Konica Minolta Preaches the Art of Disruption at 2015 Dealer Meeting

When Rick Taylor, president and chief operating officer for Konica Minolta’s US operations, came to the stage to kick off the company’s 2015 dealer meeting in L.A. wearing “The Taylor 2000,” the industry’s first wearable technology, he was only half-joking. It actually set the stage perfectly for the expansive technological offerings that would be showcased over the next several days, many of which move well beyond not just the hardware, but even the software and services, we’ve become accustomed to in the digital imaging industry.

Konica Minolta has grown by $800 million in the last six years, with the needle continuing to point up. Net sales are up 11 percent year over year, operating income is up 17 percent year over year and net income is up 200 percent year over year. Konica Minolta’s overall market share is quickly approaching 17 percent. All Covered, the IT services firm that Konica Minolta acquired four years ago, will bill $200 million in managed network services this year, with almost one-third of Konica Minolta’s dealers having signed up. All Covered’s 700 employees also now make up roughly 10 percent of the employee base for US operations. For a sign of just how well the company is perceived from an outside point of view, look no further than its stock in Japan, which is up 35 percent in the last nine  months alone, which according to Konica Minolta, is substantially more than any of its competitors, some of which have seen decreases.

“In our space, with the market not growing substantially, this kind of growth only happens by taking share from competitors and expanding our business domain,” said Taylor.

No doubt, things are going well. Taylor and his team have proven they can drive the core hardware business at the same time as they add new software solutions offerings, as evidenced by the 72 stations at the Product Expo, compared to the 43 stations at the 2013 dealer meeting.

So how far beyond its core offerings did Konica Minolta go? Let’s start with the Business Innovation Center in Silicon Valley, which opened in 2013, along with similar centers in Europe and Asia. Konica Minolta has visited with 500 technology companies, and narrowed down the collaborative opportunities to about one dozen.

“Konica Minolta is now recognized as an established partner, and partnering on deals alongside some of the top venture capitalists in Silicon Valley,” said Taylor. “Part art, part science and a little bit of luck, the trick is to find emerging technologies that we can integrate into our offerings now.”

Konica Minolta is also now providing its dealers with the opportunity to complement their core business with KMMI, Konica Minolta’s healthcare division, which offers ultrasound and digital radiology equipment, as well as IT services for the healthcare industry.  

For more details on the Business Innovation Center highlights, click here for our software and solutions coverage of the event.

