Is the paperless office finally on it's way? Aug 09, 2012 07:43 by John Sollars

In a research note released today, Chris Whitmore of Deutsche Bank securities claims that the ‘Dead tree format is dying’.  Claiming that the use of ‘low cost connected devices’ like smartphones and tablets is enabling the sharing of information electronically rather than in a printed format.  Supporting this claim he asserts that looking at the results of the major printer manufacturers over the past 10 quarters shows a dramatic decline in both units shipped and revenues.

Equipment and Supplies revenue trend for major printer vendors.
(Credit: Deutsche Bank)

June quarter results for printer suppliers were “particularly weak as Canon, Epson, Lexmark and Xerox all missed expectations,” according to Whitmore.  Canon, Epson, Hewlett-Packard, and Lexmark over the past 10 quarters show combined supplies and hardware revenues declining about 6 percent year-over-year in the second quarter of this year, he went on to say.

Disturbingly, as sales of printing equipment during the last year have declined, which is always a bad sign for ongoing sales of supplies as they tend to lag sales of hardware by nine to twelve months and are usually the profitable end of the business for the printer manufacturers.  Another key indicator is sales of printer paper (specifically A3 and A4) which also fell by 6% in the second quarter to levels that are 20 percent below their historical peak in 2006.

All of the companies in Whitmore’s survey have already reported their earnings this quarter, except for one – Hewlett Packard, and it reports its quarterly results on August 22nd.  Since the arrival of CEO Meg Whitman, the printing business unit has been amalgamated with the Personal Computer unit, the thinking being to create an opportunity to save on costs which could otherwise be duplicated.  HP of course account for nearly half of all printers sold in the World and when last heard from, revenues from the printing group had decreased by nearly 9% or more than $1Billion (for the 6 months ending April 12) and even worse news for the group was the decline in sales of supplies of over 6%.  Printer supplies contribute around $17Billion a year which is nearly two thirds of the printer business revenue of $25.7.

The future doesn’t look any brighter, especially as the decline in printing extends into the workplace.  Companies like Xerox and more recently Lexmark have tried to reposition their businesses by focussing onto document workflow management services, but these sort of services may fall victim to tightening corporate IT budgets.

Whitmore says in his report “From an enterprise standpoint, printing is increasingly a cost to be managed lower rathen an area of spend or investment.  Although many enterprise print vendors are competing via managed print service engagements,  this trend speaks to the discretionary nature of spending on printing and as such will be the most vulnerable to future spending cuts” and he concludes  that “the use of printed pages is on what appears to be a permanent decline that could anly accelerate as tablets like th iPad and others get more popular “simply put, the content that was once printed for distribution or portability is now simply being distributed or shared electronically” he adds.

Article first published as Is the Age of the Paperless Office on the Horizon? on Technorati.