What do you do if you are a traditional equipment manufacturer whose industry doesn’t show a lot of long-term growth potential? That’s been the question facing each OEM serving the document imaging space. The answer has been pretty consistent: find a new widget to manufacture, sell, and service—or move into new technology spaces. Lexmark’s intriguing Internet of Things (IoT) investment splits the difference.
Last week, the company announced Lexmark Optra IoT Solutions, a platform that enables industrial- and consumer-device manufacturers and service providers to collect status information from devices in the field; aggregate it with other data from business solutions like CRMs and ERPs; and mine it for insights that can be used to improve R&D, manufacturing, and service processes.
What Is Lexmark’s Optra IoT Solution?
Like most modern MFPs and printers, Lexmark’s output devices are chock full of embedded sensors to monitor all manner of goings-on within the machine, from temperature to engine speed and toner status. Lexmark reports that its typical MFP has an average of 125 such sensors. As part of its managed print services (MPS) offering, Lexmark has built a platform that collects the data from all these sensors, along with an analytics engine that can interpret it, and a dashboard engine so the data can be visualized. With 1.2 million devices under contract, that’s about 150 million sensors feeding Lexmark’s monitoring platform on an ongoing basis. All this data has been used for predicative analytics of device health (e.g., device A was exhibiting these conditions before a breakdown, and device X’s sensors are showing the same pattern so it is likely to need the same service soon) to improve uptime for customers and help Lexmark’s engineers improve future products.
So now Lexmark is seeking to leverage its core competencies (the technology and know-how driving their existing print manufacturing and services business) in adjacent marketplaces—namely manufacturers and service providers of other kinds of devices full of sensors. Lexmark didn’t show off the solution at IoT Tech Expo North America, where they announced the launch. The press kit doesn’t explain much about the nuts and bolts, either.
But in a follow-up interview with Keypoint Intelligence analysts, Senior Vice President and Chief Information and Technology Officer at Lexmark (and a long-time IoT expert and advocate) Vishal Gupta explained further. The Optra IoT Platform leverages the aforementioned technology developed for internal use by Lexmark for collecting and analyzing data from print devices in the field to help those in other industries ingest, manage, and mine the data coming in from the sensors in those devices. While each implementation will have to be customized, the product offering does include “accelerators” (i.e., low-code modules for business analytics and dashboards) to help streamline the deployment of a given solution. The third leg of the stool is Lexmark professional services to help build and deploy the system. Gupta referenced a “proof of concept” partner that is utilizing the platform to monitor medical devices for the dental industry to improve uptime and service-call efficiency.
What Do We Think About Lexmark’s IoT Investment?
Given the complex and connected nature of healthcare and industrial equipment, we suspect there are a lot of such potential customers. Major print manufacturers and megadealers are still going to make a ton of cash on print in the short term. That revenue isn’t going to disappear tomorrow, even with COVID-19 accelerating digital transformation initiatives. But we don’t anticipate a lot of growth in the hardware print space over the long term. As you can see in the table below, revenue is projected to be flat in the office market and slightly up for home-oriented print devices. Print can be a steady core for manufacturers and dealers, but it’s not a reliable growth driver.
2021 | 2022 | 2023 | 2024 | 2025 | CAGR 2020-25 | |
Home | $ 2,399 | $ 2,495 | $ 2,544 | $ 2,591 | $ 2,702 | 4.0% |
Office | $ 5,929 | $ 5,957 | $ 5,898 | $ 6,061 | $ 6,119 | 0.6% |
Source: Keypoint Intelligence North American Home & Office Printer & MFP Market Forecast: 2020-2025 Note: Revenue in $USD millions | ||||||
On the other hand, developing a platform for IoT device manufacturers appears to be a reliable growth driver. According to Statista, the IoT market is primed for enormous growth by 2030, more than doubling from $440 billion in 2021 to $1 trillion in 2030. If Lexmark can prove themselves as a business that can help IoT businesses maximize their growth, then we can expect that they will see some growth themselves.
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| Source: Statista |
Lexmark’s use of the technology internally to monitor printers and MFPs in the field helped the company and its partners resolve 70% of customer device support issues remotely and increased profitability in its MPS business by 25%. The technology underpinning Lexmark Optra IoT Solution also allowed the company to implement new “as-a-service” (XaaS) offerings, leading to a 40% increase in MPS contractual or recurring revenue. The company also claims that engineering efficiency increased by 30%.
At the end of the day, MFPs are as much of an IoT device as any smart thermostat, security camera, smartphone, or what have you. Lexmark feels that, based on their success as a print manufacture and service provider, they can help manufacturers and service providers of any IoT device to achieve similar goals.
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