you a num-ber that represents an ideal balance. I understand what you are trying to get to — what is a profitable mixture of A3 and A4 for a dealer? I really do not have an answer for that, except to say dealers are using A4 in several ways and when they are strong in managed print services, they are going to place more A4 than a dealer who just looks to sell multiple printers. We have one dealer who is not engaged in MPS but tells his salespeople we do not want to replace single A4 MFPS and

• 23 •

printers — just go after fleets. For a dealer heavily engaged in managed services, the breakout could be 60 percent A3 and 40 percent A4.

MJ: We really do not see an ideal balance that we could say would be a hard and fast rule. It depends on the customer require-ment. We support that. It is tough to give a number. What we see are the dealers that launch A4 MFPs, they tend to be growing their business faster than those that are sticking to an A3 line. What I can say is selling both works, and the mixture of the two varies dealership to dealership.

MS: There is no ideal relationship be-tween the two. Geography plays a role here. Our dealers who are in big cities employ more mobile workers. The deal-ers in rural areas have a different require-ment from their customers. I do not think it is possible to compare. I would rather answer this question by saying that deal-ers need a robust A4 portfolio to handle managed services. They need A3 with all the appropriate finishing to satisfy high volumes. They need both of those capa-bilities, and I have come to the conclusion they need both.

Whenever I have an opportunity to talk to end-users, I find they are moving into the solutions space. This tends to lead to a smaller box in many different locations. There are offices that do not have perma-nent seats for people. That leads our part-ners to providing a solution for a mobile workforce environment. I do not think it is one or the other [A3 or A4]. Dealers need to have both today and well into the future. Millennial buyers want instanta-neous access to information. We have half of our employees traveling every day. The average worker is 27, and those are our customers. They decide the computer

they want and where they want to work.

CR When are you planning to hold your next independent dealer

conference and what would be the main objective of that conference?

MJ: We are targeting the first quarter of 2016, and that looks like the time frame we are going to do it. We will be show-ing some new niche products we are con-vinced the dealers will respond well to.

MS: There is a meeting I would say that will be in the fall. I cannot say for sure when, because we continue to go back and forth on it. If I had to guess, it would be the first week in September and would take place somewhere in the North to make it easier for our Canadian folks to come and join us. We will be introducing new A3 and A4 that are bigger than you have ever seen before.

CR As with all of our other virtual panels, we give the participants

an opportunity to convey any mes-sage they would like to our audience.

JD: We see the future as certainly very bright. We recognize that we have to make changes toward providing more support in the area of services. That said, there is a continuing compression in the dealer business. Add to the fact that we expect manufacturers to consolidate with what we feel will lead to less competition.

I use as an example the fax business in 1992, when there were 46 manufacturers. By 2001, it was down to 10. What we encountered in the fax business was that margins and sales went up, and the same will happen with MFPs. The problem is when you get to that point, the business starts going in another direction. I guess

what I am saying is that dealers will con-tinue to do very well, at least those who are into managed services and production print, and respond to the new wave of printing, which is printing on a variety of different substrates.

MJ: At Lexmark, we are going through a transformation of hardware and software. There are some significant acquisitions that are in the works that I cannot talk about. It is an exciting time at Lexmark, as we launched on April 7, 2015, a new logo that signifies a rebirth for our part-ners and us. It will expand the possibili-ties and provide opportunities under what we term as a new umbrella. It is a new brand that helps Lexmark affects a global identity change.

MS: Samsusng has two distinct product categories. A3 and A4 can be a focus for a successful dealer business. It is a choice dealers have to make, which is a matter of a preference based on their personal styles. If you look at what Samsung is providing, it is a common-user [Android] interface for either an A4 MFP or a 65-PPM A3. It will work with our entire portfolio and allow our dealers to capture prints from mobile devices.

We also have a tablet that can run off a phone, and we have embraced this mo-bile connection throughout the line. We are a believer in what the millennials keep telling us, as to what tools they re-quire to perform their work assignments. It is pretty exciting for us and represents a huge investment for Samsung. Mobile workers represent almost 40 percent of our workforce. It is changing the way work is done, and we are providing deal-ers with an opportunity to standardize on one interface for all the devices.