• Next-generation scalable architecture will be common to all A3 and A4 products; there will also be a common security model across all platforms.
• New 28-ppm and 36-ppm A3 color devices will be launched in the June/July timeframe, with additional A3 color models planned for launch in November.
• Entry-level A3 devices designed to bridge the gap with A4 devices are also being launched in the June/July timeframe. According to KMBS Director of Product Marketing Dino Pagliarello, these models are an opportunity for branches and dealerships to get into the lower-end of the A3 spectrum where pricing is a big differentiator. The devices will be more compact then their higher-end brethren, and will feature a smaller, 7-inch control panel, support for media types up to 220 gsm and a slower RADF.  The entry-level devices will also support the bizhub MarketPlace, and will be the first to offer standard support for the company’s web browser.
• Production print sales continue to be a high point for the company, with year over year growth of 23 percent.  Konica Minolta will continue to provide both EFI and Creo controllers for its production devices. According to KMBS Senior Vice President of Marketing Kevin Kern, 4,000 to 5,000 production devices in the market today use Creo controllers, with many users content with the  Creo toolset and  locked into their workflows. This is a big opportunity for dealers to identify these Creo users and score more business.
• Also on the production front, the KM 1, which will support 6-up, letter-size printing in a single pass, compared to 4-up, letter-size printing for the HP Indigo 1000, will be undergoing beta testing this year, and will be made available to both the direct and dealer sales channels. The KM 1 is a UV-based inkjet, compared to the water-based inks used by competitors, which take longer to dry, and evaporate over time.
• The Watkiss square-bind booklet maker with trimmer will be available for the bizhub PRESS 2250P beginning in May, and will expand to the rest of Konica Minolta’s production device portfolio over time. According to the company, it will allow Konica Minolta’s devices to run a higher volume of booklets with less service than any of its current crop of booklet finishers allow for. Also slated to be available for the bizhub PRSSS 2250P beginning in May is a 60,000-page roll feeder, which will allow the device to run non-stop overnight unattended.
• Konica Minolta will be offering the JetVarnish 3DS from MGI, which the company acquired a 10 percent stake in about 13 months ago. The device allows users to add a layer of clear gloss varnish to four-color prints. Users can select where on the color page the varnish will reside, and set the thickness of the varnish coating in microns. The device uses Konica Minolta LED inkheads for accurate registration and automatic head cleaning.  The 3DS can also handle coated stock within a certain page range from multiple vendor devices, as long as the paper can fit through the device’s 14-inch carriage. The device’s suggested retail price will be $230,000, and it will cost a little over $1,000 for one drum of varnish. 
• The company announced an agreement with EFI to sell the H1625 LED wide format inkjet printer. According to Pagliarello, this device will serve as a great entry point for the color wide format space where there is display and signage opportunity. The H1625 offers four-color printing plus white on flexible and rigid substrates up to 65 inches wide and 2 inches thick.
• Konica Minolta has also entered into a partnership with IntoPrint to sell the Edge 850, a low-end label printing solution that can generate up to 2,000 labels per minute. An OKI cut-sheet printer that has been adapted into a roll-to-roll feeder and modified with software to allow for color matching, the Edge 850 gives the company an opportunity to be player in the growing packaging label market. It can be sold in conjunction with the Eclipse LF3, a finishing solution that offers lamination, contour cutting, waste removal and a slitter in a single device. In addition to margin on the equipment and media, Konica Minolta gets a piece of service and consumables.
• In what Konica Minolta is calling Project Chameleon, software is being developed which will enable control panel customization at the dealer level.  Administrators will be able to push out the customization to all MFPs or a select number of MFPs.
• The company continues to grow its relationship with 3D Systems, and will begin selling the Cube and Cube Pro 3D printers, designed for the entry-level 3D market. The Cube, in particular, is targeted at the education space, with a retail price of just $999. It features a 6-inch build area, and up to two colors can be used at the same time. More than 20 colors are available to choose from. Consumables last approximately 120 build hours, and replacement consumables sell for $50 to $100. Consumables are currently available as AVS plastic, but nylon and a rubberized material are in the works. The CubePro, which is double the price of the Cube, features a life of 240 build hours for consumables, and a 12-inch build area. A third-party company, STEAMtrax, has developed a curriculum for teachers around 3D printing for grades 3 through 8, in which students learn about a real-world problem—for  example, endangered hermit crabs in Bermuda, and help to solve it by designing shells for the crabs in various sizes and shapes. According to Kern, while 3D printing is not yet a high-revenue, high-margin space, it still allows Konica Minolta to gain more penetration into accounts, and is another opportunity for dealers and direct sales branches to expand the market beyond just the typical hardware.
• The bizhub PRO C754e, which the company believes will be a hit in the legal market, as well as in the entry-level light production color space, was announced. Built on the bizhub C754e platform, the PRO device will feature a standard EFI Fiery controller for graphics-intensive applications, along with a 9-inch monitor display on an arm that can be tilted and swiveled, and two-sided scanning up to 180 originals per minute.
• The A4 bizhub C3850FS will feature a standard 50-sheet inner finisher that can corner staple without increasing the footprint of the device. It will also output paper on the left side of the device, which could be advantageous in constrained spaces.

In relation to its dealers, Konica Minolta continues to focus on quality over quantity, having reduced its current dealer count to 318, down from 334 in 2013, and substantially lower than the 459 dealers the company had back in 2008. The strategy clearly has been paying dividends, with dealer sales of units continuing to slightly outpace direct sales at 52 percent, compared to 48 percent, and dealers thinking in terms of double-digit growth.  In fact, the dealer approach to growth has been very much in step with Konica Minolta’s direct sales strategy, with growth from both an organic standpoint and also through acquisitions. Konica Minolta also continues to believe in one large dealer in each market. And a 20 to 25 percent market share is needed if both direct and dealer channels are playing in a particular market.

With such a vast offering of products and solutions, Konica Minolta educating its dealers to help them prioritize which areas to become involved in will be a key factor in adoption.

“There is more opportunity today to dramatically grow your business than any time in history,” said Taylor, encouraging dealers to find something they’re passionate about, embrace it, and use it to build their business.

The streamlining of dealers has helped Konica Minolta close the gap between dealer principals and the employees at these dealerships that “make a living” on selling product, with some dealerships having 20-plus people in attendance for the event.

“Because we have streamlined the amount of dealers, and are emphasizing quality over quantity, we have more individuals from each of our dealerships here, to help make those key decisions of where to further invest the business without the details getting lost in translation,” Taylor said.