CR

DEAL

ERS

ONLY

Take THECANNATAREPORT 30th Anniversary Dealer SurveyVisit www.TheCannataReport.com/Survey30. Contact CJCannata@CannataReport.com with questions.

2015 Dealer Survey Sponsored in part by

• 24 •

For years, printer manufacturers have hyped the value proposition that A4 based printers would be the

next “disruptive technology.” Disruptive to what? “Disruptive technology” —a hackneyed expression long-imbued in our lexicon — is surely misplaced when describing the A4 copier/printer market, primarily because it implies that A4 multi-functional peripherals (MFPs) were the re-sult of merging two technologies to affect a change in the way copier/printer users incorporate page output in their daily rou-tines. Assuredly, A4 printers did alter the unit shares in some markets, but they did not displace mid-volume or workgroup A3 copier/printer — that honor still goes to the personal computer that effective-ly erased each typewriter. No, A4-based multifunctional units evolved because there was a demand for a small copier/printer, quiet enough to operate in a per-sonal workspace, connectable to a PC or the Internet, using ordinary cut sheet pa-per and encompassing a smaller footprint than that of the then-current printer mod-els. The reality is that A4 models were not entirely designed for the U.S. market.

I always remember my days first as a product manager and then as an OEM manager and finally as a Director of

Strategic Planning when I would sit in windowless rooms in Japanese factories to “negotiate” for the next copier/printer model for the U.S. market. The one last-ing question constantly ringing in my ears was, “If we include all those features and only raise the F.O.B. (landed costs to us) price by 5 percent, how many units will you, Bob-san, sell?” Each visit was like a career-limiting trip. And in all cases, the factory’s rightful objective to maintain operation profit margins while providing capacity prevailed. They may have been striving to keep their employment up, while we, on the other hand, were nego-tiating on behalf of hundreds of indepen-dent dealer sales reps and dealer princi-pals who had conveyed their wishes and price points at countless dealer council meetings and in one-to-one visits with us.

The factory built those models that best suited them to generate the greatest num-ber of unit sales (read, factory capacity) and profit. That strategy bruised many a product manager who had to return to his U.S. management team and sell the model the factory agreed to build. This strategy worked well for the factories when they were making small A3 tabletop units that were marketed worldwide but later ham-strung many an offshore sales division,

particularly in the U.S., that had to offer a “compromised” product to their custom-ers. The tactic changed, however, when the worldwide markets demanded faster and more robust models, and the facto-ries started manufacturing A3 standalone high-speed units designed specifically for high volume print/copy markets in West-ern Europe and the Americas.

Now, copier/printer manufacturers are performing a balancing act, whereby they are back building A4 units for evolving markets, using the A4 models as market leaders. They are developing the A4 units more for Oceania and Eastern European markets than the U.S. market.

If A4s were disruptive, then perhaps they were so to American and European sales reps and independent dealerships whose business models have been “giving the hardware away and making profit on the sales of supplies and service,” much like 3D printing is now reforming how we think about design and production. Right now, a copier/printer MFP sales rep offers A4 MFPs as a fallback product when he or she is unable to close on an A3 model. In that case, A4 generates less sales reve-nue for the dealership and perhaps less of a commission for the rep.

Forevermore The Increasing Vehicles of Choicefor American End-users By Bob Sostilio

HeretoforeA4

Traditionally, a disruptive technology forces users to adapt, but in the case of A4s, it’s been the resellers, the indepen-dent dealers, who have had to adapt to today’s consumers who have opted to invest less in hardware and more in ef-ficient applications and productivity. No question, A4 MFPs are replacing some A3 units, but those A3 units were over-sold originally and now generate month-ly volumes well below expectations. I would venture to add that as printer/copier manufacturers expand their man-ufacturing economies of scale, they will achieve lower F.O.B. brackets and incor-porate more color and finishing on A4 models. They will also likely ship more worldwide then in the Americas. Keep an eye on companies such as Samsung, Canon, Brother and HP that have a great-er presence in Oceania (and Eastern Eu-ropean) markets to introduce A4 models with lower acquisition pricing and with faster models in conjunction with greater value, including larger paper capacities and finishing.

I don’t foresee the A3 market going away any time soon. Rather, I think the A3 market will become even more narrowly defined and provide the single most prof-itable source of service revenue for the

copier dealers. The A3 model still pres-ents the better economy of scale for large volume printing, and I believe copier/printer manufacturers have invested too much engineering in their A3 models to abandon them for A4s at this time. That’s not to say that A4 models in the near future won’t be able to manage greater throughput speeds and larger amounts of paper efficiently. But eventually, A4s will run up against more users who are look-ing to lower their paper consumption, and sales of A4 will eventually stall.

Since A3 MFPs are central to many a workflow solution, I do not expect U.S. businesses to jettison their workflow mod-els for random output, but it can happen if more users accept digital receipts, digital statements, digital deposits, etc. over that of hard copy printed output. Think of A4 products as the device that eventually weans users off the notion that everything has to be committed to hardcopy.

A4s are the vehicle of choice for users and copier manufacturers operating in a shrinking page volume market. And even-tually, A4s will employ more intelligent features at new lower price points, much like the trends of all copier models.

• 25 •

CR

Forevermore

Editor’s Note: When we assigned Bob this topic, we were looking quite frankly to put a period on the discussion of A4 representing a disruptive technology. As always, Sostilio gets right down to the foundation of the argument, and there is nothing we would add or even remotely disagree with, ex-cept that KYOCERA is the “sleep-er” in the A4 examination. In the new models they introduced and previewed for the North and South American dealers, A4 MFPs with improved finishing were right at the head of the list. In addition, the company’s growth in Eastern Europe and third-world areas has been steady, and we may say even strong. In other words, Sos-tilio hit it right on the head. The factories are building for a glob-al market. Sometimes, the U.S., which enjoys the highest volumes per device and per segment, comes in second place. We hope you enjoyed Bob’s article, and if you have a question, please do not hesitate to ask him a question. we promise you he will respond.

• 26 •

The traditional office is becoming a thing of the past, instead trans-forming into a continually evolv-

ing concept as work habits and technol-ogy changes. Bring Your Own Device (BYOD), remote access and cloud com-puting make it possible for employees to work from anywhere, further blurring the definition of the office. But in spite of the freedom advanced technology has brought to employees, or perhaps be-cause of it, physical space is shrinking. According to HP research, office space per user has shrunk by about 20 percent per person in the last five years. So in response to the need for smaller, leaner printers to match more compact work-spaces, in early March, HP made a huge announcement — what HP reps called the company’s biggest re-engineering of HP products since the original LaserJet printer back in 1984.

The news began with the reformulation and rebranding of HP’s color toner, now called JetIntelligence. It not only includes Color Sphere 3 toner (the company’s third-generation chemically grown toner consisting of a wax core and a pigmented polymer resin, surrounded by a hard shell, which is key to the more efficient use of toner; the hard shell protects the particles

inside the cartridge and prevents wear and breakdown), but also cartridges that are also more compact. Improvements to the microchip on each cartridge offers better page tracking, the ability to adjust quality as parts begin to wear and the added secu-rity of anti-fraud technology. But it’s just toner, so no big deal, right? Not quite. It’s the re-engineering of the toner that en-abled HP to make the cartridges smaller, which in turn allows for smaller printers.

The Color LaserJet hardware announced at the same time as these new cartridges included two small workgroup products (a printer and sister MFP) and an enter-prise-level color laser printer. Designed for five to 15 users, the Color LaserJet Enterprise M553x offers rated speeds of 40 PPM in color and black and boasts a faster warm-up time than the leading com-petitor. The compact and affordable Color LaserJet Pro M252dw printer ($299.99, estimated street price) and Color Laser-Jet Pro M277dw MFP ($429.99, street) are designed for one to five users and of-fer speeds of up to 19 PPM in color and black. All models include touchscreens and support for apps/solutions to expand functionality, as well as wireless connec-tivity. They also boast the key advantage of being among the first to provide resident

direct printing of MS Office documents from USB Flash drives; competitive mod-els generally support only PDF and image files (such as TIFF and JPG).

So How do They Stack up?

Buyers Laboratory LLC (BLI) currently has two of the three new HP models in its U.S. lab for testing. While a full eval-uation won’t be complete for a couple of months (BLI runs the most extensive durability test in the industry, running printers and MFPs for 15 business days, outputting thousands of pages per device to assess reliability), our team of analysts is happy to share some initial feedback on the new devices.

“What surprised me most about these two devices, despite the low price and the

HP’s Reimagined Office Printers: Compact and PowerfulBy Marlene Orr, BLI Senior Analyst, Printers/A4 MFPs

MARLENE ORR

• 27 •

CR

* Based on BLI lab testing of both models. Time in seconds indicates the time it took to process, image and deliver a single-page test document to the output tray, measured from the time the print button is pressed to the time the trailing edge of the page exits the device. A lower number indicates faster performance.

compact size, was the great print qual-ity,” said Tony Maceri, BLI senior test technician. “For a $300 printer, the Col-or LaserJet M252dw delivers remarkably vibrant colors and crisp text.” In our as-sessment, technicians also cited smooth lines and dark solids, though skin tones had a slight yellow undertone. Both the M252dw and M277dw MFP received the same “Very Good” overall rating in print mode, which isn’t surprising, since they share a common engine. In copy mode, as would be expected of an inexpensive model with basic scan functionality, the M277dw received slightly lower (“Good” overall) ratings for black and color out-put, putting it on par with other models tested in the category.

Speed performance was another surprise for BLI analysts. At the low-end of the market, typical jobs are three pages or fewer, so fast first-print times matter. With these new, more compact devices, HP promises faster first-print times — and they deliver. Once our team complet-ed the initial speed testing, I compared the results to those of previously tested high-er-priced models from HP with higher rated speeds of 21 PPM. The HP LaserJet Pro 400 Color M451dw ($399.99), despite having a rated speed 3 PPM faster, was actually slower than the new M252dw when printing shorter jobs. The same is true of the sister MFP, the Color LaserJet Pro MFP M476dw ($679.99). Of course, with their limited paper supplies and low-er toner yields, the M252dw and M277dw MFP are not meant to replace their faster cousins, but they can certainly keep pace with them for those shorter jobs, making them affordable options for lower volume users. Be sure to check buyerslab.com for preliminary data on additional models currently in our test lab.

Time to Print a Single Page (in seconds)

* Based on BLI lab testing of both models. Time in seconds indicates the time it took to process, image and de-liver a single-page test document to the output tray, measured from the time the print/start button is pressed to the time the trailing edge of the page exits the device. A lower number indicates faster performance.

Time to Output Single Page documents in Print and Copy Modes (in seconds)

DEAL

ERS

ONLY

Take THECANNATAREPORT 30th Anniversary Dealer SurveyVisit www.TheCannataReport.com/Survey30 Contact CJCannata@CannataReport.com with questions.

2015 Dealer Survey Sponsored in part by

• 28 •

How Ricoh is approaching its advertising was one of the most popular questions dealers

submitted for the top Ricoh Americas Corporation (Ricoh) brass to consider during Convergence 2015’s first-ever dealer Q&A. Specifically, dealers asked if Ricoh had an advertising strategy for

2015 and if that strategy would provide for tagging opportunities.

While the Ricoh executive panel — Ricoh CEO Martin Brodigan; Dave Greene, SVP of U.S. Sales; and Jim Coriddi, VP, Dealer Division — initially responded the compa-ny had “no advertising strategy for 2015,” I learned soon after that is not the case.

As I noted in my Convergence coverage last month, I had the opportunity to sit with Peter Lazaroff, Ricoh’s VP of Com-munications and Events, at the press lun-cheon. Lazaroff had indicated the panel likely responded in this manner because while Ricoh does indeed have an adver-tising strategy — and a highly-targeted, relevant, well-thought-out strategy at that — it eschews the more traditional and broad-reaching tactics and platforms such as broadcast, radio, newspapers and mag-azines that many senior-level dealers still associate with the term “advertising.” “I don’t need everyone to know who we are,” Lazaroff said. “I need the right peo-ple to know who we are and get those people to engage [with us].”

Ricoh is placing the majority of its high-ly-targeted advertising emphasis on con-tent marketing, ad placements within digital media, search engine optimization (SEO) and social media platforms.

It’s critically important to note the vast majority of high-level professionals Ricoh seeks to reach and engage with conduct virtually all of their research online, while employing various methods to do so.

Content Kingsricoh’s relevant digitally Anchored Advertising Strategy Effectively Emphasizes Engagement and EfficiencyBy CJ Cannata

“60 percent of prospects at the C-suite and decision-making level have already made up their minds before they even see a representative from any vendor because more and more of them are doing their own research,” commented Lazaroff.

In many — if not most — cases today, information seekers are inputting “key words” pertaining to the type of business problem they are experiencing, or po-tential product or service they are in the market for, into search engines like Goo-gle and Yahoo. Then, they scroll through the websites or social media platform re-sults the search yields. Ricoh’s emphasis on SEO can only serve to increase the company’s ranking across search results related to key words most relevant to its products and services.

Conversely, Ricoh has developed a digital content marketing hub called WorkIntel-ligent.ly, and I believe the company has gone about it in the right manner. Instead of overtly populating the site with Ricoh content or advertising, along with a prom-inent Ricoh logo, the site features rele-vant, actionable written and video content, along with other resources, by thought

leaders outside the Ricoh umbrella on subjects bucketed into three overall cate-gories: Workstyle Innovation (e.g.: culture, demographics, productivity and work/life balance), Information Management (e.g.: data security , information overload, trends and workflow) and Technology (e.g.: big data, cloud, IT and mobile).

WorkIntelligent.ly targets IT decision makers, line-of-business leaders and other working professionals navigating today’s transformative “New World of Work.” To reach this highly coveted audi-ence, Ricoh strategically distributes each piece of content via paid digital content syndication partners such as Outbrain and Taboola (mass distribution), and Bizo and LinkedIn (highly-targeted distribution). These partners ensure that each piece of content is delivered to web users interest-ed in or involved with contextually rele-vant topics and themes and who are thus more likely to engage in the desired call to action (e.g., to immediately download or sign-up to receive content).

I was sold almost immediately, as there was an article entitled “Why Millennials Don’t Want a Spot in the C-Suite.” That

• 29 •

“I don’t need everyone to know

who we are,” Lazaroff said. “I

need the right people to know who we are and

get those people to engage [with us].”

PETER LAZAROFF

• 30 •

story alone immediately drew my atten-tion when I visited WorkIntelligent.ly as part of my research for this story.

(As an aside, that particular article is a truly engaging piece, relevant to virtually our entire audience. I encourage all of you

to read it, whether you’re a Ricoh dealer or not.)

WorkIntelligent.ly demonstrates Ricoh’s commitment to a true consultative ap-proach. The site offers a wide array of current, relevant business and business technology-related content clearly tai-lored to visitor interests, as opposed to Ricoh products and services.

“We’re not just interested in selling you something,” said Lazaroff. “We’re inter-ested in solving a problem.”

In placing digital advertising, Ricoh is also looking at another key ingredient to a comprehensive research process, which is also a common practice today. This is the querying or exchanging of points-of-view with counterparts at other companies with-in similar verticals, or those who have sim-ilar business problems, via social media platform such as Spiceworks.com, which serves the IT industry. Spiceworks.com is a prime example of a digital platform that Ricoh has an advertising relationship with.

In proactively seeking to engage with prospects during the research portion of the purchasing cycle, Ricoh is increasing its likelihood of placing itself in what we refer to as the “consideration set” in the advertising world. Companies in the con-sideration set are making an impact with prospects far before Ricoh or their dealers have an opportunity to engage with them.

That said, I do feel a technology compa-ny, or any busines-to-business oriented company as globally significant as Ricoh should complement a highly-targered strategy with some traditional media to drive brand awareness. Business deci-sion-makers are consumers, too. Encoun-tering Ricoh advertsing while in consum-er-mode will enhance recall and relevance for prospects who come across Ricoh’s products and services while researching solutions to a business problem or need.

delivering for dealers

For dealers, there are two highly sub-stantive benefits of Ricoh’s overall ad-

vertising strategy. First, by specifically focusing on elevating Ricoh into the consideration set of influencers and de-cision makers, prospects are more likely to be aware of and prioritize Ricoh as a potential, if not preferred, vendor before dealer representatives may even have an opportunity to engage those prospects as potential customers.

Second, Ricoh’s advertising strategy is extremely cost efficient — much more so than a more traditional stand-alone broad-reaching approach that highly pri-oritizes brand awareness. According to some dealers I spoke with, this is a big plus because Ricoh will re-invest dollars saved in lieu of generating and sustaining brand awareness on a broad scale into re-search and development.

Ricoh’s strategy demonstrates the OEM understands that the anchor to today’s most effective marketing strategies is en-gaging prospects organically. That means delivering targeted messaging and engag-ing in conversations across various media outlets in the most relevant business envi-ronments when prospects are in the most possibly receptive mindsets.

“Everybody must be engaged in the con-versation,” said Lazaroff. “Otherwise, we will not be in the consideration set.”

From what I have learned so far after speaking with Lazaroff, Ricoh’s conversa-tion began long before Convergence 2015 and continues to build momentum.

“We’re not just interesting

in selling you something,”

said Lazaroff. “We’re interested

in solving a problem.”

Winning Combinations

I’m far from the only one im-pressed with Ricoh’s WorkIntel-ligent.ly content marketing plat-form, as the hub has received several prestigious 2014 awards (except as indicated):

Gold Sabre Awards (2015)Category Winners: Practice Ar-eas, Business to Business

Content Marketing Awards (CMI)Bronze: Best Overall 2014 Edito-rial Website

The Webby AwardsOfficial Honoree: Websites: Blog – Business

PR News Digital PR AwardCategory Winner: Best Microsite/Custom site

MarComsPlatinum: Brand JournalismPlatinum: Website/B2BGold: EditorialGold: Web Copy

Communicator AwardsAward of Excellence for Websites — Corporate Communications Award of Distinction for Websites — Marketing

Mercury AwardsBronze: Reshaping a B2B Brand through Content Publishing; Writ-ing: Thought Leadership

PRSA Totem Best Overall Website and Best Overall Electronic Publication

CR

Consolidation on the distribution side of the business continues at a steady pace. In March, we published an item about The Stewart Organization and Principal Walter Stewart’s sale of his Huntsville, Alabama location to Xerox Corporation’s Global Imaging Systems (GIS).

However, Stewart is not going anywhere, with two thriving locations in Houston and Dallas, Texas. If anything, he is add-ing by subtraction to accelerate his expan-sion in Texas. Whatever Stewart received from GIS, he will very likely use to re-invest in his strong and expanding Texas operation. It is as simple as that.

This month, we learned that John Lowery, CEO of Applied Imaging Systems, also has expanded via a merger with Hi-Tech, a dealer located in Petoskey, Michigan. Headquartered in Grand Rapids, Michi-gan, Applied Imaging has grown to em-ploy 233 individuals across an additional seven locations in Ann Arbor (its most re-cent addition), Detroit, Kalamazoo, Lan-sing, Muskegon, Novi and Traverse City. Applied Imaging also represents a wide breadth of product and services lines from partners that include Canon, KYOCERA, Microsoft, Océ, OnBase, Ricoh and Sam-sung, among others.

The merger between the two companies became effective on April 6, 2015. Fol-lowing the merger, both companies are operating under the Applied Imaging brand and management team. The ma-

jor advantage of the merger for Applied Imaging is the IT business that Hi-Tech brings with them.

To successfully acquire or merge with an-other company, synergy and a compatible culture are of paramount importance. Hi-Tech is an authorized Canon dealer, as is Applied Imaging. Hi-Tech has served its business community for 27 years, which speaks well for Hi-Tech.

Lowery, who founded Applied Imaging in 1987, sees a very smooth transition ahead. Hi-Tech’s customers and Applied Imaging will occupy the same building, and all of Hi-Tech’s employees will be integrated into Applied Imaging. Hi-Tech customers can expect to see the same faces and will not experience any interruption in service. In addition, clients will enjoy benefits of employing one of Michigan’s fastest growing and best-managed businesses.

With this merger, Applied Imaging has stepped up in rank. We estimate that with the addition of Hi-Tech, Applied Imaging’s revenues are now in excess of $60 million. Lowery’s intent is to break the $100 mil-lion barrier by 2018. From our seats, every indication point to him achieving that goal.

During a time when Michigan has been a poor performer on the economic landscape, we asked Lowery what he believed were the main contributors to his company’s success. “We put an emphasis on having a real-ly good [strong] culture,” said Lowery.

“We call it ‘Applied Chemistry’ and refer to the 12 elements of success [similar to the periodic table]. If we have strength, it emanates from that. It enables us to get every employee to buy into who we are and what we do. We feel we have done a really good job of that. I would also add that having the right person to run each one of offices is extremely important. In that area, we have been very fortunate. In the end, it is enabling us to deliver a con-sistent platform of service.”

We offer our congratulations to John and wish him continued success.

MERGERS

• 31 •

CR

Applied ExpansionMidwestern dealer Influencer Merges with Promising IT Business PartnerBy Frank G. Cannata

ACQUISITIONS&

Editor’s Note: John Lowery also serves as the President of the CDA, and I have known him for quite some time. He has a quiet demeanor and a mind that can spot an opportunity from a dis-tance. Lowery is a man who never ceases to impress.

As a long-standing member of the CDA, Lowery has done a very good job of embracing new approaches to expanding educa-tion among his colleagues. He is one of few who saw an opportu-nity when I suggested he invite the leading manufacturer exec-utives to participate in a panel during CDA’s March 2015 meet-ing, which we detailed in April’s “CDA’s Power Players” in The Cannata Report and on TheCan-nataReport.com. While many dealer members thought it would be difficult to engage competing executives in that kind of environ-ment, Lowery didn’t hesitate to step up to the challenge.

• 32 •

Freeman’s PhenomenonMedia Misrepresents Military Service and u.S. Army Captain’s Achievements By Frank G. Cannata

All too often in the me-dia, our most n o t e w o r t h y citizens are overlooked in favor of the latest head-l ine-making c e l e b r i t i e s . Stories of our nation’s he-roes — cur-

rent and former members of the military — are buried behind salacious details of who wore what to which party or who was seen canoodling with whomever at a local coffee shop. Even worse, when stories are circulated with a simple press of the “forward” button, most readers aren’t scrutinizing the information, or bothering to correct details that are ei-ther distorted or outright false.

I recently came across one such story being circulated about U.S. veteran Ed Freeman, who passed away in 2008. The article made it seem as if Freeman had just passed away, as well as included sev-eral incorrect details about this U.S. Army captain’s biography. When it comes to veterans, I believe it is paramount to get their stories right, not only because they are proud of their own service but also be-cause we owe it to them.

Freeman was best known for his exploits

in Vietnam, even though he also served in World War II and Korea. During the Vietnam War, Captain Freeman served as a helicopter pilot in U.S. Army’s Compa-ny A, 229th Assault Helicopter Battalion, 1st Calvary Division (Airmobile). On No-vember 14, 1965, an American battalion in the Ia Drung Valley Republic in Viet-nam was running low on ammunitions, after suffering massive casualties and fighting off a heavily armed and deter-mined enemy force.

Despite enemy fire, Freeman flew his unarmed helicopter to the battalion to deliver water, much-needed supplies and ammunition. According to survivors, Freeman returned 14 times to deliver supplies and evacuate the wounded on each trip. Thanks to his actions, many lives were saved.

Unless you have flown in a military heli-copter, you cannot truly appreciate what he and his crew did. Landing a chopper in a hot zone once is a heroic deed worthy of decoration, never mind more than a doz-en. One 30-caliber rifle shot in the engine can put a chopper out of action. Coming in 14 times and surviving is miraculous.

For this heroic action, Freeman was decorated with the distinguished Flying Cross. However, in the decades that fol-lowed, many who survived this incident felt Freeman should be awarded a high-er honor.

On July 16, 2001, U.S. Congress award-ed the Medal of Honor to Freeman, mainly due to the persuasion of the com-manding officer on that November day in 1965, Lieutenant Colonel Bruce Cran-dall, survivors rescued by Freeman and U.S. Senator John McCain. On that day, Freeman and his wife, Barbara, arrived at the White House to be welcomed by President George W. Bush and to receive the Medal of Honor in front of a distin-guished audience, including Vice Presi-dent Dick Cheney, the Secretary of De-fense, the Secretary of Veteran Affairs, members of the Joint Chiefs of Staff, senators and congressmen.

On August 20, 2008, Freeman passed away from complications of Parkinson’s disease at the age of 80. He was laid to rest at the Veterans’ Cemetery in Idaho, where he settled after his service.

In March 2009, the United States Con-gress bestowed an additional honor to Freeman. The U.S. Post Office in Free-man’s birthplace of McLain, Mississip-pi, was named the “Major Ed W. Free-man Post Office.”

The next time you come across a story about one of our country’s heroes, I urge you to take a moment to take a closer look to get the whole story before you simply delete it or pass it along. These precious heroes deserve no less.

VETERAN’S WAYIN HONOR OF THOSE WHO GAVE

SO MUCH AND RECEIVED SO LITTLE IN RETURN

Presented by U.S. Bank

CR

ED FREEMAN

• 33 •

Editor’s Note: To date, Frank Cannata and CJ Cannata are scheduled to attend events marked with an “*”. If you have questions about these or other industry events, please contact us at cjcannata@cannatareport.com.

• 34 •

We have finally launched our 2015 30th Anniversary Dealer Survey. We invite and encourage all deal-ers to participate. EverBank, our Official Survey Sponsor for the second year in a row, as well as Konica Minolta, Ricoh and Toshi-ba, are offering complimentary one-year subscriptions to The Cannata Report. Visit www.The-CannataReport.com/Survey30 for details and to participate.

We are particularly excited to in-clude an opportunity for dealers to nominate a Female Executive of the Year (from the manufactur-ing segment). However, while we have received over 100 survey submissions at press time, only approximately 25 percent included nominations in this category. We encourage all of our dealer support-ers to do so and join us in the over-all acknowledgement of the highly

significant contributions women are making to this industry every day.

Beginning in early May, The Can-nata Report has been vetting and confirming candidates for our 2nd Annual Young Influencers Issue and complementary digital content.

Based on the young exectuives we have confirmed so far, those pro-filed this year will be aggregately more senior than the group fea-tured in last year’s issue. To date, we are set to include a CEO, CIO and Co-Owner under 40, among others, for editorial participation in the issue. This year, our cover-age of Young Influencers will move from June to July and will preceed our Women Influencers-themed month in August.

On another note, my event and travel schedule is rapidly picking up again over the next several weeks. In May, I will be attending Tech Expo 2015: The Big Event, presented by Atlantic, Tomorrow’s Office (with Frank Cannata and Carol Cannata), the Sharp Road Show event in San Diego (Frank Cannata will attend the Boston event) and the 2015 HP Analyst Summit in Las Vegas.

That’s it for now, all. Enjoy the spring weather, as it seems to final-ly have arrived for most of us. And don’t forget to take the 30th Annual Dealer Survey at www.TheCanna-taReport.com/Survey30.

I’ll look forward to seeing as many of you as possible on the road over the next several weeks.

UP NEXTBy CJ Cannata

SDG MeetingTBAPittsburgh, Penn.May 19–20

BTA WestThe VenetianLas Vegas, Nev.August 6–7

Graph Expo*McCormick PlaceChicago, Ill.September 13–16

BPCA Fall Dealer Owners MeetingThe BreakersPalm Beach, Fla. September 20–24

BTA EastBoston Marriott Copley PlaceBoston, Mass.September 24–25

SDG MeetingTBADallas, TexasSeptember 29–30

Encompass 2015*Hosted by Square 9 SoftworksSandpearl ResortClearwater Beach, Fla.October 20–23

BTA SoutheastTBAAsheville, N.C.October 23–24

Conflict Avoidance

The Cannata Report’s 30th Annual Awards and Charities Dinner Meadow Wood Manor Randolph, N.J. October 1

CR

• 35 •